• by Anna Frano , December 11, 2006

The age of accountability is in full swing as more marketers use econometric models to evaluate the productivity and return on investment of their marketing budgets.

As organizations gain greater insight into the performance of a plan, and specifically of individual tactics, the temptation to maximize short term results by only investing in "measurable vehicles" with the highest return can become overwhelming.

If a tactic hasn't been used before, or has a low return, the risk is simply avoided. But how do you prevent an overdependence on history?

Smart marketers have taken several approaches to use econometric models to their full potential while not stifling the innovation and creativity required to stay ahead in today's competitive environment. Here are five strategies for an organization seeking to improve marketing accountability:

1. Focus on the Consumer
Consider the longer-term strategic value of consumers when making investment decisions. For example, many marketers today are courting Hispanic consumers, although the short-term ROI of these efforts may trail general market results.

2. Budget for Innovation and Encourage Risk
Demand that a portion of the budget be set aside to test the viability of new and emerging vehicles or programs. Econometric models will provide the power to reallocate and optimize resources to fund innovation. Organizations that encourage risk taking will be less apt to get caught in the trap "if it hasn't been done before it won't be risked."

3. Leverage the Benefits of a Diversified Plan
Remember the basics; any plan that concentrates spending on too few vehicles (even if they have the strongest returns) is subject to the law of diminishing return. Investing too much in any one or two vehicles invariably results in saturation. Investing in a diversified plan provides the opportunity to drive synergies and volume by surrounding the consumer with your messaging. Efficiency improvements typically result.

4. Get Management Onboard
Marketing measurement programs are rarely successful without strong, senior-level sponsorship or management. This is required for a couple of reasons, including keeping focus and helping to determine metrics for success. However, the most important reason to have senior management involved is simple: money. Undoubtedly, the results of measurement and marketing accountability will impact future budgeting and resource allocation. Senior management can make this process much easier and less political.

5. "Align the planets" for Marketing and Finance
It's no secret that marketing and finance departments don't often get along. Not only does this get in the way of measurement, it can actually redefine the meaning of "marketing ROI." Finance and marketing need to agree on a definition for what true "marketing accountability" means, and how it looks in real numbers. Cross-functional teams that include marketing, finance, sales, and other areas are the best way to determine measurement metrics and achieve buy-in for the effort as a whole.

In short, staying focused on the consumer is really the best way to approach your entire marketing accountability program. Keeping the consumer in the center of your marketing investment decisions and encouraging your organization to take bounded risk will help to achieve a win-win outcome.

Econometric modeling can be used to optimize and simulate marketing plans helping smart marketers do what they do best - build great brands through innovation and creativity. However, without careful planning and diversification, even the best efforts can fail.

Anna Frano is senior vice president, client services, Marketing Management Analytics. MMA works with clients to develop fact-driven marketing strategies, comprehensive brand plans, on-demand marketing effectiveness, and comprehensive analysis of brand plan execution results. Anna can be reached at anna.frano@mma.com, or visit the company's Web site at www.mma.com.