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3 Moves Ecommerce CMOs Must Make

Written by: Ben Tregoe, SVP Business Development

Despite the headlines about the CMO role being in peril, it’s actually a great time to lead marketing at an ecommerce company. The old ways of advertising are getting thrown out and the successful CMOs and companies will be the ones that leverage the new ways faster than their competitors.

I don’t presume to know everything 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:

#1 Understand and measure true ad effectiveness

The point of ecommerce marketing is to turn ad dollars into sales. So the billion dollar question for a CMO is: How effective am I at doing that?

Too often, the marketing leaders we talk to 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 (a) all publishers support impression tracking across all ads and (b) identity is perfected across all channels and devices. Even then attribution would remain a model and not a measurement of ground truth.

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.

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.

#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.

Related post: Why More Brands Are Managing Advertising Themselves

The only way to get supply and fee transparency is on-going 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 that provide the best transparency and insights about ad effectiveness.

#3 Upgrade analytics talent

A CMO can’t achieve #1 (measure incrementality) and #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 that ask vendors the hard questions and hold them accountable.

If a CMO can orchestrate the three actions above, he or she will be on their way to creating a competitive advantage in ad buying effectiveness and setting themselves up to win in this exciting new phase of ecommerce.

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