In these challenging times marketing professionals can be sure of one thing: accountability for their actions and expenditure is going to become ever more important. With digital marketing tactics offering near-instant measurement and executive management demanding greater, deeper insight into marketing performance the need is for marketing to get onto the front foot and become more accountable.
With budgets and marketing performance under greater scrutiny than ever and brands demanding ever greater levels of ROI on their marketing expenditure the question is, if marketing is required to deliver ROI, what exactly is the ‘asset’ that marketing funds are being invested in? How can Marketing get gain greater alignment with the Finance department and closer to the management top table? What measurement approaches should I put in place to justify our marketing efforts?
2. “63% of blue-chip Marketing VPs are
dissatisfied with their marketing
performance measurement systems”
Marketing Leadership Council report, USA, 2007
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3. Why has marketing effectiveness measurement
proven so difficult?
1. Black box communication – do we understand how
communication actually works?
2. Time and timing - Not every message received results in
immediate response
3. Source of message or incentive - Consumers see between 2,000
and 5,000 branded messages per day
4. Those annoying intervening variables – that marketing cannot
control
5. Corporate versus communication timescales – your ‘financial
year’ timescale doesn’t matter to customers
6. How good is your data? – is your data robust enough for you to
rely on?
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4. Companies are seeking new standards of proof in the
justification of marketing expenditure:
“…these new standards are driven in part by the
current economic climate but are also a
function of growing corporate intolerance for
the lack of ROMI discipline that has traditionally
characterized much of brand (and marketing)
spending”
Tim Ambler, London Business School
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5. Employing poor or non-existent
metrics
Lack of desire to be measured
No ‘professionalism’
Never follow through
Hides behind ‘the customer’
Too prepared to use jargon and
technobabble
Big gap between planned and
actual behaviour
All other Departments are
accountable except Marketing
What ‘Finance’ thinks
of ‘Marketing’
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6. Lots of measures for cost; not
many for revenue (see a
standard P&L)
Knows the cost of everything
but not its value
Obsessed by numbers
Don’t understand customers’
motivations and behaviour
Don’t understand that not all
communications has an
immediate result
What ‘Marketing’ thinks of ‘Finance’
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8. “Marketers must be more than functional
specialists to win over Chief Executives.
Marketers fail to reach board level
because they are not fluent in the
language of finance. Success requires a
new set of skills”
Sir Roy Gardner, CEO Centrica plc
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9. We need a new marketing model because:
How it (marketing) used to be – no longer works
Declining effectiveness of mass marketing/media
The changing customer – ever more discerning, more information
available
Increased pressure on corporate profitability
Digital communications are making outputs easier to measure
A need for a new marketing model
SO, MARKETING NEEDS TO BECOME
MORE ACCOUNTABLE
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10. The 5 stages of Marketing
Accountability
DENIAL
“Marketing is
an art not a
science. It
cant be
measured”
Leads to
Marketing
being isolated
FEAR
“What is my
marketing doesn’t
impact the bottom
line?”
Accountability is a
double-edge
sword. You can
look like a star or
a disaster? Can
you take the risk
to find out?
CONFUSION
“I know I should
measure market
results, I just don’t
know how”
You know
measurement is
inevitable so a few
basic output
measures are
instigated but no
overall view of how
marketing impacts
the bottom line
SELF-PROMOTION
“Hey come look at
all my charts and
graphs!”
In a desperate
attempt to look
accountable they
measure anything
and everything and
produce a chart to
prove it. However,
they don’t
appreciate the
connection to hard
revenue, profits and
growth, creating an
impression of ‘soft
KPIs’
ACCOUNTABILITY
“Revenue starts with
marketing”
Marketing finds its true
place in the revenue
pipeline. Marketing
stops being a cost-
centre and starts
justifying expenditure
based on business
building outcomes.
The organisation
supports and believes
in marketing form the
top down and the right
tools and processes
are put in place. The
CMO acts and talks
like a true C-level and
Marketing has a seat
at the top table.
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11. What business really wants from Marketing?
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12. Marketing managers must aim to deliver one of 4 goals for the CEO:
1. Increase cashflow
2. Accelerate cashflow
3. Stabilize cashflow
4. Build or enhance shareholder value
What CEOs want from Marketing
REMEMBER!
Little else matters to CEOs!!!
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14. She has the ear of the CEO
and is widely respected within
business
She can help you become
more commercially focussed
You can use her to get more
budget
FDs know how to model
numbers efficiently and if you
ask her she’ll do all the
number work!
Get the FD on your side &
nobody will bother you!
Why your Finance
Director should be
your new best friend
http://www.bullzkart.com/
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15. It’s INVESTMENT
The definition of ‘investment’ was “money invested into an
asset with an expectation of profit”
Investment in what?
Invest in ASSETS
The definition of ‘assets’ was “anything a person, company, or
group owns or is owed, including money, investments and
property”
The asset is, therefore….the customer
So, let’s reprise, what is the in ROMI?
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16. 22 May 2014
Marketing expenditure is applied to the customer
as an asset to increase their value
We can raise the value of the customer asset by
investing marketing expenditure in different ways
Return on customer investment delivers in
different timeframes and in different ways
16EDGE Marketing Best Practice Forum - Marketing Accountability
The ‘asset’ is……
17. Think of ROMI as another name
for ‘profit’
Profit is the goal, ROMI is the
measure
Treat the marketing budget as a
‘loan’ from the company that has
to pay back
Think of marketing channels as
‘different ways of making money’
‘INVEST IN CUSTOMERS’
…….don’t ‘spend marketing
budget’
Change the way you think
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18. Where next?
Develop an accountability culture
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19. “Without the right measurement, we really don’t know how well
our efforts work. We don’t really know if we’re in touch with our
consumers. This is a $450billion industry and we’re making
decisions with less data and discipline than we apply to $100,000
decisions in other aspects of our businesses. We lack an industry
standard for measurement. We need a method to determine the
effectiveness of our efforts”
Jim Stengel, Chief Marketing Officer, Proctor & Gamble
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20. CEOs don’t care about the open rate of your last email campaign or
your last press release’s number of views
Use metrics that matter to the CEO and CFO: they care about
revenue and profits:
– How much faster are we growing now versus last quarter? Last year?
– How much profit was made last quarter versus this quarter?
– How much revenue and profit do you forecast for the next quarter?
– Why are you confident in the above answers?
By speaking the same quantitative language as the CEOs and
CFOs, marketers will better communicate marketing’s value and
impact
Measurement builds respect and accountability
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21. 21
But beware, what we said earlier…….
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22. What should you measure?
What matters to your business?
Who do you measure for (vanity or sanity?)
Can you acquire data good enough to evaluate?
Will the metrics help you make better decisions
How will measurement increase the amount or value of customers?
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23. 22 May 2014 EDGE Marketing Best Practice Forum - Marketing Accountability #
GeraintH@directiongroup.com
@geraintholliman
/geraintholliman
Contact
@Direction_grp #dgedge Check-in
Geraint Holliman
Director of Planning and
Head of content Marketing