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Center on Global Brand Leadership




Marketing ROI in the Era of Big Data:

The 2012 BRITE/NYAMA Marketing in
Transition Study




David Rogers	                       Don Sexton
Columbia Business School	           Columbia Business School
	                                   New York American Marketing Association
Introduction

The 2012 BRITE-NYAMA Marketing in Transition Study was conducted in early 2012 by
Columbia Business School’s Center on Global Brand Leadership and the New York American
Marketing Association (NYAMA), in preparation for Columbia’s annual BRITE conference
on brands, innovation, and technology. The study was made possible with support from
Research Now and GreenBook.

The aim of the study was to gain a better understanding of changing practices among large
corporate marketers in the following areas: data collection and usage, marketing measurement
and ROI, and the integration of digital and traditional marketing.

The survey found both widespread adoption of new digital tools, and support for the use of
new data to drive marketing decisions and measure marketing ROI. However, significant gaps
exist between desire and execution as companies strive to measure marketing ROI. The overall
picture of marketing by large corporations revealed significant need for improvements in the
use of data, the measurement of digital marketing, and the assessment of marketing ROI.



Sample findings:
•	 91% of senior corporate marketers believe that successful brands use customer data
   to drive marketing decisions
•	 Yet, 39% say their own company’s data is collected too infrequently or not real-time enough
•	 And 51% say that a lack of sharing customer data within their own organization
   is a barrier to effectively measuring their marketing ROI
•	 Large firms are much less likely to collect new forms of digital data like mobile data
   (19%), than they are to collect traditional customer survey data such as on demographics
   (74%) and attitude (54%)
•	 85% of large corporations are now using social network accounts (e.g. brand accounts on
   Facebook, Twitter, Google+, Foursquare) as a marketing tool
•	 65% of marketers said that comparing the effectiveness of marketing across different
   digital media is “a major challenge” for their business
•	 37% of respondents did not include any mention of financial outcomes when asked
   to define what “marketing ROI” meant for their own organization
•	 57% are not basing their marketing budgets on any ROI analysis
•	 22% are using brand awareness as their sole measure to evaluate their marketing spend




                                                                                              Page 2
Methodology & Survey Questions

253 corporate marketing decision makers, director-level and above, were surveyed online
between January 27 and February 8, 2012. These professionals are employed at large companies
(90% have a global annual revenue of over $50 million; 45% are over $1 billion). Respondents
were from diverse industries: 42% were from companies that were primarily business-to-business
(b2b), 28% primarily business-to-consumer (b2c), and 30% a combination of b2b and b2c.

Research Now conducted this survey on behalf of Columbia Business School and the New York
American Marketing Association. Survey respondents represent a random sample of marketing
professionals selected from a panel of individuals in the US who have online access to the
Internet. Research Now’s panel members are invited to participate in market research surveys
via e-mail invitation, and are validated through a “by invitation” recruitment process.

A downloadable copy of this research report, and a complete list of the survey questions can be
found online at: http://gsb.columbia.edu/globalbrands/research/brite-nyama-study




Table of Contents:
Methodology & Survey Questions........................................................................page 3



Findings:

	   The Failure of Big Data for Marketing So Far..................................................page 4

	   Marketers Adopt New Digital Tools, But Struggle to Measure Them..................page 7

	   ROI – Marketers Know They All Need It, But Can’t Even Agree What It Is.........page 10

Conclusions ....................................................................................................page 15

About the Authors ............................................................................................page 16

Acknowledgements ..........................................................................................page 16

About the Research Partners .............................................................................page 17




                                                                                                                          Page 3
The Failure of Big Data for Marketing So Far

A vast and increasing volume of digital data is being generated today by customers, by businesses,
by devices and processes. The growth of this “big data” has fueled the rise of analytics firms, both
new startups and established technology companies. [See “The Age of Big Data,” New York Times,
Feb 11, 2012] These firms aim to help business harness data with new tools to mine it, analyze it,
and track it in real-time. The promise of big data is to allow for better decision-making at every level
of every organization – retailers, manufacturers, service providers, even governments and NGOs.

In our study, we sought to measure how much progress has been made so far in efforts to use
data for marketing. Has the excitement around big data presaged a shift in how marketers conduct
their business? We found that so far, big data in marketing is still a work in progress. In many
organizations, the effective use of data for marketing decisions lags behind the desire to do so.
Following are our key findings.



        Table 1                    Demographic data                                           74%
 Types of date collected
           by marketers
                                   Customer transaction data                            64%
   Question: Which of the          Customer usage data                                 60%
following kinds of customer
  data does your marketing         Social media content created
       department collect or       by customers and targets            35%
            have access to?
                                   Social network ties and influence
                                   between customers and targets       33%
                                   Customer mobile
                                   phone/device data     19%
     Digital Data
 Traditional data
                               0          10           20         30    40   50   60     70   80



All marketers want to be data-driven…
Nearly all corporate marketing leaders today (91%) believe that successful brands use customer
data to drive marketing decisions. This sentiment is extremely consistent, with no industry
measured below 83%. Among respondents who are at the CMO level of their organizations,
agreement rose to 100%.

