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What Is Marketing Analytics?

• 21 Jan 2021

Marketing efforts, both paid and organic, share the same overarching goals: increase brand awareness, drive thought leadership, and generate qualified leads. Broad goals like these can be broken down into specific, trackable metrics that marketing teams can use to define success and gauge performance.

If you’re not a marketer or have never engaged with marketing analytics, you may wonder how progress is tracked, where marketing data comes from, and why analyzing it is important. This is where marketing analytics comes into play.

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Marketing analytics is the process of tracking and analyzing data from marketing efforts, often to reach a quantitative goal. Insights gleaned from marketing analytics can enable organizations to improve their customer experiences, increase the return on investment (ROI) of marketing efforts, and craft future marketing strategies.

According to a report conducted by PwC, highly data-driven companies are three times more likely than their less data-driven counterparts to see significant improvements in decision-making. Whether you work with marketers or are one yourself, it’s important to be familiar with the basics of marketing analytics and how it can inform your organization's decisions.

Where Does Marketing Data Come From?

The data you use to track progress toward goals, gain customer insights, and drive strategic decisions must first be collected, aggregated, and organized. There are three types of customer data: first-party, second-party, and third-party.

• First-party data is collected directly from your users by your organization. It’s considered the most valuable data type because you receive information about how your audience behaves, thinks, and feels.
• Second-party data is data that’s shared by another organization about its customers (or its first-party data). It can be useful if your audience types are the same or have similar demographics, if your companies are running a promotion together, or if you have a partnership.
• Third-party data is data that’s been collected and rented or sold by organizations that don’t have a connection to your company or users. Although it’s gathered in large volumes and can provide information about users similar to yours, third-party data isn’t the most reliable because it doesn’t come from your customers or a trusted second-party source.

While it’s important to know that second- and third-party sources exist, first-party data is the most reliable of the three because it comes directly from your customers and speaks to their behaviors, beliefs, and feelings. Here are some ways to collect first-party data.

Surveying your current and potential customers is a straightforward way to ask them about their experiences with your product, their reason for purchasing, what could be improved, and if they’d recommend your product to someone else—the possibilities are endless. Surveys can be anything from multi-question interviews to a popup asking the user to rate their experience on your website.

An A/B test is a way of testing a hypothesis by comparing user interactions with a changed version of your website or product to an unchanged version. For instance, if you hypothesize that users would be more likely to click a button on your site if it were blue instead of red, you could set up an A/B test in which half of your users see a red button (the control group) and half see a blue button (the test group). The data collected from the two groups’ interactions would show if your hypothesis was correct. A/B tests can be a great way to test ideas and gather behavioral data.

Organic Content Interaction

Interaction with organic content—such as blog posts, downloadable offers, emails, social media posts, podcasts, and videos—can be tracked and leveraged to understand a user’s purchasing motivation, their stage in the marketing funnel, and what types of content they’re interested in.

Paid Advertisement Interaction

You can also track when someone engages with a digital ad you’ve paid to display, whether it’s on another website, at the top of search results, or sponsoring another brand’s content. This data is crucial in determining where your customers are coming from and what stage of the funnel they see your ads.

Related: How to Learn Business Analytics Without a Business Background

How Is Marketing Data Analyzed?

With numerous types and sources of marketing data, it must be aggregated and structured before analysis. Some platforms you can use to do so are:

• Google Analytics
• Sprout Social

In addition to tracking and aggregating data, you can use several of these platforms to conduct analyses and pull out key insights with algorithms. You can also manually analyze data by exporting datasets into Microsoft Excel or another statistical program, create visual representations of it using graph or chart functions, and run regressions and other analytical tests.

Why Is Marketing Analytics Important?

Understanding how to gather, aggregate, and analyze data can enable you to extract useful insights you can use to make a data-informed impact on your organization.

1. Improve the User Experience

Collecting and analyzing your users’ first-party data can reveal how they feel about their interactions with your product and website. Whether their feelings are explicitly stated (for instance, in a survey) or implicit in their behaviors (for instance, leaving the website shortly after loading the page), having this qualitative and quantitative information can allow your organization to make changes that address their needs and increase the potential for leads to become customers.

