Unlocking the real value of marketing

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Wanted: CEOs from India

measurable outcomes like ROI, but see current metrics as detached and not up to the task; 66% of executives say that true ROI analytics are marketing’s greatest need, rather than relying on surrogate metrics like awareness and preference. Research by the CMO Council supports this, with 90% of respondents saying measuring marketing performance is a key priority, particularly in larger companies, and 80% saying they have no formal marketing performance measurement system—even when marketing spends 25% of the company’s revenues in some cases.

Some marketes have already spent much time addressing these challenges and recognise that they are not administrative distractions cramping the creative process but significant opportunities to improve the bottom line and credibility.

Can marketing be accountable?

Even when marketing takes measurement seriously, it is still not easy to quantify the full impact of marketing’s efforts. The impact is diverse, affecting both current and future sales, and also other behaviours such as the propensity to pay more, buy more or tell others. All of these factors contribute to the real return on marketing investment.

Accounting does not help. Accounting statements are flawed at the best of times, but particularly in companies with high growth, where brand building and innovation are key. Such statements treat these strategic investments as expenses to be deducted from current profits, rather than considering the future profits which they will drive.

Such accountancy-driven behaviours discourage managers from investing in brands and innovation, despite them driving the future potential in which shareholders are most interested. This is why a value-based approach, one that considers cash, current and future, is so useful to marketing and marketers.

‘Marketing ROI’ has become the fashion that every marketer now feels they should be focused on, and every consulting firm wants to sell. Yet the majority of proponents are notoriously short sighted and, in a not dissimilar way from the hijacking of CRM, they see it as a piece of analytical software to plug in and somehow connect marketing spend as inputs and sales results as the outputs.