Marketing Trend: Shared Risk
Predictive Analytics Tools Make Marketers More Accountable
Imagine a marketing company that advances the science of selling, commits to results, and has the willingness to back up its promises. Too good to be true? Think again.
One of the hottest trends in marketing today is predictive analytics -- figuring out what's going to happen before a major marketing campaign sees daylight.
In the past, marketers have avoided sharing the financial risk of a marketing engagement with clients. The success of a program was determined by simply charting increased sales after a program was launched and a good deal of money was spent.
Today that is changing. Advancing technology allows marketers to test certain premises that have been guiding principles for decades -- and either prove these premises or discard them as falsehoods and old "wives tales."
A good example is the long-held belief in the ‘law of three’ repetitions -- the idea that consumers responded to the frequency of the message when they heard it at least three times. Today analytics tools tell us that that is not always true.
Advancing Analytics
"The most sophisticated marketers are turning to advanced analytic and metric marketing tools that apply technology and scientific methodologies to the research, creative and implementation phases of the entire problem-solving process," says Dan Muggeo, a marketing and business intelligence specialist based in Boca Raton, Florida.
"Marketers can then develop predictive models of the anticipated results. From these models, they can determine the effectiveness of a given marketing program before spending a lot of money on it."
As campaigns become more predictable, marketers become more accountable for the results. Therefore, varying percentages of agency compensation are based on achievement or surpassing the predictive benchmarks. This is a breakthrough in the client-marketer relationship in that both companies are now at risk.
No Guesswork
Unlike traditional marketing firms, this new approach is focused on developing consumer marketing programs that sell products, not just market them. With predictive analytics paving the way, the client will get the shortest and fastest absorption rate, highest return on investment and, ultimately, the highest value for their product.
There is no guesswork using metrics. Clients know exactly who has the ability, predisposition and interest in purchasing the product they’re selling and where their customers live. Therefore, they can maximize marketing budgets by targeting only those interested in buying their product.
Shared Risk
Finally, a shared risk and accountability model is truly redefining the relationship of today’s client and marketer. Baseline compensation for discovery and analysis is established with mileposts for measurement throughout the process.
"Like never before, the new marketer and client are entering into a true partnership, in that both companies now have a stake in the success -- or failure -- of the marketing project," Muggeo points out.
Some marketers may find this level of accountability objectionable, he adds. But the ones who know how to apply predictive analytics to their marketing engagements are more than willing to share the risk in order to gain a competitive advantage and, in most cases, command higher commissions based on their success.
