|
"Making
marketing more accountable is the battle cry across
the marketing industry," proclaimed Forrester Research's
Jim Nail. Indeed, a recent study among senior marketing
executives found that 81% said accountability had increased
in their marketing organizations over the past 24 months.
Companies across industries and around the globe are
investing huge amounts of time and money into metrics
and ROI measurement systems.
Yet
for all of the activity and spending in this area, the
prevailing conventional wisdom is that it's not possible
to get accurate ROI data and information for marketing
programs. In the same survey referenced above, more
than 80% of senior marketers indicated that they were,
in fact, dissatisfied with their ability to measure
marketing ROI. Fewer than 20% of marketers in a CMO
Council poll said their companies employed comprehensive
and meaningful metrics.
Is
there a gap between marketing effectiveness measures
and actionable ROI data? Or is the conventional wisdom
little more than a myth? We decided to pose these questions
and more to marketing effectiveness measurement expert
John Nardone. John is Executive Vice President, Product
Development and Marketing, at MMA, the nation's premier
consulting firm dedicated to helping companies plan,
measure, validate, and optimize their marketing. MMA
has some of the most advanced and widely-used approaches
to teasing ROI insights out of sophisticated econometric
analyses of large databases which capture marketing
investment inputs (such as advertising expenditure)
and macroeconomic inputs (such as gasoline prices or
consumer confidence) and relate them back to sales,
market share, and profitability. Here's what he had
to say:
Copernicus
Mzine: What do you say to folks who say that it's
not possible to get an accurate measure of ROI?
Nardone:
The conventional wisdom is wrong. It certainly is possible
to get "good enough" measures of ROMI, if
you have a reliable data history to draw upon. Over
the last fifteen years MMA has successfully developed
ROMI measures for hundreds of businesses
across
numerous product categories. The important thing to
remember is that these measures are meant to support
a decision process. They do not substitute for marketers'
judgment and experience, but rather provide a fact-based
point of reference for evaluating and planning marketing
investments.
Copernicus
Mzine: Several recent surveys have showed that a
majority of marketers are dissatisfied with their ability
to measure ROI. Why do you think this is?
Nardone:
There are a few reasons for that. First, developing
ROMI scorecards has historically required a lot of work.
In some cases, studies would take so long that the results
were not always seen as timely or actionable. Second,
it can be difficult to tease out the impacts of smaller
or experimental programs, which are often of particular
interest to marketers. Finally, marketers sometimes
don't get the results they expect and blame the measurement
approach. While these issues do get in the way for some
marketers, many others have been able to get their processes
and metrics aligned so that they can act upon their
ROMI analysis. These marketers tend to be satisfied
with their efforts.
Copernicus
Mzine: In your experience, what are the components
of a best practice marketing effectiveness measurement
system? When evaluating different ROI metrics, what
should marketers take into consideration?
Nardone:
The most important components of a marketing measurement
system are that the information is timely, forward-looking,
and can quickly and easily be used to make decisions.
When
evaluating ROMI metrics, it is important to consider
both the long- and short-term impacts of marketing.
Most often, ROMI measures only reflect the short-to-medium-term
impact of marketing efforts. However, many marketing
campaigns contribute to a positive long-term market
impact as well, so appropriate interpretation should
be applied when considering results. The converse can
be true as well: some marketing tactics (such as discounting)
can show strong immediate ROMI, but erode the brand
over time.
Copernicus
Mzine: What tips can you give marketers to ensure
they are getting "actionable" ROI information?
Nardone:
Actionable ROMI information comes from solid models,
current data, good tools and a marketer who uses them
appropriately. The first tip is to invest in your data.
Treat it as a valuable asset and keep it current, because
timely analyses are more likely to be acted upon. Second,
strive for accuracy rather than precision in your measures.
It is not necessarily important that a measure is empirically
correct, but rather that the analysis guides you to
the best decision. Finally, put your emphasis on anticipating
future outcomes, and limit the amount of time and energy
spent dissecting the past.
Copernicus
Mzine: If you had the ear of every CEO in the world
for five minutes, what would you say to them about measuring
marketing effectiveness?
Nardone:
I would tell CEOs that they must make better, more empirically
based and accountable marketing decisions than they
are making today or they will loose ground to their
competitors. ROI measurement systems make marketing
organizations more effective, and within three years,
nearly every Fortune 500 company will be using one.
John
Nardone can be reached at john.nardone@mma.com.
He is currently working on the rollout of MMA's Avista,
the first enterprise decision support service for marketers
(Avista DSS). Avista DSS is powered by a continuously
updated marketing database, MMA's marketing mix models,
and state-of-the-art SAS analytic engines. It allows
marketers to anticipate and test the impact of unlimited
numbers marketing scenarios so they can make more informed
decisions. For more on MMA and Avista, visit www.mma.com.
Back
to top.
|