Whether your econometrics are carried out in house, by an independent supplier or media agency, marketers in search of greater confidence in the numbers should roll up their sleeves and gain a better understanding of how their modelling works.
In fact, the “number one top tip” economist and founder of consultancy Magic Numbers, Grace Kite, believes she can offer CMOs is to ask their econometrics supplier to allow an analyst within their brand to look under the bonnet at the details of the work.
“It’s totally reasonable for [an in-house analyst] to have a look,” Kite said, speaking at The Festival of Marketing: The Bottom Line this morning (24 March).
“And remember that someone who is doing [the work] 100% properly and is proud of it will want to show it off to you. But someone who is cutting corners will hesitate and give you reasons why it’s not possible. So this is a question that really quickly separates the good from the bad suppliers. Even if you haven’t got an analyst in-house, ask the question.”
She added that marketers should be particularly wary of suppliers with proprietary tools: “It’s easy to hide lazy analysis work in a black box solution.”
Remember someone who is doing [the work] 100% properly and is proud of it will want to show it off to you. But someone who is cutting corners will hesitate.
According to Kite, her recommendation comes as a result of interviewing 11 CMOs and senior marketing professionals last summer about how brands can ensure econometrics work is used effectively. All 11 had commissioned econometrics several times and included the likes of Cheryl Calverley, Eve Sleep’s CMO turned CEO, Little Moons marketing director Ross Farquhar, ITV CMO Jane Stiller and Barclay’s head of media Charles Quartey.
Of the group, four anonymously reported having had a negative experience with econometrics done by their media agencies, stating that they “overclaimed” and “you cannot trust them”.
Kite pointed out that marketers do not have to buy econometrics from their media planner, who she said may have a bias or incentive providing certain answers.
“There are good independent econometrics providers,” Kite added. “You don’t have to buy econometrics from your media planner. At least get a quote from an independent shop, because they don’t stand to gain from a certain set of answers to your questions [and] they can be unbiased.”
Ensuring it doesn’t go to waste
Econometrics work will become especially important with the phase out of third-party cookies, Kite continued, as marketers can no longer fully track online journeys and will require an alternative method of assessing sales drivers.
However, she expressed concern that a lot of econometrics work gets left by the wayside.
“When it’s done well, [econometrics] is super useful to marketing directors,” she said. “[But] a lot of econometrics gets done and then not used.”
The recommendations obtained from econometrics work may involve big changes within a complex business, so to ensure the effort spent has not been in vain marketers must communicate effectively with other people within the business, particularly finance.
The wrong and the real of marketing effectiveness
“Results need to be sold into the organisation before they can be used. Analysis on its own isn’t enough. Even when the work is great, it’s people that make change happen,” Kite said.
Understanding the complexity of econometrics and its methodology may be a barrier in such communication, she added, so it is important to choose a supplier which is good at working with your people and can explain the work in ways that “normal people” understand.
Econometrics should also be used to justify investments into brand building and therefore marketers need to ask their supplier to work with their finance team from the start to determine what evidence base they need in order to sign off on longer-term investments.
“Econometrics is a really key piece of the evidence puzzle,” Kite added. “CFOs don’t except snippets of industry research, they need robust evidence that brand building does work and will work for this business.”