Measuring Marketing Productivity

Marketers are facing increased pressure to provide clear, quantifiable
evidence to senior management as to how their marketing expenditures
help the firm to achieve its goals and financial objectives.
Although we can easily quantify marketing expenses and
investments as inputs in the short run, the resulting outputs such
as broader brand awareness, enhanced brand image, greater customer
loyalty, and improved new product prospects may take
months or even years to manifest themselves. Moreover, a whole
host of internal changes within the organization and external
changes in the marketing environment may coincide with the marketing
expenditures, making it hard to isolate the effects of any
particular marketing activity.45
Nevertheless, an important task of marketing research is to assess
the efficiency and effectiveness of marketing activities. In one
survey, 65 percent of marketers indicated that return on marketing
investment was a concern.46 A recent survey of the nation’s
leading technology Chief Marketing Officers revealed that over
80 percent of the companies surveyed expressed dissatisfaction
with their ability to benchmark their marketing program’s
business impact and value.47
Marketing research can help address this increased need for
accountability. Two complementary approaches to measuring
marketing productivity are: (1) marketing metrics to assess marketing
effects and (2) marketing-mix modeling to estimate causal
relationships and measure how marketing activity affects outcomes.Marketing dashboards are a
structured way to disseminate the insights gleaned from these two approaches within the
organization.
Marketing Metrics
Marketers employ a wide variety of measures to assess marketing effects.48 Marketing metrics is
the set of measures that helps them quantify, compare, and interpret their marketing performance.
Here is how two marketing executives look at marketing metrics to better understand marketing
ROI at their companies: 49
• The CMO of Mary Kay , Rhonda Shasteen, focuses on four long-term brand strength metrics—
market awareness, consideration, trial, and 12-month beauty consultant productivity—as well
as a number of short-term program-specific metrics like ad impressions,Web site traffic, and
purchase conversion.
• The Virgin America VP of marketing, Porter Gale, looks at a broad set of online metrics—cost
per acquisition, cost per click, and cost per thousand page impressions (CPM). She also looks
at total dollars driven by natural and paid search and online display advertising as well as
tracking results and other metrics from the offline world.
There are many different marketing measures; marketers choose one or more based on the particular
issue they face or the problem they must solve. An advocate of simple, relevant metrics, the
University of Virginia’s Paul Farris draws an analogy to the way a Boeing 747 jet pilot decides what
information to use from the vast array of instruments in the cockpit to fly the plane:50
Improperly conducted and interpreted