But many are not collecting the data they need…
The universal desire to be data-driven is not yet matched by a consistent effort to collect the data
necessary to make these real-time decisions. 29% report that their marketing departments have “too
little or no customer/consumer data.” This problem is particularly acute in some industries, such as
consumer manufacturing, where 39% report the problem.




                                                                                                    Page 4
39% of marketers say they can’t turn their data
into actionable insight


The new generation of big data analytics is predicated on access to frequent and recent data, not the
quarterly omnibus survey panels of traditional market research. And yet, when data is collected by
marketers, it is often not appropriate to real-time decision making. 39% of marketers say that their
data is collected “too infrequently or not real-time enough.”

The promise of big data is also based on integrating new types of data generated by online activity,
such as mobile computing and social media. However, marketers today are still much less likely to
collect new forms of digital data like customer mobile device data (19% collect it), and social media
data (35%), than they are to collect traditional customer survey data on demographics (74%), usage
(60%), and attitudes (54%). This gap is less pronounced in larger firms, however. Companies with
over $25 billion in revenues are 40% likely to collect mobile data, and 42% likely to collect data
on social media conversations.

And if they do collect the data, they may not be sharing and utilizing it effectively.
Collecting data is not the only hurdle that marketers must overcome in order to become more
data-driven. Two in five marketers (39%) admit that they cannot turn their data into actionable
insight. And sheer quantity of data does not appear to be the key problem: 36% report that they
have “lots of customer data,” but “don’t know what to do with it.”




        Table 2                   We have too little or no
                                  customer/consumer data                       29%
Biggest challenges to use
of “big data” for marketing       Our data is collected too infrequently
                                  or is not real-time enough                                39%

                                  The lack of sharing data across our organization is an
                                  obstacle to measuring the ROI of our marketing                        51%

                                  We are not able to link our data together at the
                                  level of individual customers                                 42%

                                  We aren’t using our data to effectively personalize
                                  our marketing communications                                    45%


                              0              10              20             30             40      50         60




                                                                                                                   Page 5
One of the biggest obstacles to turning data into actionable insight may be a lack of effective
data sharing across departments and divisions of the company. In the past, departments such
as sales, marketing, customer service, public relations, and supply chain, might each have had
their own datasets which they managed separately. But the promise of big data analytics is based
on the ability to link these datasets together, in order to better understand interactions between
firm, customer, and business partners. Marketers recognize this: 87% agree that capturing
and sharing the right data is important to effectively measuring ROI in their own company.

For the majority of corporate marketers, though, this kind of data sharing is not yet happening.
Over half (51%) say that a lack of sharing customer data across their own organization poses an
obstacle to their effectively measuring marketing ROI. Interestingly, this problem is more likely
to be reported by marketers below the VP level (56%), vs. more senior marketing leaders (32%).
This difference may reflect that the difficulty of sharing data across departments is a problem
for those “in the trenches,” but less visible to CMOs and heads of marketing.

Linking shared data at the customer-level is critical for the goals of big data: effective targeting
and personalization of marketing efforts where they will matter most. Unfortunately, many
companies are not yet achieving these goals. 42% of marketers report that they are not able
to link data at the level of an individual customer. Nearly half (45%) are not using data to
personalize their marketing communications. And while most companies are able to target their
high-value customers (a more longstanding goal), 28% still do not know which high-value
customers to focus their marketing on.

Recommendations:
In order to leverage the opportunities of big data, marketers need to improve their ability to:

•	 Collect meaningful customer data from a variety of sources, including real-time data
•	 Link that data to metrics developed for measuring marketing ROI
•	 Share data across the organization, linking datasets together at the customer level
•	 Utilize this shared data to effectively target and personalize marketing efforts to customers




51% of all marketers say that a lack of sharing
customer data across their organization is an
obstacle to effectively measuring their ROI


                                                                                                  Page 6
Marketers Adopt New Digital Tools,
But Struggle to Measure Them

The global adoption of mobile computing, social media, and digital content (from YouTube to
blogs to ebooks) has transformed consumer behaviors and opened up new opportunities for
marketing in every industry. Marketers today face an array of new digital tools that can be
harnessed for marketing purposes, from branded apps for smartphones, to online video channels,
to their own branded presence on social networks like Facebook. All of these digital tools produce
data, often as a tantalizingly public “digital footprint” by customers. That fact raises the prospect
of much more accurate marketing measurement in an increasingly digital world. However, digital
data does not necessarily make it easier to link digital marketing to clear business objectives or
to measurements of marketing ROI.

In our study, we sought to measure how marketers are using the latest digital tools, and how
effectively are they being measured. How widely have the newest digital media been adopted
by corporate marketers? And are new datasets making it easier for firms to measure marketing
ROI, or not? We found that digital media are, indeed, being adopted quite rapidly for marketing
purposes, but developing metrics for them is posing challenges for marketers seeking to
integrate their traditional and digital marketing efforts. Following are our key findings.




