3 Moves Winning E-Commerce CMOs Have to Make
Despite the headlines about the CMO role being in peril, it's actually a great time to lead marketing at an e-commerce company. The old ways of advertising are getting thrown out and the successful e-commerce CMOs and companies will be the ones that leverage the new ways faster than their competitors.
I don’t presume to know everything e-commerce CMOs will need to do to be successful in their jobs, but I do know that the winners of this next phase of online commerce will make at least the following three moves:
No. 1: Understand and Measure True Ad Effectiveness
The point of e-commerce marketing is to turn ad dollars into sales. So the $1 billion question for e-commerce CMOs is: How effective am I at doing that?
Too often, marketing leaders try to answer this question using last-touch or multi-touch attribution.
Last-touch attribution only benefits ad tech vendors and Google. You are playing someone else’s game and putting your ad budget into their pockets.
Multi-touch attribution is equally ineffective. Collecting the data required to measure every factor impacting a consumer's buying decision is unrealistic.
Attribution will remain a castle in the sky until:
- all publishers support impression tracking across all ads; and
- identity is perfected across all channels and devices.
Even then, attribution would remain a model and not a measurement of ground truth.
The acid test of ad effectiveness is incrementality. By calculating the difference in revenue between a treatment group (who see ads) and a holdout group (who do not see ads), marketing teams can understand the true effectiveness of their ad spend. Once they understand their incrementality, they can begin optimizing their spend to that objective and away from the false gods of last click and proxy metrics.
No. 2: Demand Supply Chain Transparency
Everyone knows the ad tech ecosystem extracts a huge tax on ad budgets, but most CMOs don’t know where the tax happens or how. Those brands willing to tolerate a lack of transparency and the arbitraging of media as the cost of doing business are the brands a CMO can beat. They will continue putting their companies at a massive competitive disadvantage, while a CMO who has supply chain transparency advertises more effectively.
The only way to get supply and fee transparency is ongoing testing and relentless questioning of vendors in the supply chain. Armed with A/B test results and feedback (or lack of feedback) from vendors, a CMO and his team can then move ad buying to the partners and vendors who provide the best transparency and insights about ad effectiveness.
No. 3: Upgrade Analytics Talent
A winning e-commerce CMO can’t achieve: No. 1 (measure incrementality); and No. 2 (supply chain transparency), without having strong analytical and technical talent.
Ad tech vendors can be slippery; every brand needs people who can go toe-to-toe with them. And testing and data are no good if marketing hasn’t set up the right tests and don’t have the right people to interpret results. What’s the point of asking questions if you can’t understand or validate what you’re told? So, upgrading analytics talent is critical if a CMO wants to have staff who ask vendors the hard questions and hold them accountable.
If CMOs can orchestrate the three actions above, they will be on the way to creating a competitive advantage in ad buying effectiveness and setting themselves up to win in this exciting new phase of e-commerce.
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