The document discusses the challenges of measuring marketing effectiveness, highlighting that many marketing leaders are dissatisfied with their measurement systems. It emphasizes the need for accountability in marketing by adopting new metrics that align with financial goals, shifting the narrative from marketing as a cost center to viewing it as an investment in customer assets. Ultimately, it calls for marketers to communicate in a language that resonates with finance executives to demonstrate their value and impact.

1. © DirectionGroup 2014
5
Marketing Accountability
and ROI
EDGE Best Practice Forum
22nd May 2014
Event Highlights

2. “63% of blue-chip Marketing VPs are
dissatisfied with their marketing
performance measurement systems”
Marketing Leadership Council report, USA, 2007
EDGE Marketing Best Practice Forum - Marketing Accountability22 May 2014 2

3. Why has marketing effectiveness measurement
proven so difficult?
1. Black box communication – do we understand how
communication actually works?
2. Time and timing - Not every message received results in
immediate response
3. Source of message or incentive - Consumers see between 2,000
and 5,000 branded messages per day
4. Those annoying intervening variables – that marketing cannot
control
5. Corporate versus communication timescales – your ‘financial
year’ timescale doesn’t matter to customers
6. How good is your data? – is your data robust enough for you to
rely on?
22 May 2014 3EDGE Marketing Best Practice Forum - Marketing Accountability

4. Companies are seeking new standards of proof in the
justification of marketing expenditure:
“…these new standards are driven in part by the
current economic climate but are also a
function of growing corporate intolerance for
the lack of ROMI discipline that has traditionally
characterized much of brand (and marketing)
spending”
Tim Ambler, London Business School
22 May 2014 4EDGE Marketing Best Practice Forum - Marketing Accountability

5.  Employing poor or non-existent
metrics
 Lack of desire to be measured
 No ‘professionalism’
 Never follow through
 Hides behind ‘the customer’
 Too prepared to use jargon and
technobabble
 Big gap between planned and
actual behaviour
 All other Departments are
accountable except Marketing
What ‘Finance’ thinks
of ‘Marketing’
EDGE Marketing Best Practice Forum - Marketing Accountability22 May 2014 5

6.  Lots of measures for cost; not
many for revenue (see a
standard P&L)
 Knows the cost of everything
but not its value
 Obsessed by numbers
 Don’t understand customers’
motivations and behaviour
 Don’t understand that not all
communications has an
immediate result
What ‘Marketing’ thinks of ‘Finance’
EDGE Marketing Best Practice Forum - Marketing Accountability22 May 2014 6

7.  Marketing still needs to prove its
value to business
 Unless we differentiate between
‘softer stuff’ and ‘marketing facts’
then Finance won’t take us
seriously
 Marketers don’t understand
accounting systems
 Favouring creativity over
accountability
Why Marketing struggles
at the boardroom table?
EDGE Marketing Best Practice Forum - Marketing Accountability22 May 2014 7
©www.bbc.co.uk

8. “Marketers must be more than functional
specialists to win over Chief Executives.
Marketers fail to reach board level
because they are not fluent in the
language of finance. Success requires a
new set of skills”
Sir Roy Gardner, CEO Centrica plc
EDGE Marketing Best Practice Forum - Marketing Accountability22 May 2014 8

9. We need a new marketing model because:
 How it (marketing) used to be – no longer works
 Declining effectiveness of mass marketing/media
 The changing customer – ever more discerning, more information
available
 Increased pressure on corporate profitability
 Digital communications are making outputs easier to measure
A need for a new marketing model
SO, MARKETING NEEDS TO BECOME
MORE ACCOUNTABLE
EDGE Marketing Best Practice Forum - Marketing Accountability22 May 2014 9

10. The 5 stages of Marketing
Accountability
DENIAL
“Marketing is
an art not a
science. It
cant be
measured”
Leads to
Marketing
being isolated
FEAR
“What is my
marketing doesn’t
impact the bottom
line?”
Accountability is a
double-edge
sword. You can
look like a star or
a disaster? Can
you take the risk
to find out?
CONFUSION
“I know I should
measure market
results, I just don’t
know how”
You know
measurement is
inevitable so a few
basic output
measures are
instigated but no
overall view of how
marketing impacts
the bottom line
SELF-PROMOTION
“Hey come look at
all my charts and
graphs!”
In a desperate
attempt to look
accountable they
measure anything
and everything and
produce a chart to
prove it. However,
they don’t
appreciate the
connection to hard
revenue, profits and
growth, creating an
impression of ‘soft
KPIs’
ACCOUNTABILITY
“Revenue starts with
marketing”
Marketing finds its true
place in the revenue
pipeline. Marketing
stops being a cost-
centre and starts
justifying expenditure
based on business
building outcomes.
The organisation
supports and believes
in marketing form the
top down and the right
tools and processes
are put in place. The
CMO acts and talks
like a true C-level and
Marketing has a seat
at the top table.
22 May 2014 10EDGE Marketing Best Practice Forum - Marketing Accountability