        Table 3                     Sponsorship & events                                   90%
       Adoption rate of new
                                    Email marketing                                    89%
digital tools vs established
    channels for marketing
                                    Digital content                                   87%
                                    Social network accounts                           85%
                                    Print advertising                                 85%
                                    Direct mail                                 74%
                                    TV & radio ads                       59%
                                    Mobile ads (app/SMS)           51%
      Digital tools
  Traditional tools
                               20          30           40    50     60    70   80    90    100




                                                                                                  Page 7
Getting traditional and digital marketing to work
better together remains a major goal for 77% of
marketing departments


The newest digital marketing tools are catching up quickly in widespread
corporate adoption…
Marketers across industries are rapidly adopting many of the latest digital tools for marketing.
The vast majority (85%) are now marketing via their own brand accounts on social networks
like Facebook, Twitter, Google+, and Foursquare. This is evident across industries, and even
78% of b2b companies reported using social network marketing. Retail and travel/leisure are
among the highest adopting industries. Among the lowest are industrial manufacturing and
the healthcare/pharmaceutical industry, which was slow to adopt social networks due to its
regulatory environment. Still, no industry reported less than 70% adoption.

87% of firms now create marketing-purposed digital content in various forms: white papers,
blogs, videos, podcasts, as well as branded phone apps and games. Adoption is higher, not
surprisingly, in the communications & publishing industries, but also in technology/electronics,
and financial services. B2B firms are slightly more likely than b2c firms to use such content
(90% vs 82%). Retail is among the lowest users of digital content for marketing, despite notable
cases of success among some brick-and-mortar retailers.

Even mobile advertising (ads within mobile apps, or via SMS message) has been adopted by 51%
of marketers. Financial services and travel/leisure were among the industries most likely to use it.
Although still newer and less standardized than some other digital marketing tools, mobile-only
ads have been adopted by 76% of the largest firms, with revenues over $100 billion annually.

But… these tools are among the least likely to be measured for ROI
(despite their profusion of data)
Marketing measurement, however, has not kept up with the rapid pace of adoption for new digital
media. In particular, measurement of digital marketing with financial metrics (such as market
share, revenue, profit, or lifetime customer value) is lagging. Only 14% of those companies using
social network marketing are tying these efforts to financial metrics. And only 17% of companies
using mobile advertising are tying it to financial metrics. By contrast, firms use financial metrics
to measure 41% of their email marketing (a longer-established digital tool), and 47% of tradi-
tional direct mail marketing.

… and marketers are struggling to compare their efforts across their various digital media.
As the number of marketing tools expands, the challenge of measuring and comparing them
grows. 70% of CMOs report that a “cross-platform model for ROI” is a major goal for their
business. But companies adopting digital marketing find this goal difficult to reach. 60% of
companies report that comparing the effectiveness of marketing across their different digital
media is “a major challenge.”




                                                                                                Page 8
Some of this is because digital marketing tools are often measured with metrics that are
unique to them – e.g. “retweets” measure customer engagement on Twitter, whereas “likes”
and “shares” measure it on Facebook. These channel-specific metrics create a particular
measurement problem: comparing digital marketing efforts is often like “comparing apples
to oranges.” As shown in Table 4, digital marketing channels are much more likely
(vs. traditional marketing channels) to be measured with metrics that cannot be easily
compared with other channels.

These channel-specific metrics pose an obstacle to the integration of digital and traditional
marketing in a single measurement model. Unsurprisingly, 77% of marketers report that
getting their traditional and digital marketing to work better together is still a major goal for
their business. The issue is being considered at the organizational level as well: 50% of
companies report that they have recently, or soon will, re-organize their marketing departments
to improve the integration of traditional and digital.




          Table 4                  Social network accounts                                  48%
   Use of “channel-specific”
                                   Digital content                            32%
      engagement metrics for
different marketing channels
                                   Email marketing                           30%
                                   Mobile ads (app/SMS)                 27%
                                   Direct mail                     23%
                                   Print advertising              21%
                                   TV & radio ads                 20%
                                   Sponsorship & events       19%
    Digital channels
Traditional channels
                               0                 10          20         30          40      50




Recommendations:
In order to effectively harness the capabilities of new digital tools, marketers need to:

•	 Set clear business objectives for any digital marketing effort
•	 Develop a variety of metrics for new digital tools—from audience metrics, to engagement
   metrics, to financial metrics
•	 Develop models that link channel-specific digital metrics (like retweets or Facebook
   interactions) to universal metrics, including your key performance indicators (KPIs)
•	 Continuously innovate new measurement models, as new digital tools and marketing
   rapidly evolve




                                                                                                 Page 9
ROI – Marketers Know They All Need It,
But Can’t Even Agree What It Is

In this study, we tried to learn which organizations believe that they are doing well with respect
to measuring marketing ROI. What are they doing that allows them to succeed in measuring
marketing ROI? What are some of the barriers organizations face in measuring marketing ROI?
How does knowing their marketing ROI affect how they view and use metrics?

We found that some organizations are satisfied with their ability to measure marketing ROI. They
have achieved that success through leadership and persistence. In turn, their knowledge of their
marketing ROI allows them to base their marketing spending decisions on a financial foundation.

Marketers think that they should be measuring their marketing ROI …
Marketers know that they need to justify their decisions financially. 70% say that their marketing
efforts are under greater scrutiny than ever. 39% go so far as to say that they consider it
important to spend only on marketing activities where the financial effects can be measured.

…but many managers aren’t measuring marketing ROI either consistently or effectively.
Only 43% of organizations are establishing their marketing budgets based on marketing ROI
analysis. By contrast, 68% base their marketing budgets in part on “historical spending,”
and 28% on “gut instincts.” When it comes to specific marketing spending decisions, 21%
are using financial metrics for little or none of those specific decisions, and 7% are making
all or most of those spending decisions with no metrics at all.

