• by John Gaffney , August 15, 2002

The corner office is starting to worry about marketing metrics. That’s the subject of a new report from the Wharton School of Business, which shows that CEOs are paying closer attention to advertising and marketing expenditures as well as the return on those expenditures.

“Historically, when the CEO wanted to know the ROI of marketing spending, the marketing people would say, ‘If you spend more, your market share will go up.’ But the marketing people haven’t done a great job quantifying that,” says Wharton marketing professor David Rebistein, a former executive director of MSI Consulting. John Forsyth, a principal at McKinsey and a leader of the firm’s marketing practice, says McKinsey’s clients are increasingly concerned about metrics. Many clients are “unhappy with the metrics they currently use “because they aren’t linked to performance as much as they ought to be.”

The push to develop metrics is not new. Every two years, MSI conducts a survey of its members to determine their research priorities. “Assessing marketing productivity and marketing metrics” was ranked first in the surveys for 1998 and 2002; the subject placed second in the 2000 survey. Specifically, those surveyed said they were interested in assessing marketing program productivity; linking internal marketing program metrics (customer awareness) to external financial metrics such as ROI; how to value customers, brands and innovation and how to measure short- and long-term effects of marketing efforts.

The heightened interest in metrics stems from several factors. Marketers typically are not equipped to speak the quantitative language of CEOs and CFOs. Because of this Wharton says marketers have less clout in business deliberations. Another reason for the increased interest in metrics is that CEOs see no good reason to exempt marketers from the kind of accountability demanded of other corporate managers. “We are way past the point when the CMO can say to the CEO or CFO ‘Trust me,’” says Bill Moult, MSI’s president. “Every other part of a company is being held accountable in financial terms.”

The uncertain economic climate is placing more pressure on marketers to justify what they spend. “Our clients are increasingly concerned about metrics,” says McKinsey’s Forsyth, who heads the consulting firm’s customer and consumer insights practice. “In this environment, they have to do more with less. Companies want to reduce the marketing activities that have less of an impact for them, and they need to have the right metrics to make appropriate decisions.”

Metrics are such a hot topic that a session will be devoted to the issue at a conference at Wharton on September 19 and 20. Titled the “CMO Summit: Excellence in Marketing,” the conference aims to provide a forum where chief marketing officers can discuss their challenges and concerns about the impact of marketing on business performance.