Overcoming Short-Term Bias In Marketing Measurement

by Pat LaPointe, Oct 6, 2010, 12:00 PM

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At best, marketing measurement tends to slant toward short-term payback at the expense of longer-term brand and customer development. But when you add heavy doses of highly measurable online tactics to more quantitatively elusive offline approaches, the slant can become an outright bias. Unchecked, this can seriously impair the marketer's ability to make smart decisions beyond the next quarter or two. This is particularly acute with respect to fully integrated programs designed not just for lead generation, but for brand and customer development.

This pressure for short-term payback exists in part because finance cannot afford to "trust" the marketer more than one or two periods into the future, and in part because the marketer cannot "prove" that the immediate impact understates the true value derived. Rising above the stalemate requires some new thinking in how marketers plan, execute, and measure their programs, not to mention the way they communicate their expectations and findings to finance.

So how do we stimulate that new thinking? One way is to employ a Brand Value Chain.

The Brand Value Chain (adapted from Kevin Keller of Dartmouth and Don Lehmann of Columbia) helps clarify and document, for all to see, the anticipated relationship between elements of an integrated marketing program and financial value created through stronger brand equity.

In the simplest version of the Value Chain, an integrated campaign leads to some evolution in brand image, which in turn leads to some change in "equity," which then translates into financial value.

 

 The best way to understand the Brand Value Chain is to begin with the end in mind. Specifically, what sort of financial value is the integrated campaign supposed to lead to? Is it intended to increase the incidence of purchase? To decrease price sensitivity? To open new distribution channels through superior category leverage? To project more powerful negotiating position to vendors and suppliers? Or some combination of the above?  

The Brand Value Chain tests your ability to clarify your expectations logically and to define the specific dimensions upon which brand "equity" must evolve to achieve them. How are you expecting the thoughts, beliefs, attitudes, associations, and permissions people ascribe to the brand to change or grow? What do you believe precedes seeing the desired economic behavior?

Finally, the "image" results are the early indicators (e.g. salient awareness, attribute- or characteristic-specific awareness, or more accurate awareness of the brand's points-of-parity and/or points-of-difference) of progress. While important, they are a necessary but insufficient condition for a profitable outcome. Acknowledging this works to establish the necessity of time to translate imagery into equity into financial gain.

Once you have the Brand Value Chain constructed in a way that reflects your hypotheses about the way things work, you can identify which links in the chain you are able to test/read/validate and which you cannot. This brings focus to the information gaps and raises the question of tradeoffs between the cost and value of further insight for all to assess. If finance is so keen to have precise insight into the financial outcomes of brand advertising, they should be willing to invest in the research, testing, and experiments that would have to go into properly tracking the flow of results through the value chain. Otherwise, they will have to accept informed assumptions and estimating processes that find the balance between cost and benefit.

As it appears here, the Brand Value Chain has one significant flaw. It follows the now widely discredited "hierarchy of effects" theory, which prescribed that awareness leads to conscious consideration, which in turn precedes behavior. This linear model has been found to have only limited validity in the real world. However, the Value Chain does provide a great starting point for you to map out how you think your category dynamics operate so you can construct one in a format that is most relevant to your business.

Measuring the impact of integrated marketing over the long run is possible with the application of the right tools and processes. Research, experimental design, factor analysis, and continuous feedback mechanisms all play a role in reducing the unknowns down to comfortable risk levels. It just takes some clarity and precision in defining expectations for marketing's payback by building financial bridges from short- to long-term value creation.

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0 comments on "Overcoming Short-Term Bias In Marketing Measurement".

1. Karl Lendenmann from Datran Media
   

   commented on: October 6, 2010 at 2:39 p.m.

   Spot on,….This is consistent with Pat’s book, Marketing by the Dashboard Light….
   
   ….Only the “enlightened” marketers will exert the discipline for this longer-term brand focus, assessment, and valuation,…vs. the shorter-term impact on behavior and sales.

   In addition, most "brand" marketers lack in-market testing plans and integrated Marketing Intelligence systems.

   Karl W. Lendenmann, Ph.D.
   VP, Marketing & Analytics
   Datran Media
   

2. Michael Wolfe from BBDO
   

   commented on: October 8, 2010 at 5:45 p.m.

   You have assumed that market modelers have not been able to incorporate long-term effects in their models and that they can not measure the interactions of synergies across media channels. Your assumption is incorrect. A few have.

3. Kevin Horne from Lairig Marketing
   

   commented on: October 9, 2010 at 10:49 p.m.

   "This linear model has been found to have only limited validity in the real world"

   it has? really? source?

4. Brian Mcginty from Razorfish
   

   commented on: October 20, 2010 at 5:39 p.m.

   I agree that smart strategic planning involves identifying areas within the Brand Value Chain to influence how that influence will be measured. However, I would add that such activity in and of itself is not sufficient. In order to prove the need for the investment in tactics to influence factors associated with Brand Image and Equity (and to justify investment in robust analytics), it is necessary to associate those factors with the ultimate financial measure (be it sales, ROI, etc.). That is to say that it is not sufficient to measure a dimension of Brand Image or Equity (eg a 10% raise in product awareness) in isolation, but rather to measure the economic value of an incremental change in such a measure (eg sales will increase 1.2% with a 10% increase in product awareness). This information enables a much more powerful conversation between the marketer and whoever controls the budget. In fact, rather than having the budget dictated to the marketer, the marketer can now tell whoever controls the budget how much he/she will need to reach to financial goals set forth by the organization.

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