Instead of marketing ROI, managers continue to use many traditional metrics such as recall,
brand favorability, purchase intention, and willingness to recommend. Of those using some
kind of universal metric, 22% make all or most of their marketing decisions with brand
awareness alone.

What organizations are satisfied with their measurement of marketing ROI?
Overall, 45% of the organizations surveyed are satisfied with their ability to measure marketing
ROI. Those most likely to be satisfied with their ability to measure marketing ROI are large
organizations (55.5%) - sales of $25 billion or more - and service organizations (48.8%).
Only 33.1% of consumer product organizations and only 26.1% of industrial product
organizations are satisfied with how they measure marketing ROI.

Satisfaction depends on your viewpoint: 54% of CMO’s are satisfied with their ability
to measure marketing ROI, but only 43% of those below the vice president level are satisfied –
perhaps because they are closer to the problem of determining how to most effectively
measure marketing ROI.




57% are not basing their marketing budgets
on any ROI analysis
                                                                                                Page 10
37% of respondents did not include any mention
 of financial outcomes when asked to define what
“marketing ROI” meant for their own organization

To what extent is marketing ROI used for decision-making?
Among the roughly half of marketers that are very or somewhat satisfied with their ability to measure
marketing ROI, 57% use marketing ROI for their budget decisions and 59% use financial metrics to
evaluate their marketing spend. 54% go as far as to say they consider it important to try to spend
only when they have financial metrics.

Understanding what marketing ROI is
In the organizations surveyed, however, managers do not appear to have a consistent understanding of
what marketing ROI is. When asked to define marketing ROI, 37% of the respondents did not mention
financial effects and 82% did not mention that ROI consists of both financial return and spending.
31% think that just measuring the audience you reach is “marketing ROI.” Even when prompted, 19%
do not think that “measuring the financial impact of our marketing” is marketing ROI.

In place of marketing ROI, many traditional measures are used. 37% of the respondents claimed that
they used brand awareness as a universal metric to make marketing decisions. More troubling, of
those using brand awareness, more than 60% said it was their only marketing ROI measure. To be
useful, brand awareness must be coupled with some measure of brand perception. Brand awareness
by itself is a lagging indicator of brand strength. Using it as the sole or main measure to make
marketing decisions is truly managing by looking in the rear view mirror.

How can an organization improve its ability to measure marketing ROI?
Specific actions appear to improve the ability to measure marketing ROI (Table 5). Companies are
much more likely to be satisfied with their marketing ROI measurement if they provide incentives to
both their employees and to their research vendors. Compensation is the most effective incentive for
employees while setting objectives is most effective for vendors – most likely because if the vendors
achieve objectives, they might expect repeat business.


        Table 5                                            Incent employees
                                                                                          46.3%
                              Performance objectives
Incentives and satisfaction                                                  24.2%
    with ability to measure                                                                          63.1%
                                Compensation plans
             marketing ROI                                            15.5%

                               Recognition programs
                                                                                               54.8%
                                                                              25.8%

                                                           Incent marketing vendors
                              Performance objectives
                                                                                                          67.8%
                                                                     13.6%

                                Compensation plans
                                                                                                    60%
                                                                    11.4%
         Satisfied
      Dissatisfied
                                                       0       10     20      30     40   50   60      70     Page 11
72.4%
       Table 6                     Culture
                                                                                          52.2%

                                                                                                                88.9%
Importance of drivers and      Leadership
                                                                                         51.0%
   barriers to measuring
           marketing ROI                                                                                      87.3%
                                     Data
                                                                                          52.6%

                                                                                                           81.8%
                                     Tools
                                                                                              56.1%

                                                                                                       77.1%
                                     Skills
                                                                                       47.1%

                                                                                                           81.5%
                                  Process
          Drivers                                                                       49.0%
         Barriers

                                              0    10    20        30        40    50      60    70   80   90




All the respondents considered leadership and data the most important drivers of success
in measuring marketing ROI (Table 6). While little difference was found in the use of data by
those satisfied and not satisfied with their ability to measure marketing ROI, there appear to
be differences in leadership. Organizations satisfied with measuring marketing ROI tend to
use more metrics in general than organizations that are less satisfied (Table 7) and their
leaders set measurable objectives for marketing actions (Table 8).




                               Set measurable objectives                                                      56.1%
        Table 7                        for all campaigns                                21.1%

                                                                                                                 60.0%
       Use of metrics and              Audience metrics
                                                                                       20.0%
satisfaction with ability to
   measure marketing ROI           Channel engagement                                                                    75.0%
                                               metrics                                 18.8%

                                  Universal engagement                                                      54.3%
                                                metrics                           14.3%

                                       Financial metrics                                                         58.6%
                                                                                        21.2%

                                                  No metrics                  11.8%
         Satisfied                                                                                               58.8%
      Dissatisfied

                                                               0        10        20     30     40    50    60     70    80




                                                                                                                              Page 12
Important to                                                    54.0%
         Table 8                       spend only when have
                                            financial metrics                            21.0%

     Attitude toward metrics               All right if some
                                  marketing measured only                                                  47.8%
and satisfaction with ability             with engagement                                    26.3%
  to measure marketing ROI
                                 Some aspects of marketing                                                 46.7%
                                      cannot be measured                                    26.2%

                                Marketing metrics accepted                                                          57.9%
                                                 by finance                          18.7%

                                   If cut marketing by 10%,                                                 48.6%
                                          know sales impact                                  26.8%
          Satisfied
       Dissatisfied

                                                                0        10         20      30       40   50       60




Achieving success in measuring marketing ROI
Measuring marketing ROI for most organizations is a work in progress. The factor most highly
associated with satisfaction with measuring marketing ROI is time spent working on it (Table 9).

