AKA You need to know how much a customer is worth in order to determine how much to spend to acquire them…… As mentioned by both Jim Novo and Seth Godin in there posts regarding the lifetime value of a customer, you need to know how much ca…

Paid search you can (hopefully) invoke geo-controls and get close.

Display you can use geo-control and / or swap out non-profit ads as control – wish Google would allow this on PPC ’cause it would clear up some questions on paid search incrementality.

Leaving organic search…which I would consider more operational and not really a marketing issue. It just makes sense to design for findability, and is more appropriately judged on volume for payback, I think. In my view, organic demand is the “base” and everything else should be incremental to this organic demand.

So yea, it can get complex, but you don’t need a marketing mix or other sophisticated model to get an idea of where the incremental lies. However, it does take some coporate “stamina” to not walk all over other people’s controls and so forth.

Which leads back to the whole culture issue, and needing a desire to level the playing field, so everyone competes for resources based on universal success measurement.

Which is why I suggested using control groups (or control geo-markets if you can’t identify the population) and a scoring system to execute this plan; the effort has to be measured correctly.

Here is another link to control groups info:

http://blog.jimnovo.com/control-group-series/

and the scoring system:

http://blog.jimnovo.com/2007/04/25/engagement-customers/

I’ve never understood why people seem to think using control groups is “hard”; the execution is simply not that difficult. So, any problems one might have are probably more political / cultural.

The CFO can drive a move to universal success measurement like this simply by insisting budget releases be tied to universal measurement.

Analysts too can drive this change though the process will be slower. Find the people who have enough guts to be measured as the CFO would measure them and run some tests to hone the process, working the use of controls up gradually into major campaigns. Then start laying the results of controlled tests on the table. This is the approach a Linchpin would take.

Trust me, given a choice between releasing additional budget to areas with controlled test results versus any other proofs, the CFO will pick the people using the control groups every time.

Which then begs the question from the CFO: why isn’t everyone else using control groups? And that’s how you get to universal success measurement.

This post was mentioned on Twitter by contactjr: Justify your #marketing budget based on expected customer value over a relatistic period http://icio.us/jop15h…