From selling your own advertising and custom content, to partnering with other brands for marketing campaigns/events, to managing branding resources and integrating with external clients – Finance has an important role in the commercial aspects of a successful “Brand Partnerships” operation.
As in the earlier parts of this series, we’ll continue to explore a hypothetical setup of a new line of business within a company intending to leverage existing internal resources, where possible, to sell Brand Partnerships to external customers. In this post, we’ll discuss a framework for evaluating the success of a Brand Partnerships business – metrics that demonstrate customer success and internal profitability:
Acquisition -> Behavior -> Outcome
Acquire an audience, motivate them to take a behavior toward the brand or product, and eventually reach a business outcome. (The outcome could be a purchase – or an ad view if you’re a broadcaster, a donation if you’re a non-profit.) Often the basic metric used in practice for audience acquisition is “Views” or “Impressions.” However, Acquisition metrics stop short of informing us about motivation for audience Behavior that brings them tangibly closer to making a purchase (e.g., clicking through to the customer’s website) or a subsequent Outcome. Generally, each successive level of the framework is more difficult to obtain data and to assess.
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1. Metrics to Demonstrate Brand Partnership Campaign Success
Watch Time (Acquisition)
Goal: Watch Time captures the depth of exposure for a piece of content or campaign. (See the end of this section for event-specific metrics.)
Pros: By measuring the amount of time people are willing to spend, Watch Time provides more context than a simple “View,” which may be due a cursory click and lasted a few seconds or less.
Cons: Since Watch Time is very general, it glosses over the length of the content and watch time of each viewer. Consider the below example:
- 100 viewers -> 100 seconds watched -> 1 second per viewer
- 30 viewers -> 150 seconds watched -> 5 seconds per viewer
- 10 viewers -> 100 seconds watched -> 10 seconds per viewer
If you’re only considering:
- “Viewers”, (A) looks best
- “Watch Time”, (B) looks best
- “Watch Time/Viewer”, (C) looks best
The framework can help decide which metric to favor, by evaluating which of these viewership metrics has the strongest push toward a Behavior or Outcome. (Do higher Views, Watch Time, or Watch Time/Viewer drive the most click throughs?)
Additionally, the length of the video needs to be considered. For example, when comparing a 60-second video (D) against a 15-second one (E), you might have:
- 10 viewers -> 150 seconds watched -> 15 seconds per viewer
- 10 viewers -> 140 seconds watched -> 14 seconds per viewer
The longer video (D) had more Watch Time AND Watch Time/Viewer. However, the shorter video (E) had a high Completion Rate (people viewing 90%+ of the video), indicating better engagement for (E). Again, the judgment call between which metric to favor could be guided by the next level of the framework.
Finance: Extrapolate from Watch Time to estimate the equivalent value if sourced externally – what would the same amount of audience attention have cost via TV advertising? Digital Ads? OOH?
New Visitors (Acquisition)
Goal: This metric helps you understand how many new visitors (as a raw number or a %) were reached.
Pros: It can capture increased reach provided by a certain type of content, channel, etc. You can pair it with “Loyalty” (i.e., how many times new visitors are likely to return) to estimate long-term impact of bringing in new visitors vs. retaining existing ones.
Cons: While easy to use for some channels (e.g., your own website, YouTube, etc.), it may not be available or easily trackable on others (e.g., Instagram, Twitter, broadcast TV, OOH).
Finance: Using New Visitors and Loyalty together, calculate the Lifetime marketing value compared to the equivalent cost of the attention via TV advertising, Digital ads, etc.
Click-Thru Rate (Behavior)
Goal: Click-Thru Rate lets you find how frequently those who come across some element of the campaign (e.g., video, digital ad, blog post) and click on a link (taking them to the customer’s website).
Pros: Easy to measure and compare for traffic generation via a Brand Partnership campaign.
Cons: Doesn’t provide the intent of the click (i.e., browse vs. buy). You can get a better gauge of intent via “Time Spent” or “Path Length” once on the website (i.e., duration or how many pages visited, respectively) and “Bounce Rate” (i.e., saw only the landing page before leaving).
Finance: Extrapolate from Click-Thru Rate to Revenue (and Gross Margin) by using conversion rate and average revenue per sale (see Conversion Rate below).
Amplification Rate (Behavior)
Goal: Amplification Rate measures viewer shares of your content through their network, preferably measured as shares-per-viewer.
Pros: Amplification Rate assesses reach outside of your immediate network (i.e., reaching your follower’s followers). A View or Like happens with nearly no effort, but Amplification Rate behavior (e.g., Share, Retweet) takes some time and effort, indicating stronger engagement and motivation to communicate with their network.
Cons: Amplification Rate is difficult to track outside of your social media accounts, such as sharing via email or when it’s posted elsewhere indirectly (e.g., blogs, comments, LinkedIn). Indirect Amplification may be identified by the source of web traffic. Another complication is the sentiment of the share – usually assumed to be positive. Confirm this by measuring “Applause Rate” (likes per viewer) or using Sentiment Analysis (to interpret the favorability of the language used).
Finance: Calculate the equivalent value of the Amplification by figuring the cost of reaching these out-of-network viewers via paid advertising.
Email Signups / Registered Users / Subscribers (Behavior)
Goal: These metrics measure the number of people joining your immediate network.
Pros: They’re a direct assessment of people’s interest in the brand, as they joined voluntarily, presumably prompted by content they viewed. Additionally, these people are now easy to reach at an extremely low cost (i.e., next-to-nothing, a benefit that is often overlooked) regarding new products, content, and so on.
