Channel Performance

Evaluating Individual Channels

Channel performance analysis uses decomposition to understand which marketing channels drive the most value and how to optimize the mix.

Purpose: Assess individual channel effectiveness, compare performance, and identify optimization opportunities.

Key Performance Metrics

Total Contribution

From Decomposition:

Sum of channel contribution across all time periods

Example:
TV Total Contribution (12 months): $600,000

Interpretation: Total incremental value created by the channel

Average Contribution per Period

Calculate:

Average = Total Contribution / Number of Periods

Example:
TV: $600,000 / 52 weeks = $11,538/week average

Use: Compare consistent impact across channels

Contribution as % of Total

Calculate:

Channel % = Channel Contribution / Total Marketing Contribution

Example:
TV: $600K / $2M total marketing = 30%

Use: Understand channel mix and concentration

Channel Comparison Framework

Absolute Contribution

Rank by Total Impact:

Rank

Channel

Total Contribution

$600,000

Digital

$500,000

Radio

$200,000

$100,000

Insight: TV creates most absolute value

Efficiency (ROI)

Rank by Return per Dollar:

Rank

Channel

ROI

Digital

200%

100%

Radio

80%

25%

Insight: Digital is most efficient despite lower absolute contribution

Balancing Impact and Efficiency

2x2 Matrix:

High Contribution, High ROI → Invest More
  - TV, Digital (priority channels)

High Contribution, Low ROI → Optimize
  - Large spend, needs efficiency improvement

Low Contribution, High ROI → Scale Up
  - Test increasing investment

Low Contribution, Low ROI → Cut or Fix
  - Print (reassess or eliminate)

Performance Patterns

Consistent Performers

Characteristics:

Steady contribution over time
Reliable baseline impact
Low variability

Example:

Digital Search:
Every week contributes $8K-$12K
Average: $10K
Std Dev: $1K (low variance)

Strategic Value: Reliable, predictable, foundational

Campaign-Driven Channels

Characteristics:

Spiky contributions
High during campaigns
Lower in off-periods

Example:

TV:
Campaign weeks: $30K contribution
Non-campaign: $5K contribution
Highly variable

Strategic Value: Flexible, event-driven, high-impact bursts

Growing Channels

Characteristics:

Increasing trend over time
Improving efficiency
Rising contribution

Example:

Social Media:
Q1: $20K/month average
Q4: $40K/month average
100% growth

Strategic Value: Momentum, opportunity, scale potential

Declining Channels

Characteristics:

Decreasing contribution
Worsening efficiency
Potential saturation

Example:

Radio:
Q1: $25K/month
Q4: $15K/month
-40% decline

Strategic Action: Investigate, refresh strategy, or reduce

Channel-Specific Analysis

TV Performance

What to Evaluate:

Contribution during flight periods
Carryover effects (adstock)
Diminishing returns at high spend
Brand-building vs. direct response

Common Patterns:

Large absolute contribution
Strong carryover (high adstock)
Moderate ROI (100-150%)
Better for brand awareness

Digital Channel Performance

What to Evaluate:

Search vs. Social vs. Display
Prospecting vs. Retargeting effectiveness
Platform-specific performance
Attribution complexity

Common Patterns:

Higher ROI (150-300%)
Lower carryover (lower adstock)
More granular optimization
Direct response focused

Traditional Media (Radio, Print, OOH)

What to Evaluate:

Contribution relative to declining spend trends
Geographic/local effectiveness
Complementary effects with other channels
Audience reach and frequency

Common Patterns:

Moderate contribution
Declining efficiency in many markets
Strong local/regional impact
Older demographic reach

Performance Diagnostics

Why Is a Channel Underperforming?

Possible Reasons:

1. Insufficient Spend:

Channel has low contribution because spend is minimal
Solution: Test increasing investment

2. Poor Creative/Messaging:

High spend but low contribution
Solution: Refresh creative, test new messaging

3. Wrong Audience/Targeting:

Reaching wrong audience
Solution: Refine targeting, reconsider channel fit

4. Saturation:

Diminishing returns at current spend level
Solution: Reduce spend, optimize frequency

5. Wrong Timing:

Running campaigns at suboptimal times
Solution: Align with peak demand periods

Why Is a Channel Overperforming?

