MEASURING MARKETING’S PERFORMANCE

Marketing used to be simple. When there were just four Ps of marketing not 5 , and no R’s of marketing, and when success was judged by the punch of 30 second t.v. spots, the ROI on direct mailers, the leads from the trade show booth, or the buzz created by a (traditional) media story.  Oh yes, I remember the good ol’ days when measurement meant seeing sales move in a general upward direction, stock prices rise and the CEO and shareholders smiling.

That was life before transparency.  All this fun happened before companies figured out just how much extra the ad agency was making on the media buys …  before customers could make or break brands with blogs and videos and emails the company had no idea were even happening… and before marketing was expected to justify its existence with metrics like every other department in the organization.

Oh, we marketers fought metrics tooth and nail – because as any true marketer believes, marketing is indeed a mix of science and art.  But in the data-driven society we now all live, marketing metrics are here to stay.  This is a double-edged sword for marketers but if used correctly, I think we can learn to love it. 

Consider for example, the consulting firm Communications Consulting Worldwide (CCW), who uses a statistical model to help companies put a dollar figure on their brand equity based by reviewing a sophisticated mixture of data.  As profiled in BusinessWeek,  CCW mixes metrics such as historical stock prices, satisfaction surveys, views of stock analysts, magazine clippings and financial data together in a sophisticated statistical model to derive a dollar value of the company’s reputation.  CCW then feeds this information to the marketing teams, who use it to devise and strategically place market messages that have shown historically to resonate with key audiences. The teams then monitor the stock price as they place these messages, measuring how the market responds.  While not everybody is sold on this model, their information seems to show that boosting one’s reputation amongst investors can have huge financial impact.  The article cites that if CVS Pharmacy had the reputation of Walgreens, its stock would rise 6.9% representing a $4B boost in market value.  Other examples cited: if Coca Cola had the reputation of Pepsi, its market value would increase 3.3% or $4B.  And if Walmart had the reputation of Target, its value would rise 5% or almost $10B in stock value.

Most companies don’t have the budget or inclination to go to this extreme, but as marketing leaders struggle to show the value of their work, finding a way to calculate and display meaningful metrics to senior leadership is more important than ever.

I keep Marketing NPV’s “Marketing by the Dashboard Light” book close at hand for this purpose. It provides a thorough explanation of the process of selecting metrics to monitor, and a number of good examples along the way.  For marketers struggling to prove their worth inside the board room, it may just be invaluable.