Marketing Metrics: Will we ever have the perfect dashboard?

Student Id: 90426817

In 2004, a Bloomberg article titled, Making Marketing Measure Up, provided the context, if not rational for establishing marketing metrics:

“For years, corporate marketers have walked into budget meetings like neighborhood junkies. They couldn’t always justify how well they spent past handouts or what difference it all made. They just wanted more money — for flashy TV ads, for big-ticket events, for, you know, getting out the message and building up the brand”. (Bradey & Kiley 2004)

Brady & Kiley went on to explain that the new marketing mantra was “measurement and accountability”, especially in relation to ROI figures to satisfy “fed up CEOs and CFOs”. It discussed the cutting edge use of dashboards by the likes of consumer-product giants (Proctor and Gamble) to collect multiple performance measures.  It was clear that financial metrics were the focus.

Since 2004 a vast array of marketing research, literature and textbooks (Farris, 2009, Farris 2015, Ambler & Roberts 2008, Mintz & Currim, 2013, Kotler & Keller 2012) argue the benefits of using a wider range of metrics, including non-financial metrics such as customer loyalty and brand awareness to measure marketing performance. Choosing metrics that are relevant to the business and its strategy and ensuring the metrics are relevant to what the organisation is trying to measure (indeed first figuring out what should be measured) is cited as critical for obtaining any meaningful evaluation. Nevertheless,  it is apparent from recent marketing trade articles such as “How Nivea delivered a better ROI on marketing spend”, that in the wider business world, the use of a single metric or a number of  financial measures ‘combined’ to create a silver metric (Ambler & Roberts 2008) is still de rigueur.

ROI

What is apparent when researching literature on the topic of marketing evaluation, is that the focus is often on promotional and media activities or specific advertising campaigns, without much consideration of the other 3Ps in the marketing mix. The use of ROI, or even the adapted ROMI (Return on Marketing Investment) and consideration of both short term and long term ‘returns’, essentially ‘positions’ marketing as an investment that is being made by the organisation; one where there is a choice and risk associated with that investment. Certainly this can apply to advertising and other specific promotional activities, but not as neatly to broader marketing activities: Ambler & Roberts (2008) define marketing as “what the whole company does to satisfy customers and thereby create shareholder value” (p734).

From this standpoint, Ambler & Roberts (2008) reasonably argue that one of the (many) problems with using ROI to evaluate marketing is that by regarding marketing as an investment instead of a ‘maintenance’ essentially “creates another problem for marketers, namely the expectation that marketing will always create incremental sales and profits”(p736).

As identified by one marketing authority, Professor Ujwal Kayande,  the now prevalent use of  “analytics to calculate the ROI and impact of every marketing activity being undertaken” is also a cause for concern; “The problem is that it then forces the CMO and their team to start doing things on which you can measure the ROI, and which you can attribute clearly to your activities to (…) As a result, innovation starts becoming stifled” (Kayande, U, 2015).

Also apparent in the literature is the vast number of metrics available to calculate marketing performance. Author and marketing metrics authority, Paul Farris, published: “Key marketing metrics: the 50+ metrics every manager needs to know” in 2009. More recently, Farris et al. (2015) actively refuse to offer a ’key set’ or ‘top 10’, citing the importance of selecting the right metrics for the type of organisation and its specific needs. The authors do however note that the most popular metrics amongst managers are the financial metrics of net profit, ROI and margin (but not necessarily for good reason), with customer satisfaction the most popular non-financial metric.

Farris et all. (2015)  offer a holistic graphical representation to demonstrate the interlocking nature of all marketing metrics (and marketing programs) and the central role of the customer:

 

Farris 2015

Marketing metrics is a minefield for the uninitiated and it is understandable is our fast-paced business world that silver metrics are sought by managers. Considerable work is being undertaken by companies to find the perfect dashboard and further work to standardise the marketing metrics. But even the ‘perfect dashboard’ of cleverly selected metrics may still prove elusive, something Bradley & Kiley identified back in 2004:

“For all the effort to bring science to marketing, the art component will never go away. Figuring out how much of a product’s appeal is due to marketing and how much stems from innovative features or quality is often hard to pin down, even for individual consumers. They don’t know why they like it, they just do. That’s the human factor — and so far, no one has found a way to measure that”.

References

Ambler, T and Roberts, J 2008, ‘Assessing marketing performance: don’t settle for a silver metric’, Journal of Marketing Management, Vol. 24, Iss 7-8, 2008

Bradey, D  & Kiley, D 2004,’Making Marketing Measure Up Taking the guesswork out of ad spending’ Business Week -New York-, 3912, pp. 112-113, British Library Document Supply Centre Inside Serials & Conference Proceedings, EBSCOhost, viewed 25 May 2016.

Cameron, N 2015, Why marketing analytics is not about ROI calculation, but innovation, CMO, viewed 24th May 2016, http://www.cmo.com.au/article/585507/why-marketing-analytics-about-roi-calculation-innovation/

Farris, P, Bendle, N, Pfeiffer, P, Rubstein, D 2015, Marketing Metrics: The Managers Guide to Measuring Marketing Performance, Pearson Education

Kotler, P, & Keller, K 2012, Marketing Management, Pearson Education.

Muntz, O and Currim, I.S 2013, ‘What Drives Managerial Use of Marketing and Financial Metrics and Does Metric Use Affect Performance of Marketing-Mix Activities?’ Journal of Marketing, , Vol. 77, pp. 17-40, 2013

Williams, A 2016,  How Nivea delivered a better ROI on marketing spend, CMO,  viewed 24th May 2016 http://www.cmo.com.au/article/595988/how-nivea-delivered-better-roi-marketing-spend/

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