2. Calculate the Return on Investment of Marketing Efforts

Another important function of marketing analytics is calculating monetary gain that can be attributed to specific marketing channels or campaigns. To calculate the return on investment for a specific marketing effort, use the following formula:

ROI = (Net Profit / Cost of Investment) x 100

For example, say you release a video explaining the benefits of your product that costs $1,000 to produce. You track how many people navigate to the product page on your website immediately after watching the video and see that it led to 30 new customers in a given period. If your product costs $50, and each new lead bought one, you can attribute $1,500 of revenue to the video. The net profit, in this case, is $500.

Plugging this into the ROI formula looks like this:

ROI = ($500 / $1,000) x 100

ROI = (0.5) x 100

Any time ROI is a positive percentage, the marketing effort—in this case, the video—can be considered profitable. Without data to understand where leads are coming from, calculating the financial impact of specific efforts wouldn’t be possible. ROI calculations can determine which marketing efforts drive the most sales and prove projects' value.

3. Plan Future Marketing Strategies

With knowledge of your customers and the ability to track your marketing efforts’ return on investment, marketing analytics provides an opportunity to create data-driven strategies for your organization.

By analyzing marketing data, you can discover what’s working, what hasn’t worked, and how your customers feel about their experiences with your product and website. You can also get a full picture of the impact that marketing efforts are having on your company.

With that information, you can plan for the future. What should you do more of to reach your quantitative goals? Which effort failed to generate new leads and should be dropped from future plans? Data analytics helps you strategize and answer these kinds of questions.

Becoming a More Analytical Marketer

Harnessing the power of data can enable you to make strategic decisions and feel confident in your marketing efforts.

Honing your analytical skills can be as simple as considering others’ points of view, playing strategic games and brain teasers, or engaging with data on a daily basis. It can also be as structured and purposeful as taking an online analytics course to build your skill set and make connections in the analytics field.

Are you interested in strengthening your analytical skills? Explore Business Analytics and learn to collect, analyze, and interpret data to make an impact.

About the Author

Marketing Analytics: A Reliable Lever to Revenue Growth

Imagine a scenario where you understand your customers so deeply that you can predict their needs, cater to their preferences, and communicate with them in the most effective way, making a good use of every marketing dollar invested. This is not a pipe dream, but an achievable reality through marketing analytics.

In this article, we'll take a deep dive into what marketing analytics is, how it works, and most importantly, why it's so vital for your business. We'll explore the challenges associated with marketing analysis and marketing data collection and review marketing analytics software that will help your team transform uncertainty into informed confidence. 

So, whether you're new to marketing analytics or just need a refresher, let's get started!

What Is Marketing Analytics?

For instance, let’s say your goal is to generate more leads from email, and you're running a few marketing campaigns and launching dozens of sequences to help achieve this goal. Leveraging marketing analytics, you'll be able to tell if your actions bring desirable outcomes, which campaign performs best, and whether your drips resonate with the target audience and attract high-quality leads.

Yet, marketing analytics is more than just numbers and metrics:

• Marketing analytics will help you identify exactly which activities are producing the best results and which aren't contributing much. 
• It’s about finding patterns and correlations that aren't apparent on the surface but can make a huge difference to your bottom line.
• Also, marketing analytics should be the basis for setting up goals. You first look at the funnel and stages dripping in performance and come up with measures to improve those metrics and optimize expenses. 

The Importance of Marketing Analytics for Your Business

Marketing analytics importance can't be overrated, analytics is the key to unlocking your business's potential. Properly implemented analytics bring multiple benefits to companies regardless of their size:

• Data-driven decision-making : Marketing analytics equips you with comprehensive data about your marketing campaigns, customer behavior, and market trends. This data serves as the foundation for informed strategic decisions, replacing guesswork with quantifiable evidence and resulting in 10-30% revenue growth .
• Understanding your customers : One of the most significant benefits of marketing analytics is its ability to provide deep insights into your customers' behavior, preferences, and needs. You can leverage this to personalize your messaging, improve customer experience, and ultimately, build stronger relationships.
• Optimizing marketing campaigns : Through detailed performance analysis, marketing analytics allows you to identify which aspects of your campaigns are working well and which need adjustments. This leads to continuous improvement and optimization of your marketing efforts.
• Maximizing ROI : Incorporating advanced marketing analytics can result in a 3-year ROI of 140-400%. The degree of this return is tied to a company's maturity level in analytics (the analytics maturity concept is described later in the article), with those further along the maturity curve typically experiencing lower yet still substantial ROI. The key benefits fueling this impressive return include optimized marketing spend, time efficiencies due to streamlined revenue data operations, and better analytics accessibility for the marketing team. Moreover, precise insights from analytics assist in setting attainable goals, further enhancing ROI.
• Forecasting and trend analysis : With marketing analytics, you can spot emerging trends and forecast future patterns. This empowers your business to stay ahead of the curve, capitalizing on opportunities before competitors do.
• Integrating data across platforms : Marketing analytics tools provide this unified view of all your marketing efforts, breaking down data silos and promoting a more coordinated strategy.

