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With so many options available when choosing how to allocate marketing budgets, dealers are increasingly finding themselves conflicted over what to use. Every dealer wants to know whether their marketing is producing results – whether that is in sales or service. And all vendors will attempt to show ROI for their services. Furthermore, how is a dealer to know whether the spike in sales was a direct result of the marketing or if those sales would have happened regardless?
Steven Levitt & Stephen Dubner, bestselling authors of Freakonomics and Superfreakonomics, explored this topic in their recently published book, “Think Like A Freak.” These two brilliant economists were hired by a multinational retailer who was spending hundreds of millions of dollars a year in primarily print and television advertising. The client claimed that TV was more effective since increases in sales correlated more with the airing of the ads. Because of the higher costs of television media, however, the company limited its buys to a few times per year: Black Friday, Christmas and Father’s Day. “In other words, the company spent millions of dollars to entice people to go shopping at precisely the same time that millions of people were about to go shopping anyway,” wrote the authors. When analyzing the effectiveness of its print advertising, the company had “bought newspaper inserts every single Sunday for the past twenty years in 250 markets across the United States.” The company claimed that it had no method to evaluate the effectiveness of the print ads. The results of these evaluations led the company executives to the conclusion that television advertising was more effective than print.
The authors proposed evaluating the effectiveness of the two media through the use of control groups. This would entail temporarily stopping the ads in multiple markets, comparing the results of the control group with the markets in which the media remained, then analyzing the results. The executives were hesitant to do this for fear of failure. Coincidentally, however, in one of their markets, an intern forgot to make a media buy. This resulted in the newspaper ads in a major metropolitan area going dark for the entire summer. This natural control group allowed the economists to compare the results of that market to the other markets that did run advertising during that time. According to the authors, sales in the market that did not run ads were not affected at all.
The idea of implementing control groups is not a new one. In fact, scientists have used them for centuries to evaluate the results of experiments. However, not many marketing agencies have enough confidence in their products to suggest and/or implement this as a method to prove the effectiveness of their services. It’s one thing to share results controlled by variables set by the marketing agency, and quite another to risk the potential loss of an account by using a control group to prove effectiveness.
Great marketers with confidence in their services will not only assist the dealer in implementing this type of experiment, but will also embrace it. There’s no more powerful proof of ROI than when a vendor can show a dealer a side-by-side comparison of those who were marketed to versus those who were not. The most common argument a dealer will have with a marketing vendor is that the sales, traffic or service revenue would have happened regardless of the marketing.
Dealers who really want to know how effective their marketing campaigns are should use control groups throughout all of their marketing channels. The results will prove, beyond a shadow of a doubt, whether a specific campaign was effective. The next time you question whether your vendor partner’s service is producing results, ask them to prove it using a control group experiment.