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Marketing effectiveness versus efficiency is an age-old argument that tends to circle back around on itself. There isn't a clear answer to the question of marketing effectiveness vs. efficiency mainly because they are so interrelated and interdependent.
Defining Marketing Effectiveness vs. Marketing Efficiency
Marketing effectiveness
Marketing effectiveness is the measurement of how effectively your marketing strategy achieves its dual primary goals: increasing the company’s revenue and decreasing its cost of customer acquisition.
Marketing efficiency
Marketing efficiency is all about finding ways to make your marketing cost less in terms of both time and resources. The more efficient your marketing, the faster and cheaper you can achieve maximum effectiveness.
An effective marketing strategy is one that maximizes spend to achieve ROI. One of the main goals of marketing effectiveness is lowering cost per acquisition. But every way you can do that has to do with increasing the efficiency of your marketing.
Before you optimize the efficiency of your marketing strategy, it's important to have validation that the strategy is working (or effective). But a strategy that achieves results in a manner that is neither cost- nor time-efficient won’t sustain. You can’t have one without the other if you want to succeed.
Which should I focus on right now?
The best way to determine if you need to focus more on effectiveness or efficiency right now is to determine which of the two isn’t working as well as it could be.
To do that, you have to measure both marketing effectiveness and efficiency as accurately as possible. Here’s how to do that:
Measuring Marketing Effectiveness
There are a wide variety of metrics you can measure to gauge marketing effectiveness. These are the two we recommend paying special attention to, and how to ensure you’re measuring them accurately:
Sales growth and ROI
Return on investment is the number of goal completions (leads generated, sales closed, etc.) your marketing campaign generated vs. how much money went into the campaign.
How to measure it:
Sales growth minus marketing cost divided by the marketing cost
(Sales Growth - Marketing Cost) / Marketing Cost = ROI
How to improve it:
Complete more marketing goals or lower marketing cost without compromising goal completion rate.
What can help:
The key to measuring ROI successfully is accurately calculating real sales growth. To do that, you need very accurate attribution models.
LinkedIn Marketing Partners specializing in Reporting and ROI measurement provide all the tools you need to track attribution with unerring accuracy. Bizible by Adobe, for example, is a full funnel reporting tool for B2B marketers to gain visibility into campaign elements that are delivering against goals and find areas to increase impact.
Funnel segment effectiveness
Marketing campaigns have different segments, depending on their objectives: awareness, consideration, and conversion. These segments are funnel-shaped because they drive in toward final close.
Measure the comparative performance of each marketing segment to learn where you’re losing the most prospects, and therefore which segments of your campaign are most and least effective.
How to measure it:
Calculate awareness by measuring impressions, or how many people actually see your ad.
Calculate consideration by measuring click-through rate: of the people who saw your ads, how many actually engaged with it.
Finally, your conversion will be the number of prospects who, after clicking through your ad, actually became a lead in your pipeline or even made a purchase.
How to improve it:
Calculate where the most significant fall-offs are between segments to determine which segments require the most attention.
What can help:
LinkedIn Marketing Partners specializing in campaign management offer highly-effective tools for tracking prospects through each stage of the marketing funnel.
AdStage even allows you to quickly create and test ad variations in the midst of a campaign, allowing you to A/B test and experiment with segment improvement in real time.
Measuring Marketing Efficiency
There are a few particularly important derived calculations to look at when determining marketing efficiency specifically:
Cost per lead (CPL)
In simple terms, the lower the cost per lead, the more efficient the campaign.
How to measure it:
Cost of campaign / number of goal completions.
How to improve it:
Improve conversion rate in the case of lead generation campaigns; improve impressions in the case of brand and demand campaigns.
What can help:
LinkedIn Marketing Partners specializing in audience management offer excellent tools for improving cost per click and cost per lead by helping you understand and target your ideal audience.
Bombora supplies valuable B2B intent data to help you better understand what your audience is trying to achieve so you can better align your content and messaging. They monitor the content consumption activity of 3.8 million businesses across over 12,000 topics related to B2B products, services, and industries, and apply data science to deliver these powerful insights.
Funnel segment efficiency
Like funnel effectiveness, you calculate funnel efficiency by analyzing impressions, click-through rate, and conversion rate. However, to determine efficiency, you add one more factor: time.
How to measure it:
Track and calculate how long it takes for a prospect to move through each stage of the funnel.
How to improve it:
Understanding how long it takes for a prospect to move through each segment will help you understand which segments require the most work.
What can help:
Add the LinkedIn Insight Tag to track website conversions tied to all of your LinkedIn ads. LinkedIn Marketing Partners specializing in page management can help track your prospect’s progress even more effectively.
HubSpot, for instance, can attribute all ad interactions straight back to specific contacts in your CRM automatically, as soon as they happen.
Marketing Effectiveness vs. Efficiency: Where to Start
If your sales growth and engagement rates are low, focus on improving your campaign’s effectiveness by considering how you can create more impact with your content and messaging.
If your cost per lead and time in funnel are high, focus on improving your campaign’s efficiency by considering how you can motivate your prospects to commit faster, or how you can use automation tools to reduce human effort.
Whatever you do, never sacrifice effectiveness for efficiency or vice versa. If you want your marketing to be truly successful, you need to invest in both.
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