11. What business really wants from Marketing?
22 May 2014 11EDGE Marketing Best Practice Forum - Marketing Accountability

12. Marketing managers must aim to deliver one of 4 goals for the CEO:
1. Increase cashflow
2. Accelerate cashflow
3. Stabilize cashflow
4. Build or enhance shareholder value
What CEOs want from Marketing
REMEMBER!
Little else matters to CEOs!!!
22 May 2014 12EDGE Marketing Best Practice Forum - Marketing Accountability

13. “I get paid to make the owners of the
company more wealthy with each
passing day. Everything else is just
fluff.”
Roberto Goizueta, CEO, Coca Cola Corp
22 May 2014 13EDGE Marketing Best Practice Forum - Marketing Accountability
Image©CocaColaCorporation

14.  She has the ear of the CEO
and is widely respected within
business
 She can help you become
more commercially focussed
 You can use her to get more
budget
 FDs know how to model
numbers efficiently and if you
ask her she’ll do all the
number work!
 Get the FD on your side &
nobody will bother you!
Why your Finance
Director should be
your new best friend
http://www.bullzkart.com/
EDGE Marketing Best Practice Forum - Marketing Accountability22 May 2014 14

15.  It’s INVESTMENT
 The definition of ‘investment’ was “money invested into an
asset with an expectation of profit”
 Investment in what?
 Invest in ASSETS
 The definition of ‘assets’ was “anything a person, company, or
group owns or is owed, including money, investments and
property”
 The asset is, therefore….the customer
So, let’s reprise, what is the in ROMI?
22 May 2014 15EDGE Marketing Best Practice Forum - Marketing Accountability

16. 22 May 2014
 Marketing expenditure is applied to the customer
as an asset to increase their value
 We can raise the value of the customer asset by
investing marketing expenditure in different ways
 Return on customer investment delivers in
different timeframes and in different ways
16EDGE Marketing Best Practice Forum - Marketing Accountability
The ‘asset’ is……

17.  Think of ROMI as another name
for ‘profit’
 Profit is the goal, ROMI is the
measure
 Treat the marketing budget as a
‘loan’ from the company that has
to pay back
 Think of marketing channels as
‘different ways of making money’
 ‘INVEST IN CUSTOMERS’
…….don’t ‘spend marketing
budget’
Change the way you think
EDGE Marketing Best Practice Forum - Marketing Accountability22 May 2014 17

18. Where next?
Develop an accountability culture
EDGE Marketing Best Practice Forum - Marketing Accountability22 May 2014 18

19. “Without the right measurement, we really don’t know how well
our efforts work. We don’t really know if we’re in touch with our
consumers. This is a $450billion industry and we’re making
decisions with less data and discipline than we apply to $100,000
decisions in other aspects of our businesses. We lack an industry
standard for measurement. We need a method to determine the
effectiveness of our efforts”
Jim Stengel, Chief Marketing Officer, Proctor & Gamble
EDGE Marketing Best Practice Forum - Marketing Accountability22 May 2014 19

20.  CEOs don’t care about the open rate of your last email campaign or
your last press release’s number of views
 Use metrics that matter to the CEO and CFO: they care about
revenue and profits:
– How much faster are we growing now versus last quarter? Last year?
– How much profit was made last quarter versus this quarter?
– How much revenue and profit do you forecast for the next quarter?
– Why are you confident in the above answers?
 By speaking the same quantitative language as the CEOs and
CFOs, marketers will better communicate marketing’s value and
impact
Measurement builds respect and accountability
EDGE Marketing Best Practice Forum - Marketing Accountability22 May 2014 20

21. 21
But beware, what we said earlier…….
22 May 2014 EDGE Marketing Best Practice Forum - Marketing AccountabilityEDGE Marketing Best Practice Forum - Marketing Accountability22 May 2014 21

22. What should you measure?
 What matters to your business?
 Who do you measure for (vanity or sanity?)
 Can you acquire data good enough to evaluate?
 Will the metrics help you make better decisions
 How will measurement increase the amount or value of customers?
EDGE Marketing Best Practice Forum - Marketing Accountability22 May 2014 22

23. 22 May 2014 EDGE Marketing Best Practice Forum - Marketing Accountability #
GeraintH@directiongroup.com
@geraintholliman
/geraintholliman
Contact
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Geraint Holliman
Director of Planning and
Head of content Marketing