Possible Reasons:

1. Underutilized Opportunity:

High ROI suggests room to scale
Action: Increase investment carefully

2. Optimal Creative:

Strong messaging resonating
Action: Maintain, replicate across periods

3. Market Timing:

Channel particularly effective in current environment
Action: Capitalize while conditions favorable

4. Complementary Effects:

Benefits from other channel activity
Action: Coordinate campaigns across channels

Competitive Benchmarking

Compare Your Performance to Benchmarks:

Industry Standards (Example - E-commerce)

Channel

Typical ROI Range

Your Performance

150-300%

250% ✓ On target

Social

100-200%

180% ✓ Good

Display

80-150%

90% ✓ Acceptable

80-120%

60% ⚠️ Below average

Insight: TV underperforming vs. industry standards - investigate why

Internal Benchmarks

Compare to Your Historical Performance:

Digital Performance:
Last Year: 180% ROI
This Year: 220% ROI
Change: +22% improvement ✓

Insight: Digital strategy is improving over time

Channel Mix Optimization

Current Mix Analysis

Spend vs. Contribution:

Channel  | % of Spend | % of Contribution | Efficiency Gap
TV       | 40%        | 30%               | -10% (over-invested)
Digital  | 35%        | 45%               | +10% (under-invested)
Radio    | 25%        | 25%               | 0% (balanced)

Insight: Shift 10% from TV to Digital for better efficiency

Optimal Mix Scenario

Model Reallocation:

Proposed Change:
TV: $400K → $300K (-$100K)
Digital: $350K → $500K (+$150K)
Radio: $250K → $200K (-$50K)

Expected Impact:
TV contribution: -$100K (at 1.0x ROI)
Digital contribution: +$300K (at 2.0x ROI)
Radio contribution: -$50K (at 1.0x ROI)

Net Impact: +$150K incremental contribution

Testing New Mix

Phased Approach:

Start with 5-10% shift
Monitor performance for 2-3 months
Adjust based on results
Scale to full reallocation if successful

Performance Tracking

Week-over-Week Monitoring

Track Changes:

Week 10:
Digital contribution: $18K
Digital spend: $8K

Week 11:
Digital contribution: $22K (+22%)
Digital spend: $9K (+12.5%)

Analysis: Contribution grew faster than spend (good sign)

Month-over-Month Trends

Identify Patterns:

Q1 Average: TV = $45K/month
Q2 Average: TV = $52K/month (+15%)
Q3 Average: TV = $48K/month (-8%)
Q4 Average: TV = $60K/month (+25%)

Pattern: Strong Q4 seasonality, consistent baseline Q1-Q3

Campaign-Specific Performance

Isolate Campaign Impact:

Black Friday Campaign (TV):
Pre-campaign baseline: $40K/week
Campaign weeks: $90K/week
Lift: +$50K/week
Duration: 3 weeks
Total incremental: $150K

Campaign spend: $100K
Campaign ROI: 50%

Channel Portfolio Strategy

Core vs. Opportunistic

Core Channels (Always On):

Consistent performers
Reliable ROI
Foundation of strategy
Example: Search, Email

Opportunistic Channels (Tactical):

Event-driven
High impact when used
Not continuous
Example: TV campaigns, Sponsorships

Risk Diversification

Balanced Portfolio:

60% in proven channels (TV, Digital Search)
30% in growth channels (Social, Video)
10% in test channels (New platforms, Podcasts)

Concentrated Portfolio (Higher Risk):

80% in single channel (Digital)
20% in secondary channels

Risk: Over-dependent on one channel

Action Planning by Performance Tier

Tier 1: High Performers (ROI > 150%)

Actions:

Increase investment carefully
Test scaling incrementally
Maintain creative quality
Monitor for saturation

Tier 2: Good Performers (ROI 100-150%)

Actions:

Maintain current levels
Optimize within channel
Test efficiency improvements
Stable backbone of mix

Tier 3: Underperformers (ROI 50-100%)

Actions:

Investigate root causes
Test optimization strategies
Consider reducing investment
Set improvement timeline

Tier 4: Poor Performers (ROI < 50%)

Actions:

Strongly consider cutting
Run last-chance optimization test
Reallocate budget to better channels
Exit gracefully if no improvement

Channel Recommendations Template

For Each Channel:

Performance Summary:

Total contribution
ROI
Trend (growing/stable/declining)

Key Insights:

Strengths
Weaknesses
Opportunities

Recommendations:

Specific actions
Investment level changes
Optimization strategies

Expected Impact:

Quantified improvement
Timeline
Success metrics

Example:

Channel: Digital Search

Performance:
- Contribution: $500K (25% of total)
- ROI: 200% (highest in portfolio)
- Trend: Growing +15% YoY

Insights:
+ Consistently high ROI
+ Growing contribution
- May be reaching saturation at current spend

Recommendations:
1. Increase budget by $100K (+20%)
2. Test new keyword categories
3. Improve landing page conversion

Expected Impact:
- Additional $150K contribution
- Maintain ROI above 180%
- Implementation: Q3 2024

Summary

Key Principles:

Measure What Matters:

Total contribution
ROI
Trends over time
Consistency vs. variability

Compare Meaningfully:

Against other channels
Against benchmarks
Against historical performance

Make Decisions:

Invest more in high performers
Optimize or cut underperformers
Test and learn continuously

Balance Portfolio:

Efficiency vs. absolute impact
Risk vs. return
Short-term vs. long-term

Next Steps:

Analyze your channel performance
Identify top 3 opportunities
Develop action plans
Monitor and iterate

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Last updated 26 days ago