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RSS1. What are the specific goals for our marketing spending, and how should we expect to connect that spending to incremental revenue and/or margins?
2. What would be the short and long-term impacts on revenue and margins if we spent 20% more/less on marketing overall in the next 12 months?
3. Compared to relevant benchmarks (historical, competitive, and marketplace), how effective are we at transforming marketing investments into profit growth?
4. What are appropriate targets for improving our marketing leverage ($'s of profit per $ of marketing spend) in the next 1/3/5 year horizons, and what key initiatives are we counting on to get us there?
5. What are the priority questions we need to answer to inform our knowledge of the payback on marketing investments -- and what are we doing to close those knowledge gaps?
How you answer these five questions will get you promoted, fired, or worse -- marginalized.
If you tend to answer with a dizzying array of highly conceptual (e.g., brand strength rankings compared to 100 other companies) and/or excruciatingly tactical (e.g., cost per conversion on Web site leads) "evidence," stop. Preponderance of evidence doesn't win in the court of business. A credible, structured attempt to answer the underlying financial questions does.
The five questions are all answerable, even in the most data-challenged environments. Provided, too, that you build acceptance of the need for some substantial assumptions made in deriving answers -- much the same way you would in building a business case for a new plant, or deploying a new IT infrastructure project. The key is to make the assumptions explicit, clearly defining the boundaries of facts, anecdotes, opinions, and guesses. Think in terms of:
a) Clarifying links between the company's strategic plan and the role marketing plays in realizing it;
b) Connecting every tactical initiative back to one or more of the strategic thrusts in a way that makes every expenditure transparent in its intended outcome, thereby promoting accountability for results at even the most junior levels of management;
c) Defining the right metrics to gauge success, diagnose progress, and better forecast outcomes;
d) Developing a more methodical (not "robotic") learning process in which experiments, research, and analytics are used to triangulate the very types of elusive insights that create competitive advantage; and
e) Establishing a culture of continual improvement that seeks to achieve quantifiably higher goals year after year.
As you push boldly into 2010, remember that 2011 is just around the corner. You may not have been asked these hard questions this year, but who knows who your CFO might talk to next year (me, perhaps??) that will ratchet up his/her expectations. You can prepare by using these five questions as a framework to benchmark where your marketing organization is starting from; as a guide to ensure that sufficient resources are being allocated to promote continual learning and improvement; and as a means of monitoring the performance of your marketing organization.
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I strongly disagree with your opinions. Marketing is essentially an assumption. We create marketing campaigns and branding initiatives based on what we THINK will engage our target audiences. Marketing should meld with IT in that we should not just be using JUST hindsight or benchmarking as a guide to things like social media or search media. Just because we can't measure the value of a fan on a social network down to the pennies doesn't mean that the information isn't usable. Rather, it means that even if it's not 100% accurate, 95% is pretty damn close.
I purposely use 95% as a statistical allusion, because that's what behavioral targeting is - predictive analytics.
Your car purchase is a bad example Tilly. Your implication is that technology can't measure what occurs on the dealer side of the buying cycle; that the interactions between salesmen and buyer are intangibles.
But those "intangibles" are not influenced by marketers either... so it's kind of an invalid example.
A couple points of contention: Accountability with digital marketing does require some understanding of more technical concepts and, what's most challenging is that in some areas (social media, for example), the value of a fan, friend or iphone app user is not readily ascertainable yet. Social nets are missing the all-important tracking pixel capabilities to allow marketers to learn which users are showing up on the brand website after consuming some related media.
So we have traded not knowing which 50% of advertising is working to not knowing what can be expected from the advertising.
David Shor Principal Quillion
I agree about the importance of metrics and relating them back to your objectives. What I disagree with is the practically reality of being able to pinpoint and actually correlate outcomes to marketing programs.
Is it possible, yes. But it's also very very difficult. In the life insurance business for instance, the length of the purchase cycle and the nature of the financials makes it difficult to conclusively model anything. In the automotive business so much happens at the dealer level, much of which is in the hands of the individual sales person.
What's critical is knowing the importance of relating metrics to objectives, and being resourceful and resilient in finding a way to get close even if it's only 50% of the way there.
When marketers set out to run their numbers based on different financial, operational and marketing scenarios, sure you can get to a number you'd LIKE to hit. Knowing what contributed to hitting or missing the number is in many ways much more difficult.
At the end of the day I do believe that there's as much art and judgment in the metrics game as there is science. When you hold yourself to an unrealistic standard, you might start seeing numbers where there aren't any and will end up doing yourself and the honesty and openness with which you should lead a business a disservice.
Thanks for this.
As the author of Accountable Marketing (www.accountablemarketing.info) I try and convince marketers of the need to be able to answer all your questions.
But you have said it much better than I could have.