There appears to be a clear learning curve for understanding how to measure marketing ROI.
Continuing to work on measuring marketing ROI does move the organization forward. In addition,
organizations satisfied with their ability to measure marketing ROI tend to stay there, while other
organizations can move from dissatisfaction to satisfaction, even over two years. Among
organizations surveyed, 22% of those dissatisfied became satisfied after two years, while only
3% of those who were satisfied became dissatisfied over the same period.




            Table 9                      0
                                                8.3%
                                       Years
       Years spent measuring
marketing ROI and satisfaction
       with ability to measure
                 marketing ROI
                                                        1-2 Years                          46.2%


                                                             3-5 Years                           51.2%


                                                                More than 5 Years                         63.8%
          Satisfied


                                   0           10       20          30         40          50        60    70




                                                                                                                        Page 13
22% are using brand awareness as their sole
measure to evaluate their marketing spend


  Outcomes
  Organizations that report satisfaction in their ability to measure marketing ROI utilize it in their
  decisions, but they also understand that all decisions need not be made with marketing ROI
  (Table 8). As one would expect, they are savvier with respect to the financial effects of their
  marketing decisions and, for example, are more likely to be able estimate the financial impact
  of any cuts in their marketing budgets.

  Recommendations
  Above all, get started. Start with the basics of determining marketing ROI so you will
  create the largest impact on your organization:

  •	 Make sure you’re using some kind of metrics on most of your marketing.
  •	 Be ready to invest in getting some kind of data relevant to your measures.
  •	 Make coordinating your traditional and digital media campaigns a goal.
  •	 Set specific measurable objectives for all your campaigns.
  •	 Put ROI in stated objectives for all your vendors (so they know your expectations
     to retain them or to cut them loose).
  •	 Link marketing ROI to employee compensation, perhaps a bonus.
  •	 Start today… as the pay off and learning curve will likely take a few years.



  Then, move on to ROI best practices:

  •	 Make sure your marketing metrics are accepted by finance.
  •	 Make sure your data is: timely, actionable, linked at the customer-level,
     used to personalize marketing and target customers.
  •	 Share your data across your organization.




                                                                                                   Page 14
Conclusions

Chief Marketing Officers face a dynamic and challenging environment for marketing today. They
will find no simple answers to effectively measuring marketing ROI amidst the growth of big data
and new digital marketing tools. Innovative marketing and effective measurement will both be
works in progress that require leadership, agility, and constant learning.



To lead effectively, CMOs should focus on five key leadership imperatives:

1.	 Set objectives first. It is critical that all marketing efforts be focused on delivering on
    key business objectives, or KPIs (key performance indicators). Even with new technologies
    like social networks and mobile advertising, experimentation needs to quickly give way
    to focused strategies linked to clear objectives that are set in advance.
2.	 Design metrics to ensure marketing is linked to those objectives. Once objectives are set,
    marketers need to develop appropriate metrics for any marketing effort that will be able
    to measure whether and how it is succeeding. Last year’s metrics should not determine
    what this year’s objectives can be. (“I know how to measure it, so that must be my goal.”)
    Rather, marketers must be prepared to develop new metrics and new measurement models
    as they develop innovative marketing programs, in order to clearly tie these to their
    intended objectives.
3.	 Gather the right data for those metrics. Once metrics are set, they should be used to identify
    what types of data are required. Marketers must avoid the temptation to analyze or purchase
    data simply because it is available, brand new, or being promoted by a vendor. By starting
    from defined marketing objectives, and from the metrics chosen to measure them, marketers
    can clearly identify which data they need, and which they do not.
4.	 Communicate to the entire organization what your objectives are, and how they are being
    measured. With a process for effective marketing measurement in place, it is essential that
    all relevant staff be aligned. That includes knowing what the firm’s key marketing objectives
    are, knowing how they are being measured, and responding to incoming data in order to
    continuously improve marketing efforts, and innovate new ones.
5.	 Evaluate and reward employees in part on how well objectives are achieved. Once employees
    understand the organization’s marketing objectives and the metrics being used to measure
    them, evaluation and compensation should be linked in part to their measurable success.
    By demonstrating that measurable results matter to everyone in the marketing department,
    CMOs give all employees the initiative to show leadership of their own at every stage of
    the marketing process.




                                                                                              Page 15
About the Authors

                       David Rogers is the Executive Director of BRITE at Columbia Business School
                       and the faculty director of the school’s Executive Education program on
                       Digital Marketing Strategy. He is the founder and host of the Center on
                       Global Brand Leadership’s acclaimed BRITE conference on brands, innovation
                       and technology. Rogers is a widely recognized leader on digital strategy and
                       brands, known for his unique insights into customer networks. His latest book
                       is The Network Is Your Customer: 5 Strategies to Thrive in a Digital Age,
                       published by Yale University Press.

