Column: Econometrics - Ratcheting Up Accountability

  • by June 22, 2005

BY John Nardone

Marketing accountability is a hot topic these days. It seems that every marketing conference I go to, and every trade publication I read, attempts to address some facet of the issue. According to the hype, marketing accountability is at the top of the industry's agenda. But when it comes to improving marketing accountability, companies are more talk than action.

A recent survey conducted by MMAand Forrester Research, in conjunction with the Association of National Advertisers, shows that while there is indeed recognition of a problem, few companies have begun coordinated efforts to solve it.

The MMA/Forrester study surveyed 135 senior marketers about their current abilities to manage marketing effectiveness, and their plans to improve capabilities. The survey showed that existing capabilities are pretty weak. Only one in three marketers report that they plan their marketing budgets around knowledge of the spending required to achieve their corporate goals. A similarly small percentage felt confident in their ability to predict the sales impact of their marketing programs.

Given this grim state of affairs, you might expect that companies are mounting coordinated, aggressive efforts to improve their capabilities. Unfortunately, that is not the case. We have found that accountability initiatives, if they are happening at all, are random, bottom-up efforts of individuals and silos reaching for the justification of their own campaigns and budgets. We found that coordinated, top-down efforts that cut across silos remain rare.

A big part of the problem seems to be companies' inability to agree on basic measurements. In the survey, 61 percent of respondents indicated "gaining agreement on a definition of return on investment" as one of their most challenging problems. It is understandable (though unfortunate) that few companies have put comprehensive marketing measurement programs in place. With most stuck at square one, it also makes sense that few companies have attempted to move from measurement, to diagnosis, to rapid course correction.

And yet, this is exactly the prescription that companies need, and marketers must champion - rigorous, real-time measurement, structured diagnosis, and pre-defined response protocols that allow immediate action. Direct marketers have been operating this way for years, and now mass marketers need to develop similar skills and tools.

As 30-second commercials become proportionally less of the media budget, marketers will experiment with alternative media vehicles. Until they build a new knowledge base of what works, speed-to-market in evaluating these new tactics will be a competitive advantage. Or, look at the situation in reverse and see that better evaluation is needed to gain productivity from tried-and- true traditional tactics, so that budgets can be freed for experimentation with new approaches. Either way, it's important to launch marketing effectiveness initiatives now.

So what can a company do to get started? First, find a senior-level champion who can cut across silos and get everyone committed to a common framework. This champion doesn't necessarily have to come from within the marketing organization. The finance, research, or strategic planning groups are all candidates for providing appropriate sponsorship of a marketing effectiveness initiative. What's important is that the champion have the clout to bring a cross-functional team together and lead them to agreement on a common approach to marketing evaluation.

Next, identify those marketing questions that must be addressed again and again in the course of the annual business cycle, and define the analytics necessary to answer them. Remember that decisions can be made by the data, or they can be made by the clock, so build an analytics calendar that ensures that the information will be available when decisions need to be made.

Finally, identify critical success factors and barriers, and build a road map of initiatives and programs that address them. Plan the road map over a period of years, because a fundamental change in your marketing approach won't be adopted by an organization all at once. But get started now. There is no need to wait for the CFO to call with a budget cut before you get your act together.

John Nardone is executive vice president, product development and marketing, for Marketing Management Analytics. (

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