Cons: To get a complete understanding of the value of a subscriber, you need to know their effective tenure. How long does a subscriber stay connected before tuning out or unsubscribing? This can be measured, but it may take considerable effort to accurately judge the average subscriber “lifetime.”
Finance: Calculate the subscribers’ lifetime value by using Click-Thru Rate (discussed above) and average revenue per Click-Thru over the expected lifetime.
Lead Generation Rate (Behavior/Outcome)
Goal: Particularly for B2B enterprises, this metric measures the frequency that a legitimate lead emerges from a piece of content or campaign.
Pros: It signifies direct contact with potential customers. (Getting potential retail customers into a store likely equals “Behavior.” Generating B2B leads that are typically converted at high rates likely equals “Outcome.”)
Cons: Tracking this metric will take manual work. Unless the initial contact is over the web or social media, there’s no downloadable report. A retailer probably needs surveys; B2B can use their customer- or lead-tracking CRM.
Finance: Estimate the business impact from incremental Lead Generation by applying the average “Close Rate” (i.e., % of Leads Generated that turn into customers) along with the average Revenue (and Gross Margin) per customer to figure the value from each lead.
Conversion Rate (Outcome)
Goal: This metric matches up sales with campaign elements – calculated as % of Viewers (or Visitors) that made a purchase.
Pros: Conversion Rate can draw a straight line from a piece of content to a sale.
Cons: This is generally easy to use for eCommerce, but it’s not as straightforward to measure for other businesses. Since not all marketing is meant to generate conversions (e.g., a movie preview), citing a low/zero Conversion Rate may be incongruous with intent. Similarly, relying on Last-Click Attribution (i.e., giving 100% credit to the “last” click prior to the conversion) downplays any prior marketing that “primed the pump.” A more nuanced multi-channel attribution analysis (such as Time Decay or Position-Based modelling) is needed to interpret the value across your full program.
Finance: Conversion Rate can be further quantified by adding in the revenue from the sale, or better yet, use the profit margin.
Addendum: Event-Specific Metrics
- Attendees – how many people showed up
- Impressions – how many times event attendees encountered promotional materials (banners, videos, product samples, etc.)
- Signups Generated – as above, bringing people into your network of email/users/subscribers
- Amplification – particularly helpful since event attendees had to take additional effort to spread the message about your event
- Conversions – sales onsite of products (hey, why just market at an event when you can sell your product right there?) and/or merchandise
- Ticket Sales – if the event generates its own revenue, then any shared with Brand Partners would be a business outcome
One Last Note About Campaign Metrics
Now, go demonstrate to your customers and potential customers the value generated by your Brand Partnership campaigns!
Alert: not all companies are going to be familiar with the most efficient metrics. You might have to start with metrics where they’re comfortable, such as Views or Impressions. But with some gentle guidance, they will follow along and agree with using more advanced metrics. Then, use information from these measures to adjust your process to provide even more effective Brand Partnership campaigns.
2. Metrics for Internal Brand Partnership Business Evaluation
If the Brand Partnership business can deliver the above value to external customers, then internal metrics will trend in the positive direction, ultimately driving profitability. Each of these can be translated by the Finance team into bottom-line impact.
For existing customers, offering a broader package should increase the revenue brought in per account, on average. Perhaps more importantly, as existing customers see the effectiveness of the campaigns per the metrics above, they elect to commit more resources to the Brand Partnership campaigns.
Similar to growth, if your Brand Partnership customers are seeing the lift in value, they will be more likely to repeat as customers, extending their tenure instead of taking their business elsewhere.
Finance: Calculate the additional revenue, gross margin, and profit margin from Customer Growth. Additionally, there is cost efficiency if customers have longer tenure due to less business development, which can be estimated.
Inventory Usage %
A likely purpose of Brand Partnerships is using existing digital inventory by selling it externally. Especially regarding available digital ad space, where daily inventory is typically stable, the percentage of inventory that you can sell through to partners is a key gauge to monitor progress.
Finance: Estimate the margin lift from selling a higher portion of existing available inventory (costs are fixed, revenue is increased). Pricing analysis can find the right balance – between higher price vs. inventory usage – to maximize revenue.
Gross Margin %
Nothing revolutionary here, but ultimately the Brand Partnership business unit’s Gross Margin (and even better, the Contribution Margin and Profitability Margin) needs to reach performance goals.
Finance: Compare the Gross Margin % across business units and/or against external benchmarks. Cost allocations may greatly affect this result, so consider a “before cost allocation” and “after cost allocation” comparison.
Armed with these metrics, the Finance team can evaluate the performance of the Brand Partnership business for its customers – boosting the sales pitch and customer satisfaction – and for its internal profitability. While it takes more effort, the closer a metric can get to measuring a true business outcome, the stronger that analysis will be for driving action within the business. Experiment with segmenting the analyses to compare different content types, distribution channels, and other factors to make the Brand Partnership business as effective and efficient as possible.
In this series, we’ve discussed how Finance can effectively organize around an emerging Brand Partnerships business, including operations, strategy, and evaluation. In each stage, there’s significant value to be added by the Finance team, with some main takeaways:
- Finance can create value at every step of the Brand Partnership process, but maintaining the connection between Finance and the Brand Partnership business throughout is vital for effective information.
- Capitalizing on internal strengths is key to creating competitive advantage for a Brand Partnerships business, and Finance should help identify and validate this aspect of the strategy.
- Advanced metrics, enhanced by Finance, focus toward business outcomes to ensure the Brand Partnerships business is providing performance for customers and driving internal profitability.
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Categorized in: Business Advisory, Financial Planning & Analysis