Margin is the most overlooked topic of marketing effectiveness

Everyone is talking about Marketing Mix Modeling and incrementality experiments, but we miss the star of the show: Margins.

Recognize this? Product groups that seem valuable because they generate a lot of revenue. But totally underperform on margin.

You want to attract customers who contribute to margin, not just customers who generate sales.

This is why companies feel the need to shift from steering on revenue to steering on margin.

That makes sense.

But what is the right way to do this?

1️⃣ Start by calculating margin per order in your data warehouse. Margin drives profitability, so it is definitely worth investing BI resources to generate this insight. Not just for marketing, but also for broader business decisions. Be sure to include all cost elements, such as shipping and warehouse handling costs.

2️⃣ Track order-level identifiers. For example, ensure that Google Analytics is registering each order ID in the purchase events.

3️⃣ Include touch path modeling (MTA) in your marketing effectiveness solution, alongside MMM and experiments. These techniques allow you to attribute margin at a very granular level.

4️⃣ Identify which campaigns drive incremental margin, and reallocate budget to the channels and campaigns that deliver margin rather than just revenue.

To take it a step further, include Customer Lifetime Value. Another benefit of MTA is that it can differentiate between loyal and new customers.

Usual suspect of low margin, low loyalty: Price comparison websites. You bring in customers focused on price, and willing to switch again.

We consistently see that focusing on margin leads to smarter budget shifts and stronger business results.