                       Rogers speaks at conferences worldwide on the ways that digital technologies
                       are transforming business strategy. He received the award for Brand
                       Leadership at the 2009 World Brand Congress and has appeared on CNN,
                       CNBC, Marketplace, Reuters, MSN Money, and Channel NewsAsia. David
                       has advised and consulted on marketing and digital strategies for leading
                       companies in the consumer packaged goods, technology, pharmaceutical,
                       food & beverage, telecom, hospitality, non-profit, and media industries.
                       Contact: contact@davidrogers.biz


                       Don Sexton is Professor of Marketing and Professor of Decisions, Risk, and
                       Operations, and Faculty Director, Center for International Business Education
                       and Research, Columbia University. His articles have appeared in numerous
                       journals such as the Harvard Business Review, Journal of Marketing, Journal
                       of Marketing Research, and Management Science. His best-selling books,
                       Marketing 101 and Branding 101, have been translated into several languages
                       including Chinese, Turkish, Russian, Vietnamese, Polish, Romanian, and
                       Indonesian. Don’s most recent book, Value Above Cost: Driving Superior
                       Financial Performance with CVA®, the Most Important Metric You’ve Never
                       Used (Wharton), explains how marketing drives financial performance and is
                       also available in Chinese.

                       He serves on the board of the NY-AMA, is President-Elect of the Association
                       for International Business Education and Research (a consortium of 33
                       universities), and is an advisor to the Marketing Accountability Standards
                       Board. He received the 2011 Marketing Trends Award for his work on
                       marketing and branding strategy. Don is the founder of The Arrow Group,
                       Ltd.®, a company that has provided consulting and training services to such
                       companies as GE, IBM, Unilever, Pepsi, Sony, DuPont, Pfizer, Volkswagen,
                       Citibank, Boeing, and Verizon. Contact: donsexton@mindspring.com

Acknowledgements
Special thanks are due to Randall Ringer, President of the New York American Marketing Association, for proposing
this project, championing it, assembling the necessary partners, and guiding our efforts with expert advice and insight.
The study would not have been possible without the critical support of Leonard Murphy (GreenBook), Morgan Buckley
(Research Now), and Matthew Quint (Columbia Business School Center on Global Brand Leadership). Special thanks
to Kartik Pashupati and Melanie Courtright (Research Now) for the survey programming and fielding, and to Sylvia Chu
and Michael Dudley (Verse Group) for the visual design of this report.

                                                                                                                  Page 16
About the Research Partners

    Center on Global Brand Leadership


The Center on Global Brand Leadership was founded at Columbia Business School in 1999 and
has grown into the leading global forum on brands. The mission of the center is to turn the
research and intellectual capital of academia’s foremost thinkers on branding into practical
tools and insights for real-world application. The Center has worked with a wide range of sponsor
companies to develop a variety of thought leadership including: conferences, case studies, videos
and webinars, and sponsored research. More details at http://globalbrands.org. The Center’s
flagship BRITE conference on brands, innovation, and technology presented was founded in
2008 and is presented each spring at Columbia University. BRITE ‘12 included John Hayes
(CMO, American Express), Marc Speichert (CMO, L’Oreal USA), and Bob Garfield (host of On
the Media, editor for Ad Age). More details at: http://www.BRITEconference.com




The New York American Marketing Association (NYAMA) helps marketing professionals navigate
to success in today’s dynamic business environment. We serve the marketing community by
giving members opportunities to push the boundaries of marketing, expand their skills and
exchange ideas with other experienced professionals. The BRITE/NYAMA study is one example of
how we are contributing to the advancement of marketing. More details at: http://nyama.org




Research Now is the leading global online sampling and online data collection company. With
over 6 million panelists in 38 countries worldwide, Research Now enables companies to listen
to and interact with real consumers and business decision makers in order to make key business
decisions. Research Now offers a full suite of data collection services, including social media
sampling, and operates the Valued Opinions™ Panel and e-Rewards® Opinion Panels. The
company has a multilingual staff located in 24 offices around the globe and has been recognized
for four consecutive years as the industry leader in client satisfaction. Visit www.researchnow.com
to learn more.




GreenBook® brings stimulating, practical, and timely resources to marketers and market
researchers on both sides of the table. Through its targeted multi-media platform, GreenBook
offers effective marketing and lead generation opportunities to businesses that communicate
with buyers and users of market research. More details at: http://www.greenbook.org




                                                                                              Page 17

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Most Marketers Unaware of What Digital ROI Means, Fail to Measure it Appropriately