Who Stands to Gain from Marketing Data and Analytics? 

In the realm of marketing, numerous roles coexist, each distinct in its responsibilities. This might lead to the question "Which of these roles truly benefit from marketing data and analytics?" The short answer is everyone—even people who don’t necessarily have “marketing” in their title.

Let's explore the marketing analytics importance for different roles within the organization:

• CMO: The Chief Marketing Officer shoulders the responsibility of monitoring the broader implications of marketing strategies on the company's financial health. Diving deep into data grants them a bird's-eye view of this impact.
• Marketing Director: Engulfed in the nitty-gritty of marketing maneuvers, the Marketing Director leans on data to assess the efficacy of campaigns and to ensure optimal allocation of the budget.
• Head of Analytics: Holding the reins of data acquisition for the entire organization, the Head of Analytics should be well-acquainted with the specific metrics that the marketing arm values and tracks.
• CRO: The Chief Revenue Officer, keen on deciphering the sources of business influx and revenue, finds solace in marketing analytics. It equips them to ascertain the direct contributions of marketing-led initiatives to revenue-generation processes.
• Marketing Analyst: This role, arguably at the heart of the nexus between marketing and data, is tasked with leveraging information to chart the course for marketing endeavors. The Marketing Analyst harnesses data to carve out actionable and strategic pathways.
• Head of Business Intelligence: Ensuring the organization moves in harmony with data-backed insights, the Head of Business Intelligence draws from analytics spanning various departments. Naturally, marketing data serves as a crucial piece in this analytical mosaic, guiding holistic business strategies.

Key Components of Marketing Analytics

A practical approach to marketing analytics isn’t reliant on a single strategy, best practice, or tool. Instead, it’s based on the culmination of several components that ultimately provide you with the ability to set up and benefit from marketing analytics within your company. 

1. Data collection and integration

The lifeblood of marketing analytics is data. Data can come from myriad sources: websites, CRM, social media networks, ad platforms, and third-party APIs, to name a few. Each of these data points provides valuable insights into customer behavior, marketing campaign performance, and overall market trends.

The power of this data is not fully unleashed until it's unified and integrated. Some approaches you can take to effectively gather and integrate your marketing data:

• Manual data collection: It's the process of manually exporting data directly from platforms (such as social media networks or ad platforms), validating, and cleaning the data to ensure it's accurate, complete, and usable. This could involve removing duplicate entries, correcting errors, and filling in missing values. 
• Automated data collection tools: When manual data collection is inefficient, marketers can rely on automated data collection tools that gather data from various sources. An example is a social media analytics tool that pulls data from multiple social media networks and provides a unified view of all your organic social activities. 
• Extract, transform, load (ETL) solutions: Automated data collection tools primarily focus on gathering data and often fall short when it comes to converting this raw data into a format ready for in-depth analysis. ETL tools are used to extract data from different sources, transform it into an analysis-ready format, and then load it into a desired destination for further analysis (BI tool, data warehouse, or analytics tool). This end-to-end process makes ETL tools instrumental in managing large volumes of data.

Not sure which tool is best for your organization? This table will help you evaluate where you stand and which approach is right for you. 

In the context of marketing analytics, it's also vital to note that data and insights are not the same thing. Data is raw numbers, while insights are the meaningful conclusions drawn from this data. The route from data to insights to strategic actions isn't as short as one might think. It requires meticulous analysis, a keen understanding of how to work with data, and the right analytical tools.

2. Data analysis

Once your data has been collected and integrated, the next step in the marketing analytics process is data analysis. This is the process of examining, cleaning, transforming, and modeling data to uncover useful information, draw conclusions, and support decision-making. 

