“I have more data than ever, less staff than ever, and more pressure to demonstrate marketing impact than ever.” —A Chief Marketing Officer
Now more than ever, marketing departments face pressure to demonstrate their value to the firm. They need to connect marketing investments to brand attitude metrics (‘consumers love us!’) to behavioral (‘they buy us!’) and financial performance (‘their loyalty and willingness-to-pay protect us in this recession’). Hence, Mike Hanssens and I broke down marketing value assessment from three perspectives: metrics, models, and communication in our review paper (freely available here).
Marketing tasks have become increasingly specialized and complex resulting in siloed functions with little consistency. This calls for establishing guidelines for reconciling marketing objectives, distinguishing between marketing effectiveness and efficiency, defining scope, and for budgeting and resource allocation activities. Often there is a trade-off between effectiveness and efficiency and it is particularly salient when there is a conflict between short-term and longer-term goals. Efficiency-driven marketing decisions should be supported only when they do not jeopardize the long-term viability of the brand. We propose that the goal should be to maximize the total effectiveness when a certain threshold is achieved, even if that reduces the overall efficiency. In terms of the scope of marketing in an organization and decisions related to resource allocation, we recommend a broad definition of marketing in the organization and broad inclusion of business functions for marketing resource allocation activities.
The best insights on marketing value come from the combined use of modeled historical data and experimental data. Taken together, models, surveys, and experiments provide the benefits of the highest decision impact at a moderate cost and risk. In situations where both approaches are feasible, we recommend the sequence of model, experiment, model, experiment (MEME) to obtain the maximum impact of analytics-driven decision making. We also recommend integrating soft and hard performance metrics to assess marketing since the inclusion of attitudinal metrics in market response models has proven to increase their predictive and diagnostic power.
Finally, after defining and measuring marketing value, it is important to properly communicate this value within the organization. Internally communicating the value of marketing requires the use of insightful marketing dashboards and adaptation of communication style to that of the decision-maker and of the marketing organization. Marketing dashboards provide a concise set of interconnected performance drivers, help monitor performance, and enable goal-setting. The Inofec example below allowed the decision makers to adapt their marketing schedule, observe the projected performance changes and ultimately get buy-in for a field experiment that increased net profits fifteen-fold over the status-quo control region.
Marketing value assessment is essential if marketing as a discipline wants to exert an influence at the highest levels of the organization. Its influence will also determine the scope of its role in the organization, which could range from tactical execution of advertising and promotion policies to being a fundamental driver of organic growth.
For the full paper click here.