Marketing Measurement:Marketers are being urged now more than ever to prove their worth. Senior management is demanding that all marketing expenditures have a clear objective, and that these objectives be quantified and measured. Few believe that the ROI of every marketing dollar can be isolated; however, there is a broad consensus that marketing is not doing enough to demonstrate its value.
The demand for accountability in marketing measurement has given rise to an increased focus on marketing measurement data, and the use of marketing data to demonstrate the value of particular activities, such as advertising campaigns. Online marketing, CRM and SFA systems, as well as the traditionally data-centric approach of direct marketers, mean that more data than ever before is available to tell corporations who they are talking to and how consumers are responding.
In the context of the wealth of available marketing data, new acronyms such as MPM (Marketing Performance Measurement) are being used to articulate the need for corporations to embrace marketing measurement as a defined and rigorous discipline.
This paper discusses both the benefits and the pitfalls of the increased focus on marketing measurement, and describes how a comprehensive Marketing Intelligence strategy can be used to report on the full spectrum of marketing activities. Particular emphasis is placed on the value of measuring more than just direct response marketing, and on methodologies for organizing marketing data so that the influence of brand building and other indirect forms of marketing can be fully understood and optimized.
At some level, marketing will always fail to be accountable, because at some level it is about things that cannot be measured. The specific reasons, for example, why an individual consumer chooses to believe in a particular brand might have a lot to do with a long chain of cause and effect, very little of which can be quantified. It would be false to propose that all of the uncertainties will one day be removed.
Despite these uncertainties, though, and particularly at the most senior level, accountability is demanded of marketers now more than ever before. The proliferation of ways to collect and manage customer data is a large part of this demand, in that the expectation now is that companies must use this data to deliver better returns on each marketing dollar spent. This white paper addresses the topic of Marketing Intelligence (MI), and Marketing Measurement at the extent to which a properly deployed MI strategy can transform both the information available to marketers about the effectiveness of their spend, and their ability to better direct this spend to enhance ROI.
As this paper illustrates, marketers need to focus on three core components in their approach to Marketing Intelligence: Strategy, technology and accountability. Giving appropriate attention and resources to each of these components is ultimately what allows marketers to develop an MI approach that produces long-term value.
The Consequences of Being Unaccountable For Markeing Measurement
It's quite ironic that marketing, the industry responsible in part for the image of the brands it manages, has an image problem. It is perceived by many senior executives and boards of directors as a black hole of wasted money, with no discernible proof that it works or doesn't.
Only five FTSE 100 companies have dedicated marketing directors on their boards.
At the world's 100 largest branded companies, the average tenure of a Chief Marketing Officer is under two years.
The consequence of this perception is not just tighter controls on marketing measurement budgets. Perhaps the greatest risk is that without a perception of accountability and value, CEOs and CFOs will make sweeping, arbitrary decisions about cutting expenditures in areas that may very well be producing results, but not producing them in a way that is made apparent to these senior executives.
On the other hand, studies have shown that there is clear linkage between accountable marketing measurement and increases in the marketing budget. In 2004, for example, companies that comprehensively measured marketing results increased their marketing budgets by an average of 11.2 per cent over the previous year, as compared to only six per cent for those without a measurement strategy.
Marketers, therefore, may find themselves facing a very narrow window in which to 'fix' the accountability problem, to ensure not simply their own survival, but also that they have the authority and flexibility (and of course the budget) to make the required investments in a sophisticated marketing strategy.
To be truly accountable, marketers need to demonstrate not simply that they can measure marketing and report on things that are very obviously measurable online marketing, direct mail, and so on, but rather that the full spectrum of marketing channels is being used in the most cost-effective manner.
In short, they need to be smarter about illustrating the impact of those marketing expenditures that are more difficult to measure, but clearly delivering some kind of results. Without such an approach, marketers risk confusing simple marketing measurement with things that work but require a more sophisticated approach to marketing measurement and marketing intelligence.