For different marketing teams, data analysis may include various tools and practices and serve a variety of purposes. This concept is well described by the analytics maturity model concept that encompasses different stages of data analysis and how a company progresses through them as it recognizes the value of data-driven marketing.

Starting point: No analytics

Companies in this stage have minimal or no established marketing analytics processes, and decisions are largely based on intuition and experience. Data collection is sporadic and unorganized. 

Understanding the basics: Descriptive analysis

Descriptive analysis is the initial stage of data analysis where you interpret historical data to identify patterns and trends. Here, you’ll ask questions like, "What was our most successful marketing campaign last quarter?" or "What was the response rate to our latest email campaign?"

Companies in this stage have started collecting data regularly but the integration and analysis might still be manual and time-consuming. Marketers rely on minimal tools, mostly spreadsheet-based like Microsoft Excel for simple data organization and analysis. 

Digging deeper: Diagnostic analysis

The diagnostic analysis involves looking at your data to understand why something happened. For instance, if a particular marketing campaign performed poorly, diagnostic analysis helps understand the reasons behind it - was it the messaging? The channel? The timing?

Companies at this stage have a defined marketing analytics strategy, leverage analytics to understand historical performance and why certain things occurred, and regularly use data in decision-making.

The marketing analytics stack includes basic analytics tools like Google Analytics for website tracking and social media analytics provided by the platforms themselves. Data is usually siloed within each tool.

Looking ahead: Predictive analysis

Predictive analysis uses statistical techniques and machine learning algorithms to understand potential future outcomes based on historical data. It helps in answering questions like, "What type of content will engage our target audience?" or "Which marketing channels are likely to drive the most conversions in the next quarter?"

Companies in the advanced stage have a well-integrated marketing analytics system. Teams use more advanced analytics tools and platforms like Improvado that automates the whole reporting process, from data aggregation to data visualization. Data is becoming more consolidated and there's a focus on creating a single source of truth.

Making informed decisions: Prescriptive analysis

The prescriptive analysis uses advanced tools and technologies, like AI and machine learning, to suggest various courses of action and potential outcomes. It helps answer questions like, "How should we allocate our marketing budget to maximize ROI?" or "Which customer segment should we target to increase sales?"

At this stage, companies have fully optimized their use of marketing analytics. They maintain a unified, integrated view of their customer data and have real-time reporting and dashboards for ongoing insights. Data-driven decision-making is ingrained in their culture.

In a nutshell, data analysis is all about using methodologies and tools to turn your raw data into actionable insights that can drive strategic decision-making and improve your marketing outcomes. The key lies in understanding which types of analysis and tools are most suited to your specific needs and objectives.

3. Reporting and visualization

After going through the rigorous process of data collection, integration, and analysis, the final component of marketing analytics is the presentation of your insights: reporting and visualization. This phase ensures that the analyzed data is displayed in a clear, digestible, and visually appealing way for all stakeholders.

The importance of clear reporting can be summed up in three points: 

• Better decision-making: Well-structured reports provide clear insights and actionable recommendations, guiding strategic decision-making.
• Transparency: Reports offer transparency into your marketing operations and demonstrate the impact of your efforts.
• Consistent tracking: Regular reporting allows you to consistently track and evaluate your performance over time and identify trends or areas for improvement.

A variety of tools are available for reporting and data visualization, ranging from Microsoft Excel for simple charts and reports, to more advanced options like Tableau , Looker Studio , and PowerBI for comprehensive dashboards.

Ultimately, the goal of reporting and visualization in marketing analytics is to communicate insights effectively. By doing so, you enable your team and stakeholders to understand the implications of your data and make informed decisions that drive business success.

Key Metrics and KPIs in Marketing

Understanding which metrics matter and how they connect to larger business objectives can make the difference between a campaign that falters and one that flourishes. Here, we delve into the essential metrics and key performance indicators (KPIs) that provide insight into the effectiveness of marketing endeavors.

1. Return on Marketing Investment (ROMI)

This metric provides an understanding of the profitability resulting from marketing activities. It's calculated by subtracting the marketing cost from the net profit and then dividing this by the marketing cost.

Why it matters : ROMI gives a clear picture of the financial returns generated by marketing investments. A positive ROMI indicates successful marketing initiatives, while a negative value signals the need for recalibration.