  • 1. Center on Global Brand Leadership Marketing ROI in the Era of Big Data: The 2012 BRITE/NYAMA Marketing in Transition Study David Rogers Don Sexton Columbia Business School Columbia Business School New York American Marketing Association
  • 2. Introduction The 2012 BRITE-NYAMA Marketing in Transition Study was conducted in early 2012 by Columbia Business School’s Center on Global Brand Leadership and the New York American Marketing Association (NYAMA), in preparation for Columbia’s annual BRITE conference on brands, innovation, and technology. The study was made possible with support from Research Now and GreenBook. The aim of the study was to gain a better understanding of changing practices among large corporate marketers in the following areas: data collection and usage, marketing measurement and ROI, and the integration of digital and traditional marketing. The survey found both widespread adoption of new digital tools, and support for the use of new data to drive marketing decisions and measure marketing ROI. However, significant gaps exist between desire and execution as companies strive to measure marketing ROI. The overall picture of marketing by large corporations revealed significant need for improvements in the use of data, the measurement of digital marketing, and the assessment of marketing ROI. Sample findings: • 91% of senior corporate marketers believe that successful brands use customer data to drive marketing decisions • Yet, 39% say their own company’s data is collected too infrequently or not real-time enough • And 51% say that a lack of sharing customer data within their own organization is a barrier to effectively measuring their marketing ROI • Large firms are much less likely to collect new forms of digital data like mobile data (19%), than they are to collect traditional customer survey data such as on demographics (74%) and attitude (54%) • 85% of large corporations are now using social network accounts (e.g. brand accounts on Facebook, Twitter, Google+, Foursquare) as a marketing tool • 65% of marketers said that comparing the effectiveness of marketing across different digital media is “a major challenge” for their business • 37% of respondents did not include any mention of financial outcomes when asked to define what “marketing ROI” meant for their own organization • 57% are not basing their marketing budgets on any ROI analysis • 22% are using brand awareness as their sole measure to evaluate their marketing spend Page 2
  • 3. Methodology & Survey Questions 253 corporate marketing decision makers, director-level and above, were surveyed online between January 27 and February 8, 2012. These professionals are employed at large companies (90% have a global annual revenue of over $50 million; 45% are over $1 billion). Respondents were from diverse industries: 42% were from companies that were primarily business-to-business (b2b), 28% primarily business-to-consumer (b2c), and 30% a combination of b2b and b2c. Research Now conducted this survey on behalf of Columbia Business School and the New York American Marketing Association. Survey respondents represent a random sample of marketing professionals selected from a panel of individuals in the US who have online access to the Internet. Research Now’s panel members are invited to participate in market research surveys via e-mail invitation, and are validated through a “by invitation” recruitment process. A downloadable copy of this research report, and a complete list of the survey questions can be found online at: http://gsb.columbia.edu/globalbrands/research/brite-nyama-study Table of Contents: Methodology & Survey Questions........................................................................page 3 Findings: The Failure of Big Data for Marketing So Far..................................................page 4 Marketers Adopt New Digital Tools, But Struggle to Measure Them..................page 7 ROI – Marketers Know They All Need It, But Can’t Even Agree What It Is.........page 10 Conclusions ....................................................................................................page 15 About the Authors ............................................................................................page 16 Acknowledgements ..........................................................................................page 16 About the Research Partners .............................................................................page 17 Page 3
  • 4. The Failure of Big Data for Marketing So Far A vast and increasing volume of digital data is being generated today by customers, by businesses, by devices and processes. The growth of this “big data” has fueled the rise of analytics firms, both new startups and established technology companies. [See “The Age of Big Data,” New York Times, Feb 11, 2012] These firms aim to help business harness data with new tools to mine it, analyze it, and track it in real-time. The promise of big data is to allow for better decision-making at every level of every organization – retailers, manufacturers, service providers, even governments and NGOs. In our study, we sought to measure how much progress has been made so far in efforts to use data for marketing. Has the excitement around big data presaged a shift in how marketers conduct their business? We found that so far, big data in marketing is still a work in progress. In many organizations, the effective use of data for marketing decisions lags behind the desire to do so. Following are our key findings. Table 1 Demographic data 74% Types of date collected by marketers Customer transaction data 64% Question: Which of the Customer usage data 60% following kinds of customer data does your marketing Social media content created department collect or by customers and targets 35% have access to? Social network ties and influence between customers and targets 33% Customer mobile phone/device data 19% Digital Data Traditional data 0 10 20 30 40 50 60 70 80 All marketers want to be data-driven… Nearly all corporate marketing leaders today (91%) believe that successful brands use customer data to drive marketing decisions. This sentiment is extremely consistent, with no industry measured below 83%. Among respondents who are at the CMO level of their organizations, agreement rose to 100%. But many are not collecting the data they need… The universal desire to be data-driven is not yet matched by a consistent effort to collect the data necessary to make these real-time decisions. 29% report that their marketing departments have “too little or no customer/consumer data.” This problem is particularly acute in some industries, such as consumer manufacturing, where 39% report the problem. Page 4
