Marketers Missing Measurements

Corporations are spending up to one-quarter of their budgets on marketing initiatives, but few are noticing the results or planning long-term integrated strategies, according to a study from the Chief Marketing Officer (CMO) Council.

The study of more than 320 global technology marketers, conducted during the first quarter of 2004, revealed that just 16.8 percent of the respondents’ companies have formal marketing performance measurement (MPM) systems despite some spending as much as 25 percent of their revenue on marketing.

Nearly 90 percent of respondents believe measuring marketing performance is a key priority for today’s technology companies, but roughly 70 percent of the respondents reportedly spend less than 2 percent of their marketing budget on MPM. However, nearly 60 percent plan to increase their MPM allocation within the next two years.

“We felt there would be more sophistication and attention to this area,” said Donovan Neale-May, executive director of the CMO Council. Neale-May acknowledges that marketers are able to gauge individual campaigns but results from advertising, sales and marketing collateral, and branding were among the hardest to measure.

Among the activities that were easiest to measure were results from direct mail and email campaigns, Web site and Internet search engine presence and telemarketing and contact management programs.

“There are reasonably well-accepted solutions that track Web metrics, analytics and email measurements embedded in hosted services and solutions and campaigns,” said Neale-May. He noted that marketers don’t draw a distinction between tactical point solutions that are campaign specific and much more strategic holistic views.

Almost 80 percent of the senior marketing executives that participated in the survey said they were dissatisfied with their ability to demonstrate their marketing programs’ business impact and value. Furthermore, 90 percent reported that MPM has become a priority in their organizations as they struggle to secure and defend budgets.

“Everyone is saying this [MPM] is a problem and we need to deal with it to defend and secure our marketing budgets, so marketing must establish its role and value within an organization. What you missed in marketing pays back in stock price, employee retention, branding, sales, etc.,” said Neale-May.

The study, comprised mostly of responses from executive officers with vice president titles or above from North American companies, outlined the importance of MPM to the entire organization. The report revealed that companies using MPM systems tended to outperform the market in terms of sales growth, market share and profitability, and these companies consistently achieved a higher level of CEO confidence in the marketing function.

To build cohesion, corporations should look beyond their disparate marketing campaigns to develop collective visions for marketing strategy, and the organization should have a clear understanding of where marketing is impacting and intruding. Neale-May says that companies don’t want to quantify marketing performance based on an email campaign. “They want to measure against strategic business factors that the board and management see as critical business factors,” said Neale-May.

Implementing MPM systems requires management to become part of the process, and survey respondents report that the CEO, CFO, sales groups and product management teams are the most critical stakeholders for technology marketers to produce tangible results and value. The study indicated that these are the same stakeholders that should be embraced in the design and deployment of MPM systems.

Neale-May suggests companies create infrastructure that tracks real-time marketing performance, which will allow for revision, re-allocation, and redesign. “It’s part of elevating marketing’s stature. Most companies are run by engineers who are not aware that marketing vision requires infrastructure,” said Neale-May.