2. Customer Acquisition Cost (CAC)

CAC represents the total cost associated with acquiring a new customer. This includes costs related to advertising, promotions, and other marketing efforts.

Why it matters : CAC offers insights into the efficiency of marketing efforts. A lower CAC indicates that the company is acquiring customers at a cost-effective rate, while a high CAC might indicate the need for optimization.

3. Customer Lifetime Value (CLV)

CLV estimates the total revenue a business can expect from a single customer account throughout the relationship duration.

Why it matters : By juxtaposing CLV with CAC, businesses can gauge the long-term value of a customer against the cost of acquiring them.

4. Conversion Rate

This metric represents the percentage of visitors to a website or landing page who take a desired action, such as signing up for a newsletter or making a purchase.

Why it matters : Conversion rates provide insights into how effectively a marketing asset leads to the desired customer action.

5. Churn Rate

The churn rate calculates the percentage of customers who stop using a product or service over a given period.

Why it matters : A high churn rate might indicate dissatisfaction among customers, signaling the need for product improvements or enhanced customer engagement strategies.

While numerous metrics can be monitored, it's crucial to discern which ones align most closely with business goals and objectives. By regularly tracking and analyzing these KPIs, marketing teams can make informed decisions, refine strategies, and consistently drive growth.

Implementing a Marketing Analytics Strategy

Implementing a successful marketing analytics strategy is a complex but rewarding endeavor. The process encompasses a series of crucial steps.

1. Understand your current state

Begin by auditing your current marketing analytics capabilities or at what stage of marketing maturity you are. Analyze the tools you're using, the data you're collecting, and the insights you're generating. This step helps to identify any gaps in your data collection and analysis and provides a clearer picture of your strengths and areas for improvement.

2. Set goals aligned with business objectives

Whether it's improving customer retention, increasing conversion rates, or boosting brand awareness, make sure your analytics objectives align with broader business goals. This alignment ensures that the insights you generate have a direct impact on your organization's bottom line.

Here are some examples of how this alignment could look in practice:

• Business objective: Increase revenue. If your business is looking to boost revenue, one relevant marketing goal could be improving conversion rates. With marketing analytics, you can perform A/B testing on different elements of your marketing funnels to identify what works best for your audience. This data-driven approach can help optimize your marketing tactics and ultimately increase conversions, leading to higher revenue.
• Business objective: Expand into new markets. Suppose your business is looking to expand into new markets. In that case, a marketing goal could be to understand these new audience segments better. Marketing analytics can provide invaluable insights into the demographics, behaviors, and preferences of these target audiences, informing your market entry strategy and messaging.

3. Select the right tools

After setting your objectives, find marketing analytics tools that will best help you achieve them. Consider the scalability of these tools and how well they integrate with your existing systems. It's also critical to consider the ease of use and the level of support provided by the tool vendors.

After setting your objectives, consider the tools that will best help you achieve them. Here's a framework to guide your selection process:

• Understand your organization's unique needs and objectives. What type of data do you need to gather? Do you need real-time insights, predictive analytics, or social media tracking? Having a clear picture of your objectives helps you narrow down the list of potential tools.
• Evaluate the features of each tool to see if they align with your needs. Features to consider might include data visualization capabilities, integration with existing systems, predictive analytics, real-time data processing, and scalability.
• Consider the ease of use. Your team will be more likely to adopt a tool that is user-friendly and intuitive. A tool that requires minimal training can save time and resources. 
• Ensure the tool can seamlessly integrate with your existing stack. Integration capabilities are crucial as they allow for a unified view of data across various platforms, making data analysis more efficient and accurate.
• Assess the quality of vendor support. You'll want to partner with a vendor that offers robust support, especially during the initial implementation phase.
• Review pricing and ROI the software brings. While pricing should not be the only determinant, it's essential to ensure the tool provides a good return on investment. Calculate potential gains from the insights you'll derive and the time you'll save, against the total cost of ownership, which includes licensing fees, training, implementation, and maintenance costs.

4. Ensure Compliance and Privacy

As you collect and analyze data, it's imperative to prioritize data privacy and ensure compliance with regulations such as GDPR or HIPAA. Implement robust data security measures and maintain transparency with customers about how their data is being used.

