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Managers must understand their marketing efforts as precisely as possible to determine how much to spend on each marketing channel. If paid search advertising is the most effective way of getting a firm’s message in front of the right customer, why would the company spend more on print advertising? If sales calls are profitable only up to a point, the marketing manager must know at which point the calls start costing his or her company money instead of making it.

The only way to measure the effects of marketing efforts on profitability is through the best-guess relationships revealed through marketing analytics. By using statistical analysis techniques, firms can use past customer behaviors to predict how customers will react to different marketing channels; managers can then optimize spending on each channel.

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