May
4
2017
Why all marketing agencies fail at optimization

I am disgusted with the marketing industry

It is amazing how marketing agencies think about spending a client’s budget. I just heard from a marketing company that manages thousands of car dealerships and how they spend their clients budget. The agency approach was to spend the budget omnichannel regardless of the result instead of spending the budget in the channels that generate the most sales.  They claimed that omnichannel was optimized and got the best results. However, their “optimization” contained no math. How is it possible that you can claim you are optimizing a clients budget yet have no underlying math to project, test and validate your omnichannel marketing strategy? Optimization is a mathematical technique that will either maximize or minimize the variables or find the optimum point within the data.  Optimization is not a creative process

How is it possible that you can claim you are optimizing a clients budget yet have no underlying math to project, test and validate your omnichannel marketing strategy? Optimization is a mathematical technique that will either maximize or minimize the variables or find the optimum point within the data.

Optimization is not a creative process

Optimization is a mathematical technique(s) that will either maximize or minimize the variables or find the optimum point within the data.  Optimization is not a creative process that deals with art, or how pretty the design is. Design work could fall under an a/b landing page test strategy but that still requires the tracking of clicks to outcomes. Yes, the design work could cause the increase in the conversion rate, but the landing page or banners are not optimizations themselves.

#1 Reason Marketing Agencies Fail

The number 1 reason marketing agencies fail is because they fail to track the marketing that generates sales and reconcile the sales data.

#2 Reason Marketing Agencies Fail

The number 2 reason marketing agencies fail and waste clients advertising budget is they do not do the math required to perform an optimization. The most common optimization that every business wants is to optimize ROI. I have literally asked 1000’s of marketing specialist what the ROI formula is and how to execute. To my dismay, less than 1% of those asked can accurately answer the question.

ROI or return on investment is the most simple formula that every marketing person needs to know and master. Without this simple measure of spend to performance, you have no idea how well you are performing.  Try it yourself, start asking marketing people “what is the ROI formula and how do you calculate it?” Ask the marketing people that are at your agency in your next performance meeting if they know.

#3 Reason Marketing Agencies Fail

They talk about optimization but in reality, they have no idea what it really is. Optimization is the buzz word used daily which mostly means “I have no idea what I am talking about.” But the word sounds cool to use.

Optimization takes the form of algebra, calculus, trig and the best optimizers know machine learning. They execute statistical decision theory and use tools like Python, R, SAS or open source machine learning libraries like Google’s Tensor Flow.

When you are able to connect Google AdWords API to your SalesForce CRM and execute machine learning algorithms to accelerate leads that convert into high-value sales, you are then performing optimization. If you take your data and export into a spreadsheet, then run calculations and pivots, you are doing analysis that could lead to optimizations. But first, you must perform a math technique that can show you what the optimum points are in your dataset.

About the Author
Alex Fender is a Google Certified Analytics Consultant and is an expert in internet marketing. If you have questions or would like to contact him, he can be reached at (972) 867-3100.