Shared from Business of Fashion
Marketers spent much of the last year confronting a hard truth: the data and analytics they’ve long relied on to measure campaign success and inform future decisions may not be as reliable as they once thought.
There’s no one culprit to blame for this sobering reality. In December, the Wall Street Journal published an investigation into leaked internal Facebook documents, which revealed that the company was aware that it had likely overstated its advertising reach to brand partners. Meanwhile, it’s become increasingly clear that so-called vanity metrics, such as likes, comments and followers on social media, which had previously been touted as indicators of momentum propelling a brand, actually do little to reflect its long-term performance. Changes to consumer privacy laws and industry practices, such as new privacy features within Apple’s iOS software, are making it harder for brands to gather customer information and retarget shoppers.
Fashion and beauty brands, perhaps more so than other consumer goods categories, have benefited from the visual nature of platforms like Instagram and YouTube, as well as the direct connection to Gen-Z on TikTok, and have redirected advertising dollars accordingly. But as it’s become more difficult to measure return on investment on these platforms, brands and marketers must think of new and more holistic ways to gather customer data and to measure the success of their marketing strategies.
“The businesses that have that kind of information advantage, they’re going to weather things like the pandemic way better,” said Matt Voda, chief executive of OptiMine, which provides AI software to brands to help them measure and optimise their marketing. “They’re going to invest more intelligently so they have a real edge in terms of competitive success over the long term.”
No Love for ‘Likes’
Retail brands have devoted more of their marketing resources to social media both paid and organic, a trend that shows no sign of abating. Increased social media advertising spend is expected to continue through 2024 and overtake television ad spend, according to media planning agency Zenith Media.
As social media marketing has matured, measurements such as likes, comments, views and shares have become less meaningful indicators of growth and success, with bots and single users with multiple accounts (also known as SUMAs) muddying the real picture of a brand’s social media reach. Though they do give a sense of brand awareness and have some impact on sales, the relationship is more tangential than direct.
Take teen clothing brand Pacsun, a staple of the American mall in the mid-aughts and that has recently focused its growth efforts on e-commerce, which accounts for 40 percent of its business today, according to CEO Mike Relich. The brand has earned impressive numbers on TikTok — billions of impressions and over two million followers — which Relich attributes to its early embrace of the platform.
When Pacsun runs a TikTok campaign, increased website traffic often follows, a phenomenon Relich calls an “implied success.” Still, he said, the brand considers the platform largely one for driving brand awareness, not sales.
To be sure, the metrics that measure a brand’s organic social media presence like potential reach (the available audience that sees a brand’s content) and social share of voice (a gauge of brand visibility compared to competitors) still have value. They’re important in determining how content will perform on a brand’s social accounts as well as executing specific marketing strategies — for example, targeting a wide or more niche group of potential customers.
When it comes to paid social media marketing, metrics like conversion rate (rate of users who see an ad and make a purchase through it) and cost per thousand impressions (also known as CPM) — considered together — offer insights into the value of the content for the target audience, according to Daniel Yomtobian, CEO of Advertise.com, an ad-tech platform for brands.
To obtain these metrics, brands should also look to third-party firms rather than relying on a social media platform’s analytics or their agency partners.
“You’re essentially asking someone to score their own homework,” said Voda, adding that asking the agency that created a campaign to then measure its success is a “conflict of interest.”
Rethinking Return on Ad Spend
Beyond vanity metrics, the accuracy of industry-standard marketing metrics is also being reconsidered this year.
For example, brands spent years lauding the metric “customer lifetime value” (CLV or LTV). CLV is most commonly determined by multiplying a customer’s average order total by the average number of purchases in a year by average retention time in years. Marketing efforts with higher CLV are generally seen as successful.
But some marketers are questioning the formula to get to that number, which is grounded in revenue. Eric Best, CEO and co-founder of data and marketing platform SoundCommerce, said that as it stands, CLV doesn’t paint a complete picture and should also account for “more complicated profitability concerns” like cost of customer acquisition and delivery.
Similarly, “return on ad spend” (ROAS) — the revenue generated from a campaign divided by the cost of the advertising — is one Best is reconsidering at his firm, as it only measures the impact that an advertisement has on one single transaction and on revenue without taking into account the relationship a brand is developing with a consumer.
Getting Creative With First-Party Data
Data is also increasingly difficult to access. Global lawmakers continue to pass regulations that prioritise consumer privacy, such as GDPR in Europe or CCPA in California. Meanwhile, major tech companies are making it harder for marketers to track consumer activity online — Google is phasing out cookies by late 2023 and Apple is limiting how brands can track users through iOS apps.
The limitations, however, can provide an opportunity for brands to think creatively about how to collect consumer data.
Some brands, like Pacsun, are prioritising direct communication methods, like email marketing and loyalty programmes. Brands can also use other tools on their websites that offer a utility for customers when they share information.
One e-commerce plug-in called TrueFit, which works with companies like Kate Spade and Shopify, allows users to identify their favourite brands according to fit. By inputting information like age and style preferences, the user is promised a better-fitting product. Meanwhile, the collected data allows the brand to better understand what it is the customer is looking to purchase and market to them accordingly, Best said.
Ultimately, brands that rely less on individual metrics, taking a wider approach to measurement with the help of independent auditors, are best positioned to survive any changes that make it harder to find and retain customers.
“The industry talks a lot about… this idea that lifetime value is the new North Star of the DTC commerce industry… but it is often misconstrued as a revenue metric,” Best said. “In reality, if it’s instrumented right, it needs to account for… all of these things that are really much more complicated profitability concerns.”
Images and Article from Business of Fashion