Why do 90% of marketing dollars flow to paid/performance channels that provide attribution?
HINT: It’s not because ads are 10X more effective than organic investments.
It’s because ads aren’t just measurable, they’re attributable. Your CFO, CMO, and CEO can get in a room and look at the CAC:LTV ratio of every performance channel and feel like they know where they can put marketing dollars to work to grow the business. Sure, a smart marketer knows that organic investments are almost certainly propping up those paid ones (because paid almost always gets credit for sales that would have happened anyway). But in the boardrooms and at the pitch meetings, attribution > measurement every time.
For more, check out this week’s 5-minute whiteboard (now with a much bigger whiteboard).
Howdy SparkToro fans, and welcome to another edition of five minute whiteboards. Last week we talked about measurement versus attribution. What’s the difference between the two of them.
This week, I wanna follow-up and dive deep into how attribution obsession, warps our marketing investments. And why many of you who invest in things like content or PR, social media marketing, even SEO see much less dollars and intention flowing your way from the C suite, then those of us who might work on the paid search performance marketing side of things.
And… how this is actually intentional on the part of entities like Google and Facebook and Amazon and other big ad players. So watch this. Alright, first off, imagine two scenarios. One scenario we’re spending one hundred thousand dollars on Facebook ads and two hundred and fifty thousand dollars on Google ads.
The other scenario we’re spending a hundred thousand on content and social and SEO types of investments and PR and events and media buy are getting quarter million dollar investment.
Now in this scenario A, Facebook is gonna give metrics to the business, to the marketer and and the company that’s making the investment on, how many impressions they got, how many clicks that drove, how many conversions were driven, and something called view through conversions, which is someone saw this ad, and then later, sometime later in their online journey, maybe weeks later, months later, after visiting hundreds of different sites, they eventually converted. But we know that they saw that ad at some point, right? This Facebook user, this Google user who saw this had, they eventually bought your product.
So this is incredibly valuable to a financial team because they can calculate things like much does it cost to acquire one new sale on Facebook versus Google or on Instagram or on TikTok or on Reddit or on Twitter. Right? They can see all those metrics. The platform provides all of this data.
In Google search, they’ll show you things like search keywords, right? Which keyword data is here, but let’s take it down to area b now. Right? They they’ve been able to calculate finance been able to calculate cost of acquisition per channel.
They’ve been able to calculate marginal cost, they know how much they can invest. If a bunch more money pours into the company, they know where they can spend that to get more growth and exactly how much. Now you might argue that they don’t really know because they won’t know how that curve declines over time, arguable. Yes.
Scenario B though, where we spent it on all these organic channels, we do get some data. We get data on like new social followers, right? And and awareness could measure that in a survey. So we’ve done a bunch of media buys, we’ve done a bunch of PR.
How many people in the market segment that we’re going after, now have heard of our brand. Let’s run a survey. Let’s find out, okay, it was percent before now, it’s thirty five percent. We can see traffic, right?
Oh, traffic is growing. Most of this though, most of the stuff that comes from content and social and PR and events and media buys is going to come through that’s right SEOs. It’s gonna come through branded Right?
Brand. You can’t hear me when I turn away from you. Branded search and that’s going to warp everything and make it look like search is where the vast majority is spent. And if you’re bidding on keywords, branded keywords, guess what?
That’s gonna look like, oh, yeah, branded search keywords. That’s where all of our valuable traffic comes from not realizing that it was actually these people that drove all of this activity that now look like you can acquire it over here. Yes, baloney. Okay.
Financial analysts though, when they look at channels like these, they cannot calculate those important metrics. They can’t tell you which channel could we spend money on, right, to get more visitors, to get more sales in Maybe traffic they could, but visitor but sales, probably not converting visits, no, what’s the marginal which channel sends the marginal highest converting visits, right? So, oh, okay, Facebook sent this, Google sent this. Well, we can’t really show our social investments on like organic LinkedIn have we have no idea a lot of that is dark social, a lot of it comes through later on and it doesn’t come through directly.
And if we spend X more (this is the crucial part); if we spend x dollars more, how much more money are we going to make? If we go and we do another big media by how many more sales are we gonna and because this measurable hard to attributable channel can’t answer that question perfectly in a spreadsheet format it gets under invested in.
This is not why you shouldn’t invest. This is why you should invest.
It gets under invested in because financial analyst can’t prove it can’t prove it. CMOs can’t take it to their boss and that’s why all the opportunity all the opportunity for a competitive advantage in marketing sits in these channels, not these ones.