There are two sides to every company - the supply side and the demand side. The supply side is the one the companies control. They can turn the dials, push the buttons and know almost exactly what the result will be. They buy a new machine and know how much their productivity will go up. The demand side, on the other hand, companies don't control. It is controlled by consumers. It's the fuzzy side where cause and effect are not always clear. It's the world of marketing. Finding out what happens when you turn the dials and push the buttons on the demand side is the art of marketing effectiveness. So how does marketing create demand?

1. Global Data
& Analytics
Marketing Measurement - Measurement and the Illusion of Control
By Dimitri Maex
Managing Director Marketing Effectiveness
Ogilvy New York
Ogilvy & Mather

2. Measurement and the illusion of control
There are two sides to every company - the supply side and the demand side.
The supply side is the one companies control. They can turn the dials, push the
buttons and know almost exactly what the result will be. They buy a new
machine and know how much their productivity will go up. The demand side, on
the other hand, companies don’t control. It is controlled by consumers. It’s the
fuzzy side where cause and effect are not always clear. It’s the world of
marketing. Finding out what happens when you turn the dials and push the
buttons on the demand side is the art of marketing effectiveness.
So how does marketing create demand? The always insightful, to the point and
practical Tim Ambler provides a very high level framework of how marketing
creates demand in Marketing and the Bottom Line :
Today Tomorrow
Environment Environment
Category Category
Competitor Competitor
Marketing Mix
Behavior Behavior
A marketing activity today will be processed in our heads and modified by
perceptions of the environment, the category and what our competitors are doing.
This may or may not affect behavior. Memories of the marketing activity and the
brand experience if behavior was affected will be stored in our heads tomorrow.
This is what Ambler calls Brand Equity - what is stored in our heads about a
brand. He says Brand Equity supports the business because it stores what
marketing has achieved but has not yet reached the profit and loss account.
This is a very simple framework that conceals a lot of the complexity of how
marketing works. There are no absolute rules that can explain with a high
degree of certainty how we process marketing information, how that is affected
by other external perceptions (or peers), how it affects behavior and how what is
in our heads today about a brand will affect our behavior tomorrow and beyond.
These are all relative unknowns and it is the role of marketing measurement and
analysis to get a better understanding of how this process works. This insight will
enable the marketer to make better marketing decisions today. But because of
the complexity, irrationality and unpredictability of consumer behavior there will

3. always be a high degree of fuzziness around what the future behavior will be as
a result of marketing activity today.
Many non marketing executives feel uncomfortable with the fuzziness of
marketing. They spend most of their time on the supply side of the business
where there is very little fuzziness and where the return on an investment can
usually be quantified relatively easily. It therefore shouldn’t come as a surprise
that they have asked marketing for more clarity on (accountability of) what the
impact is of their efforts.
Marketing’s response has been to try and use supply side financial techniques to
do this. The most popular one would be to estimate the discounted cash flow of
future revenue streams that will be generated as a result of current brand equity.
The complexity of fig 1 described earlier clearly shows that getting an accurate
estimate of this is nearly impossible. This is however the main technique used to
calculate Brand Value (often confused with Brand Equity itself).
By trying to use supply side language to describe the complex dynamics of the
demand side of the business, marketers have chosen a wrong and potentially
dangerous path. Ambler writes : Important as financial metrics are, they distort
reality and provide the illusion of control. Cannabis does much the same. Giving
non marketing executives the illusion that the demand side of the business can
be explained by financial metrics is counter productive. It gives them the excuse
to treat marketing as a black box they can invest in and expect a positive return
from without really having to understand its inner workings.
Marketing measurement should do the exact opposite. Rather than reducing the
entire process to one or 2 financial metrics, it should create transparency and
thereby force non marketing executives to acknowledge the complexity of how
demand is created. This can be done using a combination of financial metrics
such as sales, investment and bottom line and brand equity indicators such as
awareness, consideration, penetration, loyalty and brand image and perceptions.
Measurement that creates transparency around how demand is created can be
extremely powerful. It should never be shy to expose the complexity of the
process by which demand is generated and the fuzziness that comes with it.
Very few marketing organizations do this well. And if the marketing community
can’t explain clearly how demand is created, it’s hard to blame non marketing
executives for wanting to try to do it using crude financial metrics.