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Marketing communications measurement


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Marketing communications measurement

  1. 1. Conference of the EuroMed Academy of Business 21.10.2011Aarne Töllinen, Heikki Karjaluoto / Jyväskylä University School of Business and Economics
  2. 2. • Social media has gained significant interest both in science and business• Marketing Science Institute – Customer engagement as a top research priority for marketing academics (MSI, 2010) – New frameworks and methods that link existing marketing metrics and marketing performance measures with new media (MSI, 2010) – Marketing measurement and metrics (MSI, 2000; 2002; 2004; 2008)• Business
  3. 3. We ask… ... Is there a need for new marketing communications performance metrics for social media?So, we try to develop a framework for measuring the effectiveness of social media marketing communications. TO DO THATWe review and collate the literature on social media marketing, social media metrics, and marketing performance measurement. The Literature is collected from The most recent social media books and article The studies related to marketing performance measurement
  4. 4. Social media• Social media is collaboratively produced and shared content published through the internet. The term refers to networked digital platforms, which are used in communication between human beings.• Social media is new, but a permanent environment for marketing – Business invests $6 billion in social media in 2011• The shift toward engagement and interactive communications – From many to many – Customer participation & customer interaction – UGC / UGC (van Zyl, 2009; Riegner, 2007; Hearn et al., 2009; Aho Williamson, 2011; Weinberg and Pehlivan, 2011; Dennis et al., 2009; Liu et al., 2011)
  5. 5. • With social media one could equally be a content creator and a content consumer.• In social media, neither the customer nor the company is a king. The king is the content. Web 1.0 INTERNET Web 2.0 Platform for information Platform for influence (Hanna et al. 2011; Parent et al. 2011; Kietzmann et al. 2011)
  6. 6. Perspective to Social Media Author(s)viral marketing Kaplan and Haenlain, 2010; Ho and Dempsey, 2009;word of mouth Steffes and Burgee, 2009; Cheung and Rabjohn, 2008; Brown et al., 2007ecosystem Hanna et al., 2011customer engagement and Parent et al., 2011; Muñiz and Schau, 2011; Kaplan and Haenlain,participation 2011marketing budgeting Weinberg and Pehlivan, 2011corporate internal communications Hearn et al., 2009organizational knowledge management van Zyl, 2008history and development Boyd and Ellison, 2008; Kambil, 2008; Schibrowsky et al., 2007conceptual studies Karakas, 2009; Constantidines and Fountain, 2008relationship marketing and customer Quinton and Harridge-March, 2010; Ozuem et al., 2008interactiondirect marketing Palmer and Koenig-Lewis, 2009
  7. 7. • Why social media? (according to marketing literature ) – FIRST, marketing communication created by customers has been proved to be more credible in customers’ eyes than the messages promoted by an organization, and so to have a more powerful impact on decision making (Riegner, 2007). – SECOND, UGC may increase customers’ value experience, because of interactive and fluent customer service and better opportunities to participate in product and service creation process (Muñiz and Schau, 2011). – THIRD, active interaction and customer based content creation helps companies to build long-term competitive advantages (Parent et al., 2011).
