The Investment Mindset in Marketing: 

Why Testing Frequently Pays Off in Marketing

Testing frequently in marketing is not just a best practice; it's a strategic imperative. By embracing an investment mindset and consistently refining your marketing strategies through regular testing, you gain a deeper understanding of how media spend drives business growth. This article explores why testing frequently pays off, providing a roadmap for Marketing and Data leaders in direct-to-consumer companies.

1. The Dynamic Nature of Marketing

Marketing is inherently dynamic, with numerous external factors influencing the effectiveness of your strategies:

• Competitive Landscape: Changes in competitors' strategies can alter the performance of your channels.
• Consumer Behavior: Shifts in consumer preferences require continuous adaptation of messaging and targeting.
• Seasonality: Different times of the year bring varying levels of responsiveness to specific channels and tactics.
  
  

Frequent Testing Insight:

• Testing frequently allows you to adapt quickly to these changes, ensuring your marketing efforts remain effective.
• By understanding the impact of seasonality or competitor behavior on your campaigns, you can adjust your strategies in real time.

2. Testing Informs Smarter Investment Decisions

Marketers often struggle with the question, "Where should I allocate my next marketing dollar?" Testing provides a clear answer by uncovering the channels and campaigns with the highest incremental impact.

Investment Example:

• Geo-Testing Scale Test: By doubling the budget in selected geographic regions and comparing the results to control regions, you can identify the exact level of spend that maximizes ROI.
  
  

Frequent Testing Insight:

• Regularly conducting tests like scale and holdout tests ensures that you always have up-to-date data to make informed decisions on media investments.
• With tools like Stella, you can automate test setups and track results across multiple regions simultaneously.

3. Mitigating Risks through Continuous Learning

Marketing investments inherently carry risks, especially when scaling new channels or doubling down on existing ones. Testing frequently provides an opportunity to minimize these risks by learning continuously.

Risk Mitigation Example:

• New Channel Testing: Before heavily investing in a new channel like Connected TV, run a geo-based incrementality test to measure the incremental lift over a holdout group.
  
  

Frequent Testing Insight:

• Regularly test new channels or tactics with small budgets to gauge potential returns before making significant investments.
• By frequently validating the performance of current campaigns, you can identify early signs of diminishing returns and adjust spending accordingly.

4. Improving Portfolio Mix with Incremental ROI (iROI)

The concept of Incremental ROI (iROI) focuses on the true return on investment after accounting for organic sales. Testing frequently allows marketers to fine-tune their portfolio mix based on the incremental impact of each channel.

Portfolio Optimization Example:

• Non-Brand Search vs. Display Ads: Conduct a scale test to see whether doubling non-brand search spend delivers higher iROI than increasing display ads.
  
  

Frequent Testing Insight:

• Use frequent testing to optimize your media mix based on which channels deliver the highest incremental value.
• With regular tests, you can ensure that your portfolio remains aligned with changing market dynamics.

5. The Investment Mindset: Seeing Testing as a Long-Term Asset

Testing in marketing is an investment that pays returns. Instead of viewing the potential losses from a holdout test as a cost, see it as an investment that can uncover inefficiencies and reveal opportunities for optimization.

The Bigger Picture Example:

• Holdout Test Investment: Losing $50,000 in potential sales during a holdout test might seem daunting. However, if the test reveals inefficiencies that save $200,000 in annual media spend, the return far outweighs the initial loss.
  
  

Frequent Testing Insight:

• Test frequently to build a long-term repository of insights that consistently refine your strategies and improve your overall marketing ROI.
• Investing in tools like Stella can streamline this process, ensuring that you get maximum value from your testing investments.

Conclusion: Adopting the Investment Mindset

In an increasingly complex marketing landscape, frequent testing is no longer optional; it's a strategic imperative. By adopting an investment mindset, marketers can:

• Adapt Quickly: Stay agile in the face of changing market dynamics.
• Invest Smartly: Allocate budgets to channels with proven incremental impact.
• Minimize Risks: Continuously learn and refine strategies to mitigate risks.
• Optimize Portfolio: Ensure media mix delivers the highest incremental ROI.
  
  

Ready to invest in your marketing strategy with frequent incrementality testing? Schedule a demo with Stella today and discover how you can refine your marketing strategies through strategic testing.