Interest in econometrics jumps as marketers anticipate the demise of cookies

In a year where many marketers expected support for third-party (3P) cookies to finally be phased out once and for all, marketers’ interest in econometrics has risen significantly from 2023 levels, according to Marketing Week’s annual ‘The Language of Effectiveness’ report, supported by Kantar.

Attribution and measurement have always been thorny problems in marketing, as teams work to understand whether their campaigns are performing – and prove that performance to other parts of the business.

This has only become more challenging with the loss of visibility brought about by privacy changes like Apple’s App Tracking Transparency (ATT) and the gradual phasing-out of third-party (3P) cookies, currently slated for deprecation in Chrome in early 2025 after various issues with Google’s Privacy Sandbox meant the deadline was pushed back once again to 2025.

Econometrics, or media mix modelling (MMM), is a set of statistical analysis techniques that set out to assess the impact of a variety of different marketing activities. It allows marketers to understand the sales impact of, for example, TV ad spend, once all other variables are taken into account. Though this sort of analysis may be expensive and require data science expertise, it gives a broader proof of success than does optimising at a channel level.

Marketing Week and Kantar’s annual report is a valuable snapshot of the approach that marketers and their organisations’ senior leadership are taking to marketing effectiveness, including how much it is prioritised and how it is measured.

In 2023, close to a fifth of marketers (18.8%) reported that they were neither using nor considering econometrics to measure campaign outcomes – but this has fallen to just 6% in 2024. Meanwhile, the percentage of marketers who are not using, but considering, econometrics has risen from 27.4% in 2023 to 44.7% in 2024 – an increase of 17.3 percentage points.

The proportion of marketers putting econometrics into practice to measure campaign outcomes has also risen by 5 percentage points, from 40.9% to 45.9%.

Source: Marketing Week, ‘The Language of Effectiveness 2024‘

Squeezed budgets may put expensive measurement options out of reach for marketers

Notably, and despite the undeniable rise in interest in econometrics reflected by the survey, it’s still true that less than half of marketers are actually using econometrics to measure campaign outcomes. With that said, the percentage of marketers who are considering econometrics is almost as high, meaning that summed together, more than 90% of marketers are either considering or using this measurement approach – up from 68% in 2023.

On the fact that econometrics is still only seeing use by a minority of marketers, report author Michaela Jefferson observes that, “Budgets play a big part in this – econometrics can be expensive and is most useful for brands spending millions of pounds to reach large audiences.”

The Language of Effectiveness report also sheds light on the extent to which marketing budgets have been squeezed in 2024: close to a third (31.6%) of respondents reported that their business cut its overall marketing budget this year, a figure that has risen from 21.6% in 2023. This could explain why such a high percentage of marketing teams are considering econometrics but not yet taking the plunge: they may see the potential benefit, but want to be sure that it will prove worthwhile.

Jessica Myers, Chief Customer Officer at The Very Group, tells Marketing Week that alternative attribution models based on first-party data are becoming “really important” as third-party cookies are phased out.

With that said, “there is no one silver bullet for measurement” for The Very Group: “We use various inputs to draw conclusions – including econometrics, attribution, MMM and our own internal models. We use a number of those things together to paint a [complete] picture and share results.”

The quest to prove effectiveness from both long and short

The report reflects a particular drop in budget put towards long-term marketing, which was more likely to have been cut than short-term investment: 27.3% of marketers reported a drop in long-term investment, versus 23.1% who reported a drop in short-term investment.

Short-term spend was also more likely to have increased than long, with 42.8% reporting a rise in short-term spend versus long-term spend (40.2%). Amid tight budgets and a challenging economic climate, it’s not surprising that businesses are looking for quick returns; but as well-studied marketers know, longer term investment and brand-building are just as important to overall success.

Pete Markey, Chief Marketing Officer at Boots UK, points out that brand advertising also drives a short-term performance benefit. “Things like paid search always do better when we’re advertising on TV. Brand spend is a tide that lifts all boats.”

He highlights econometrics in particular as a way to measure how these channels are working in combination: “Econometrics done well is, for me, the best way to show your base level of brand health and what underpins it.”

Econometrics done well is … the best way to show your base level of brand health and what underpins it.

Pete Markey, CMO, Boots UK

Allie Lawson, Marketing Director for Recruitment Software at B2B software company The Access Group, highlights that the key thing when aligning on a measurement framework as an organisation is to make sure the rationale and advantages are understood by everyone. “I’ve … seen business leaders struggle with believing the numbers given by things like econometrics, and I don’t think enough is done within organisations to ensure all leaders understand the chosen measurement framework and why it exists.

“Measurement frameworks need to be agreed upon at the top and everyone aligned with them for them to be truly embedded and appreciated within an organisation. They need to be a common language, like how NPS is often an understood measurement for customer satisfaction.”