  8. 8. • Marketing performance • The research have advanced measurement = gaining only sporadically calculable and provable results from marketing activities – Marketing productivity (the efficiency approach) Financial (e.g. sales, savings) – The marketing audit concept Non-financial (e.g. brand awareness, (the effectiveness approach) customer satisfaction) • The ability to measure marketing performance Quantitative (e.g. visitors, leads) positively affects firm performance and reporting Qualitative (e.g. sentiments, frequency mediates the reviews) relationship (Morgan et al., 2002; O’Sullivan et al. 2007 and O’Sullivan et al. 2009
  9. 9. • The digitalization has radically altered the ways in which firms can monitor their customers and collect data from their marketing communications Companies do not understand what KPI`s they should measure? How to measure the new kind of interactive marketing communications? (Phillips and Halliday, 2008)
  10. 10. • The simplest measurement model includes actions (inputs) and profits (outputs)• Ambler et al. (2001) propose that “metrics” should be limited to performance measures which are high level, necessary, sufficient, unambiguous, and ideally, predictive. – Marketing metrics should be calculable, in quantitative form, and auditable – in other words, reliable and professionally sourced (Ambler, 2002). Marketing Business Marketing Marketing Marketing measurement METRICS strategy strategy objectives tactics strategy Phillips and Halliday, 2008; Ambler and Roberts 2008; Seth and Sisodia, 2002
  11. 11. • Challenges: – Short-term and Long-term effects • the answer: brand equity? – The continuous change in business environments • the answer: multiple metrics? – The lack of shared marketing-accounting language: different objectives, different tools, different metrics • the answer: deeper co-operation between marketing & accounting? Ambler et al. 2004; Seth and Sisodia 2002; Sidhu and Roberts 2008
  12. 12. KPI discussion ROI discussion• ROC (return on a customer) • According to AMA ROI measures are:• NPC (net promoter score) – incremental sales revenue – ratio of cost to revenue – cost per sale generated• NPV (net present value) – changes of financial value of sales generated,• CLV (customer lifetime value) – cost of new customer, cost of old customer retention.• CE (customer equity) • According to Ambler and Roberts (2008) none of those is really an• Shareholder value ROI metric. Peppers and Rogers 2005; Reichheld 2003; Ambler and Roberts, 2008)
  13. 13. “CP can be considered, with some adjustments,equivalent to the CLV over a period of one accountingyear, it is possible to see the inter-relation of these twoterms. Since CE is defined as the sum of all current andfuture customers’ lifetime values, we can clearly link CEwith CLV by adding the NPV of future customers to thesum of the individual CLVs of all existing customers.” Sidhu and Robers 2008
  14. 14. • Social media analytics is a fresh concept, but it is based on the old principles of business analytics• ROI discussion – Financial measurement and non-financial measurement Barlow and Thomas 2011; Blanchard 2011; Turner and Shah 2001; Arikan 2008; Delahaye Paine 2011; Hanna et al. 2011
  15. 15. Qualitative Metrics Quantitative Metrics Financial MetricsNegative mentions Number of shares Average buyPositive mentions Number of retweets generated Average yield per transactionRecommendations Number of outbound replies ROIProduct reviews Number of click-throughs EPL = earnings per leadGeographic distribution of Number of customer service Customer lifetime valuementions requestsConsumers thoughts Number of comments Cost per acquisitionConsumers feelings Frequency of transaction Value of online transactions Number of bookmarks Value of sales Number of inbound visits Value of conversions Number of subscribers CPM Number of event attendees Value of leads generated Bounce rate Value of prospects converted Conversions Value of customer retained Costs
  16. 16. Findings• The digitalization has enlivened the discussion around marketing performance measurement during the last ten years• New technologies enable more precise qualitative and quantitative marketing communications measurement• When companies engage with their customers, the focus of their marketing measurement should be on the customer reaction to the tactics employed by their marketers. – Marketing measurement metrics should also be customer oriented – The digitized environment facilitates reaction tracking and marketing communications measurement. – Marketing measurement models developed in the past 40 years are still usable, and even more important than ever (customer satisfaction, CP, CLV etc.) – The shift towards a digitized interactive marketing environment does not necessarily mean that a whole array of new measurement metrics is needed.
  17. 17. • The marketing communications measurement must be company specific• That the marketing communications measurement must base on company strategy• Especially in the social media context, but also in a broader sense, marketing performance should be measured with several metrics• There is no broadly accepted opinion of a single KPI• Social media marketing metrics can be categorized in three groups: qualitative, quantitative and financial
  18. 18. COMPANY STRATEGY MARKETING STRATEGY SOCIAL MEDIA MARKETING OBJECTIVES (short- & long-term) SOCIAL MEDIA MARKETING TACTICS SOCIAL MEDIA MARKETING MEASUREMENT ROO EVALUATION Return On ObjectivesGoal A Goal B Goal C Goal D Goal E Goal F Qualitative Quantitative Financial measurement measurement measurement Sentiments, Number of… ROI, Profits, Sales, Thoughts, Followers, Clicks, Savings, Costs, CLV,Emotions, Feelings, Mentions, Shares, EPL, CPA, Value of Tones, Mentions Replies, Requests, leads generated Reviews Comments, Bookmarks, Bounce rate
  19. 19. • A large share of the literature concerning social media marketing measurement is managerial• We combine traditional marketing performance literature and social media marketing literature – Not conclusive, but indicative results
  20. 20. • How companies have combined the increased interest both in social media and in marketing performance measurement in practice.• How has the movement towards social media changed measurement practices?• An interesting question is whether the popularity of marketing accounting will continue to increase or perhaps we are moving towards more qualitative type of measures, or a mix of the two forms?