Sense and Nonsense Of Measuring Marketing ROI
- At September 28, 2009
- By Ewald Jozefzoon
- In Blog
0
There is a lot of debate going on, online and offline, about the sense and nonsense of measuring Marketing ROI. This debate is centred around the question how marketing can raise companywide recognition for its role as a profit driver.The opponents of measuring monetary marketing value state that it isn’t possible to (directly) link marketing activities to company profit. How, for instance, do you measure the incremental profit generated by a single print advertising? Furthermore, they point out that marketing is an art, not a science. And art cannot be measured.
Those in support of measuring marketing ROI argue that it is a critical task.
They claim that it is the only way to prove marketing’s added value to a critical business audience of non-marketers or marketin stakholders such as general management, sales, finance, et cetera. What’s more, they claim that marketing is being held more and more accountable for the budget they get. At face value, the arguments on both sides sound acceptable. But who is right?
During the summer of 2009, Calibrero initiated and conducted a research study on marketing performance attitudes to find answers to the following questions:
- Do marketers & non-marketers have a shared definition of the marketing role?
- How common is the practice of measuring & reporting marketing ROI?
- What benefits, if any, can be associated with measuring & reporting marketing ROI?
In the four months that this survey was run, we recorded 251 responses. Here is a summarised overview of the main conclusions:
Ad 1 – Do marketers & non-marketers have a shared definition of the marketing role?
The answer is: No, but the level of disagreement depends on whether marketers measure marketing value or not. We can conclude that there is more confusion between marketers and non-marketers about the marketing role, when marketers don’t measure marketing value.
In order to reduce the chance of confusion about the marketing role, marketers need to start or improve the measurement of their marketing ROI. Strategy development (identifying product, price and/or distribution opportunities) is a critical marketing task for measuring marketing ROI. After all, clarity of quantitative commercial targets is a prerequisite for measuring tangible results. Especially in B2B companies, marketers should focus more on fulfilling strategic marketing tasks.
Ad 2 – How common is the practice of measuring & reporting marketing ROI?
The answer is: Not common enough! Over 60% of respondents indicate that marketing value is measured within their company [please note: measuring monetary marketing value explicitly excludes activity-based measurement!]. This means that 40% doesn’t measure any marketing value. The results also show us that there is still room for improving the practice of measuring marketing ROI.
Less than 50% of all marketers that measure marketing value indicate that they know how much the return on marketing investment is within their company. This means that over 50% of them don’t know it.
Ad 3 – Are there benefits to measuring & reporting marketing ROI?
Yes, but in varying levels! There are clear benefits for marketers that measure their marketing performance. But there are even more benefits for marketers that can calculate their full return on marketing investment. The better marketing value is quantified, the bigger the benefits. Measuring marketing value doesn’t automatically mean that the company’s ROMI is known. When we look at the marketing budget prospects, marketers that measure marketing value but don’t know their ROMI have no advantage over those that don’t measure marketing value. On the other hand, marketers who do know their company’s ROMI are less likely to have their budgets cut. They are also more likely to have kept the same or higher budget.
To read the full report, click here to request a FREE copy.
CALCULATED MARKETING SUCCESS!
Recent Comments