Wednesday, March 14, 2007

Just as You Always Suspected: Nobody Believes Marketing Effectiveness Measures

I consider it a point of honor not to simply reproduce a vendor’s press release. So when Marketing Management Analytics sent one headed “Most Financial Executives Critical of Marketing Effectiveness Measures: Only 7% Say They are Satisfied with their Company's Ability to Measure Marketing ROI”, I asked to see the details. In this case, it turned out that not only did the press release represent the study accurately, but it also picked up on the same two points that I found most intriguing:

- “only 7% of senior-level financial executives surveyed report being satisfied with their company's ability to measure marketing ROI”, compared with 23% of marketers in a similar earlier survey; and,

- “only one in 10 senior-level financial executives report confidence in marketing's ability to forecast its impact on sales” compared with one in four marketers.

And that, my friends, is the problem in a nutshell: financial managers have almost no confidence in marketing measurements, and marketers don't even realize how bad things are.

With numbers like these, is it any wonder that advanced concepts like customer experience management attract so little executive support? Nobody is willing to take a risk on them because nobody believes the supporting analysis. Note that three-quarters of the marketers themselves are not confident in their measurements.

In fact, the one other really interesting tidbit in the financial executive detail was that “customer value measurements” ranked a surprisingly high number three (34.6%) in the list of marketing effectiveness metrics. Only “effectiveness of marketing driving sales” (52.2%) and “brand equity and awareness” (44.1%) were more common. “Return on marketing investments” (25.7%) and “contribution” (22.8%) ranked lower.

It makes sense to me that “driving sales” would be the most common measure; after all, it is easy to understand and relatively simple to measure. But impact on brand equity and customer value are much more complicated. I do find it odd that they are almost as popular. I’m also trying to reconcile this set of answers with the fact that so few respondents had any confidence in any type of measurement: what exactly does it mean to rely on a measure that you don’t trust?

All in all, though, this survey represents an urgent warning to marketers that they must work much harder to build credible measures for the value of their activities.

(Both surveys were funded by MMA, which provides marketing mix models and other marketing performance analytics. The financial executive survey was conducted with Financial Executives International while the marketer survey was made with the Association of National Advertisers.)

1 comment:

Will said...

Thanks for the mention of the ANA survey. Marketing accountability is in a constant state of reinvention but many measures still offer value, particularly enabled by technology. Finance is built on being a naysayer, something that has been a hurdle for many years.