How to implement a data-driven media budget

Data is king. It was a fact several years ago and remains a fact today. For marketers, the problem isn’t diving through all the data; the key is reliable data. The dilemma is that while they have measurable and usable data, marketers must also accept that true measurement will not come from single-source data points.

We have an advertising landscape made up of several walled gardens. These are inventory providers such as Meta, Google, and TikTok that do not provide open access to third parties. So what can marketers do when the wrong decisions can be costly?

Traditional media such as linear TV, out-of-home (OOH), print and radio are not yet a thing of the past — they are still some of the biggest providers. And rightly so – return on investment (ROI) estimates for linear TV are even better – 18%, 22% or 25% increase in digital ROI, depending on the source.

The problem always comes when we look too closely. For example, Kellogg Insight found contradictory insights to previous ones, claiming that TV advertising is generally not worth it.

So who do we trust? And how much can we trust your data? This article isn’t about TV, but we’re using TV to be clear—even the most used and searched inventory in the world will yield conflicting results.

So what are the main steps to approach data measurement? And how can marketers properly collect and leverage data to optimize media budgets?

First, recognize the problem

Unreliable data is usually due to a few factors:

• Attribution is an unresolved problem
  • There is still no right answer to this challenge. When it comes to prioritizing and valuing any given channel, customers are likely to be impacted by multiple impressions of your campaigns. To this day, there is no right answer to the question. Data-driven models are probably the closest we get to the solution, but even they have their limitations.
• context matters
  • Your vertical will have a certain audience profile. Understanding what media they consume, in what mindset, what time of day (and more) is vital. TV may or may not be your best bet. Chances are, making broad assumptions with just one variable will have a high margin of error; therefore, the context needs to be present in the analysis.

Know what questions to ask

A well-thought-out media strategy will be present across a wide range of ad inventory, and assigning value to each is a difficult task. So, here’s a list of questions you should openly answer before we get started:

1. How does your business function without advertising?
2. What role does paid media play in your marketing strategy?
3. Do you have a single source of truth for target key performance indicators (KPIs)?
4. Has your strategy been consistent across different geographic and demographic regions?
5. Do you have strong and accurate forecasting capabilities for your business performance?

Build a credible image

Understanding what you should expect when not investing in advertising allows you to establish a very important baseline of expected business performance. A single source of truth for key business metrics provides an unbiased and reliable dataset of the desired outcome.

Consistent strategy on given variables gives you the ability to make comparisons (essentially correcting the strategy variable), and its forecasting capabilities are essential for understanding when changes have an impact.

Below are some recommendations for pulling the answers above together and starting to put together a measurement plan that provides not only a fuller picture, but actionable insights.

Set the right goals

The starting point is to go through the KPIs and make sure they align with the ultimate campaign objective. Some good examples of this include:

• ROI on first sale x expected lifetime value
• Cost of sale x incremental cost of sale
• Reach x Incremental Brand Lift
• Leads x final sales value

What these all have in common is that for many marketing teams, the focus is on the former when they are trying to achieve the latter.

Start by defining your KPIs according to your business objectives. Then you can start thinking about measurement plans.

define your method

Remember the baseline? Time to put it to use. There are different ways to approach this depending on your media plans. As Alfred Korzybski said: “The map is not the territory”.

What we recommend is geography-based splits – the process of finding different geographic segments that have correlatable KPI behavior. The key is that KPIs are correlated, not equal, as they have a similar baseline with historical data (sales over time, investment over time).

There are, of course, other ways to do this. The most used in digital would be exposed x unexposed users within a given target audience. There are some problems with this method.

In particular, if your business does any activity offline, it will not be accounted for or tracked as intended. If your business operates in brick-and-mortar stores, chances are you don’t factor this into your measurement. Finally, it makes a big assumption that the audience is homogeneous – spoiler alert, they’re not.

Test, Validate, Repeat

This is not to say that geographic divisions are perfect. They cannot explain human mobility across borders and work with historical data to establish baselines. (If financial markets teach us anything, it’s that past performance doesn’t equate to future results.) And they require the inconvenient aspect of differentiating strategies across target locations.

But testing is a fundamental part of the measurement methodology – so it must be done. You should test different media and mix campaign messages to create a robust hypothesis based on insights. Only then can you validate your results.

But the testing shouldn’t stop there: a data-driven media budget must be driven by validated hypotheses.

Whichever way you choose, the important part is that you to do choose to act. Understanding the value of a channel or campaign can help you plot investment and return curves that will help maximize cross-channel buying.

Joaquim Salgueiro is partner and director of communication at LINK Agency.