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Marketing Effectiveness vs. Efficiency: Which is More Important?
by Heather Timmerman Moller
Marketing effectiveness versus efficiency is an age-old argument that tends to circle back around on itself. There isn't a clear answer to the question of marketing effectiveness vs. efficiency mainly because they are so interrelated and interdependent.
Defining Marketing Effectiveness vs. Marketing Efficiency
The Relationship Between Effectiveness and Efficiency
An effective marketing strategy is one that maximizes spend to achieve ROI. One of the main goals of marketing effectiveness is lowering cost per acquisition. But every way you can do that has to do with increasing the efficiency of your marketing.
Before you optimize the efficiency of your marketing strategy, it's important to have validation that the strategy is working (or effective). But a strategy that achieves results in a manner that is neither cost- nor time-efficient won’t sustain. You can’t have one without the other if you want to succeed.
Which should I focus on right now?
The best way to determine if you need to focus more on effectiveness or efficiency right now is to determine which of the two isn’t working as well as it could be.
To do that, you have to measure both marketing effectiveness and efficiency as accurately as possible. Here’s how to do that:
Measuring Marketing Effectiveness
There are a wide variety of metrics you can measure to gauge marketing effectiveness. These are the two we recommend paying special attention to, and how to ensure you’re measuring them accurately:
Sales growth and ROI
Return on investment is the number of goal completions (leads generated, sales closed, etc.) your marketing campaign generated vs. how much money went into the campaign.
Funnel segment effectiveness
Marketing campaigns have different segments, depending on their objectives: awareness, consideration, and conversion. These segments are funnel-shaped because they drive in toward final close.
Measure the comparative performance of each marketing segment to learn where you’re losing the most prospects, and therefore which segments of your campaign are most and least effective.
Measuring Marketing Efficiency
There are a few particularly important derived calculations to look at when determining marketing efficiency specifically:
Cost per lead (CPL)
In simple terms, the lower the cost per lead, the more efficient the campaign.
Funnel segment efficiency
Like funnel effectiveness, you calculate funnel efficiency by analyzing impressions, click-through rate, and conversion rate. However, to determine efficiency, you add one more factor: time.
Marketing Effectiveness vs. Efficiency: Where to Start
If your sales growth and engagement rates are low, focus on improving your campaign’s effectiveness by considering how you can create more impact with your content and messaging.
If your cost per lead and time in funnel are high, focus on improving your campaign’s efficiency by considering how you can motivate your prospects to commit faster, or how you can use automation tools to reduce human effort.
Whatever you do, never sacrifice effectiveness for efficiency or vice versa. If you want your marketing to be truly successful, you need to invest in both.
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