Implementing Closed-Loop Activation to Achieve Greater Marketing ROI

As someone who made his career in attribution and analytics I can tell you that no one really cares about MTA, MMM, MMM+MTA and/or Unified Models.

What everyone cares about is how to use the RESULTS from these methodologies to optimize marketing and gain true ROI as a result.

Attribution is a means to an end. The end goal is to be able to measure the effectiveness of marketing and then use that to activate marketing campaigns across offline and online channels, while considering all factors that are impacting a consumer during the purchase cycle. This activation can be done in many ways, but the most effective way is what we like to call “closed-loop activation”.

Closed-loop activation is a term that is used to describe the automation of optimizing marketing spend:

 

Closing the loop is important because it helps marketers to quickly understand what is working and what isn’t and take actions accordingly. When done automatically and at scale, this can be used as a competitive advantage that helps business grow fast leveraging technology instead of manual processes. Think about other fields such as logistics: Amazon managed to become one of the biggest retailers in the world by having a closed-loop inventory optimization mechanism supported by technology.

Analytics that stop at measuring or even attributing value to marketing but fall short on optimization and closing the loop will not be actionable nor fast, causing more work on the marketer side to infer the insights, run the campaigns, synchronize between different systems and finally do that at scale in real time.  One of the key ingredients in speeding up the activation loop is incorporating audience management with advanced analytics.  For example, almost all competitors in the multi-touch attribution space incorporate a DMP or have been acquired by a company with a DMP.

We also often forget that while media accounts for the lion share of dollars in advertising, creative messaging accounts for most of the effectiveness in driving consumer behavior changes.  Smart advanced analytics systems must help advertisers close the loop on creative optimization and personalization.

Closed-loop optimization does not mean “passing back attribution value to 3rd party”. If you want a closed-loop system that works at scale you have to have:

  • All the components within the system (measure, attribute AND optimize)
  • Always-on system that decides based on the most current data
  • Full transparency into the reasons behind decisions that were taken by the system
  • Ability to remote-control programmatic buying systems

When passing back the results to a 3rd party you fail to achieve the transparency, in fact you don’t even know what decisions are made and why.

Some pitfalls of simply passing back attribution values to a 3rd party:

  • No intelligence on availability of inventory.
  • Data loss due to poor user matching percentages between platforms.
  • Confusion for users of the 3rd party tools as to why specific optimizations are being recommended.
  • Manual effort required to implement recommendations from the attribution platform.

Although passing back the attribution results to 3rd parties is a common way to “close the loop” today, we believe that the future is having ONE system that closes the loop for you. A simple example to such a capability is what Convertro does today with ONE by AOL: Video; budgets are shifted programmatically between different tactics based on the ROI goal and using the attribution results, as well as other factors such as inventory availability, pacing and more.

However marketers decide to implement closed-loop activation, it is important to think about the advantages to their scale, time-to-decision and transparency of decisions made by the system.