Measuring marketing effectiveness is hard…
I was invited to attend The Conference Board meeting on Marketing Effectiveness yesterday. The main theme focused on how companies keep their marketing departments accountable.
Surprisingly, but as most research shows, a majority of companies are nowhere near being able to hold their marketing departments accountable. Not only are some companies measuring the wrong things, a majority of them have no ability to measure anything at this stage. Columbia Business School Professor and Conference Chair Don Sexton further noted that the lack of progress in marketing effectiveness is also visible in the budget process. Research shows that 54% of companies set their marketing budgets based on historical data – clearly indicating that they have no clue on the effectiveness – and only 20% of marketing executives report being able to forecast the impact of a 10% budget cut.
Now in some cases it’s no wonder than companies cannot measure their marketing effectiveness. A new study by The Conference Board, which will be released later this summer, found that half of the companies which reported no progress with marketing ROI had nobody assigned to the task. Duh…
According to Kevin Clancy, another keynoter at the conference, most marketing programs have an ROI that is zero or negative, which could of course be another explanation for why no progress in measuring marketing effectiveness has been made in the last 40 years - people in charge don’t want that dirty secret to be exposed.
One Fortune 50 company which had a few representatives at the meeting had a very interesting approach to marketing measurement, although one that was running into cultural and political barriers. They recognized that marketing is indeed a large multi-variable complex system that needs to be measured as such. You cannot measure the impact of a campaign without also keeping pricing, packaging, and competitive changes into the mix, just to name a few variables. So they hired a bunch of PhD’s in systems dynamics and operational research to measure marketing as a complex system. Unfortunately, and because they lack marketing expertise, marketers are resisting cooperation with them at this time.
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July 21st, 2008 at 5:29 pm
[...] executives, the marketing department is often viewed as a cost center. Although some would say that it is impossible, most marketing professionals keep close tabs on their return on investment and the effectiveness [...]