In the earlier discussion of what you are paying for we introduced the split between brand marketing and sales activation. Brand marketing builds brand equity, which sustains baseline sales, while sales activation drives attributed sales – quickly. Together, they are your total sales.
The process that separates sales credited to sales activation from the baseline that would have occurred anyway is called attribution, and it is approached through a combination of individual tracking of sales to touchpoints, statistical models linking spend and outcomes, and customer feedback on how they discovered you.
Knowing attributed sales, you can access effectiveness of your sales activation with two metrics:
- Incremental cost of sale, defined as activation spend divided by attributed sales.
- Return on marketing spend, defined as profit from attributed sales over sales activation spend.
Assessing effectiveness of brand marketing is slightly trickier, with these two approaches:
- Track changes in your baseline over longer periods (for example, year to year) and credit brand marketing with the growth or erosion.
- Use leading indicators like awareness, sentiment, or share of search and track how brand marketing influences them over time. These indicators can be strong signals of future sales, but their relevance must be validated for your business and market.
In short, sales activation is best measured through incremental cost of sale and return on spend, while brand marketing shows up in the strength of your baseline and in leading indicators of demand. Both sides need attention: one tells you how efficiently today’s spend creates sales, the other tells you whether tomorrow’s sales will still be there.
These are not just theoretical concept - see how they apply in practice when you adjust the budget.