5. Monitor and Refine Your Strategy

A marketing analytics implementation strategy is not a one-time event but an ongoing process. Regularly review your analytics outcomes and adjust your strategy as needed to stay aligned with changing business goals or market conditions.

Challenges of Building Marketing Analysis Processes

While marketing analytics is a fantastic thing to utilize in your company, getting things up and running often means you'll have to overcome certain obstacles. If you’re not aware of these challenges ahead of time, you will likely experience poor results when implementing this concept in your organization.

One of the most common challenges companies face is siloed data. Data silos exist when departments independently collect and analyze data, leading to duplicate, incomplete, and inconsistent data. In fact, 46% of businesses state that data silos are their biggest problem when handling customer data.

Data silos can occur when departments use incompatible data management systems. They can also occur if a business grows quickly, causing different departments to set up data management practices on the fly, with no thought being put into how this data can be shared across the organization.  

Because data silos can produce incomplete data sets, leading to poor decisions when planning marketing activities. They can also lead to increased costs, as managing all this data across different databases can contribute to inefficient IT spending.  

Low-quality data

Your attempts to set up marketing analytics will count for very little if everything is based on low-quality data.

One of the most common causes of poor data quality is the use of UTM tags in internal links or complete neglect of UTM tags. UTM parameters are essential for tracking the effectiveness of your campaigns, but using UTMs on internal links can overwrite the original source of traffic in analytics reports, leading to inaccuracies.

Another thing to be aware of is event and transaction setup. If events or transactions are set up incorrectly, you may miss out on critical data or get misleading information. Before rolling out a new event or transaction tracking, always test it thoroughly to ensure it works as expected.

Lastly, page redirects can cause issues with channel attribution, making it hard to accurately assess the performance of different marketing channels.

Solution: By being proactive and implementing these corrective measures, you can significantly enhance the accuracy and reliability of your data. Here're a couple of things you can do to address the three major causes of poor data quality:

• Develop a UTM naming convention for your organization to maintain consistency across all campaigns and train your team on the correct use of UTM parameters. Always use UTM parameters on external links only.
• Regularly audit your event and transaction tracking setup to ensure it's capturing data accurately and aligns with your current business objectives.
• Where possible, avoid using redirects. If they are necessary, ensure they are implemented correctly to preserve the tracking parameters.
• Encourage the use of direct links to your pages in your marketing activities.

Lack of expertise

Often, in large enterprise companies, marketers might be adept at understanding market trends and consumer behaviors but may lack the technical know-how to navigate advanced analytics tools and methodologies. This skill gap can result in missed opportunities for optimization and innovation.

Privacy concerns and regulatory compliance

Whether you're handling personal identifiable information (PII), credit card data, or health records, it's vital to adhere to the laws and regulations governing data privacy and security in your industry and region. Any data used in segmentation, targeting, personalization, or other marketing analytics practices must respect individual privacy rights and comply with relevant regulations.

Any tools or platforms you employ for marketing analytics must also align with the compliance requirements of your industry. This means they should offer robust data protection capabilities and ensure that any data they process or store is handled in accordance with the law.

Streamline Marketing Analytics with Improvado

Navigating through the complexities of marketing analytics reveals its pivotal role in driving strategic decision-making and enhancing ROI. Understanding marketing analytics is only the first step.

The subsequent steps are finding and implementing marketing analytics software that will guide your organization from being overwhelmed by data to harnessing it for competitive advantage.

A chosen analytics solution should not merely manage data, but transform it into actionable insights, fostering informed strategies. Improvado is an advanced marketing analytics software solution that acts as an analytics partner supporting your marketing team at every stage of the process.

Improvado aggregates data from 500+ marketing and sales platforms . The intelligent data transformation software then cleans and transforms it before pushing analysis-ready data to any destination for further analysis and visualization. The automated approach saves marketing departments 80-100 hours per week and an average of 30% of marketing resources.  

The support your marketing team gets doesn't stop there, the Improvado team also provides Professional Services for companies with unique and complex data inquiries, a marketing attribution solution, data warehouse management services, and cover many other aspects of a successful marketing analytics strategy.

500+ data sources under one roof to drive business growth. 👇

Advanced marketing analytics solution for all your analytics needs

Im provado – AI-powered marketing analytics & intelligence platform

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