  • 5. 39% of marketers say they can’t turn their data into actionable insight The new generation of big data analytics is predicated on access to frequent and recent data, not the quarterly omnibus survey panels of traditional market research. And yet, when data is collected by marketers, it is often not appropriate to real-time decision making. 39% of marketers say that their data is collected “too infrequently or not real-time enough.” The promise of big data is also based on integrating new types of data generated by online activity, such as mobile computing and social media. However, marketers today are still much less likely to collect new forms of digital data like customer mobile device data (19% collect it), and social media data (35%), than they are to collect traditional customer survey data on demographics (74%), usage (60%), and attitudes (54%). This gap is less pronounced in larger firms, however. Companies with over $25 billion in revenues are 40% likely to collect mobile data, and 42% likely to collect data on social media conversations. And if they do collect the data, they may not be sharing and utilizing it effectively. Collecting data is not the only hurdle that marketers must overcome in order to become more data-driven. Two in five marketers (39%) admit that they cannot turn their data into actionable insight. And sheer quantity of data does not appear to be the key problem: 36% report that they have “lots of customer data,” but “don’t know what to do with it.” Table 2 We have too little or no customer/consumer data 29% Biggest challenges to use of “big data” for marketing Our data is collected too infrequently or is not real-time enough 39% The lack of sharing data across our organization is an obstacle to measuring the ROI of our marketing 51% We are not able to link our data together at the level of individual customers 42% We aren’t using our data to effectively personalize our marketing communications 45% 0 10 20 30 40 50 60 Page 5
  • 6. One of the biggest obstacles to turning data into actionable insight may be a lack of effective data sharing across departments and divisions of the company. In the past, departments such as sales, marketing, customer service, public relations, and supply chain, might each have had their own datasets which they managed separately. But the promise of big data analytics is based on the ability to link these datasets together, in order to better understand interactions between firm, customer, and business partners. Marketers recognize this: 87% agree that capturing and sharing the right data is important to effectively measuring ROI in their own company. For the majority of corporate marketers, though, this kind of data sharing is not yet happening. Over half (51%) say that a lack of sharing customer data across their own organization poses an obstacle to their effectively measuring marketing ROI. Interestingly, this problem is more likely to be reported by marketers below the VP level (56%), vs. more senior marketing leaders (32%). This difference may reflect that the difficulty of sharing data across departments is a problem for those “in the trenches,” but less visible to CMOs and heads of marketing. Linking shared data at the customer-level is critical for the goals of big data: effective targeting and personalization of marketing efforts where they will matter most. Unfortunately, many companies are not yet achieving these goals. 42% of marketers report that they are not able to link data at the level of an individual customer. Nearly half (45%) are not using data to personalize their marketing communications. And while most companies are able to target their high-value customers (a more longstanding goal), 28% still do not know which high-value customers to focus their marketing on. Recommendations: In order to leverage the opportunities of big data, marketers need to improve their ability to: • Collect meaningful customer data from a variety of sources, including real-time data • Link that data to metrics developed for measuring marketing ROI • Share data across the organization, linking datasets together at the customer level • Utilize this shared data to effectively target and personalize marketing efforts to customers 51% of all marketers say that a lack of sharing customer data across their organization is an obstacle to effectively measuring their ROI Page 6
  • 7. Marketers Adopt New Digital Tools, But Struggle to Measure Them The global adoption of mobile computing, social media, and digital content (from YouTube to blogs to ebooks) has transformed consumer behaviors and opened up new opportunities for marketing in every industry. Marketers today face an array of new digital tools that can be harnessed for marketing purposes, from branded apps for smartphones, to online video channels, to their own branded presence on social networks like Facebook. All of these digital tools produce data, often as a tantalizingly public “digital footprint” by customers. That fact raises the prospect of much more accurate marketing measurement in an increasingly digital world. However, digital data does not necessarily make it easier to link digital marketing to clear business objectives or to measurements of marketing ROI. In our study, we sought to measure how marketers are using the latest digital tools, and how effectively are they being measured. How widely have the newest digital media been adopted by corporate marketers? And are new datasets making it easier for firms to measure marketing ROI, or not? We found that digital media are, indeed, being adopted quite rapidly for marketing purposes, but developing metrics for them is posing challenges for marketers seeking to integrate their traditional and digital marketing efforts. Following are our key findings. Table 3 Sponsorship & events 90% Adoption rate of new Email marketing 89% digital tools vs established channels for marketing Digital content 87% Social network accounts 85% Print advertising 85% Direct mail 74% TV & radio ads 59% Mobile ads (app/SMS) 51% Digital tools Traditional tools 20 30 40 50 60 70 80 90 100 Page 7
  • 8. Getting traditional and digital marketing to work better together remains a major goal for 77% of marketing departments The newest digital marketing tools are catching up quickly in widespread corporate adoption… Marketers across industries are rapidly adopting many of the latest digital tools for marketing. The vast majority (85%) are now marketing via their own brand accounts on social networks like Facebook, Twitter, Google+, and Foursquare. This is evident across industries, and even 78% of b2b companies reported using social network marketing. Retail and travel/leisure are among the highest adopting industries. Among the lowest are industrial manufacturing and the healthcare/pharmaceutical industry, which was slow to adopt social networks due to its regulatory environment. Still, no industry reported less than 70% adoption. 87% of firms now create marketing-purposed digital content in various forms: white papers, blogs, videos, podcasts, as well as branded phone apps and games. Adoption is higher, not surprisingly, in the communications & publishing industries, but also in technology/electronics, and financial services. B2B firms are slightly more likely than b2c firms to use such content (90% vs 82%). Retail is among the lowest users of digital content for marketing, despite notable cases of success among some brick-and-mortar retailers. Even mobile advertising (ads within mobile apps, or via SMS message) has been adopted by 51% of marketers. Financial services and travel/leisure were among the industries most likely to use it. Although still newer and less standardized than some other digital marketing tools, mobile-only ads have been adopted by 76% of the largest firms, with revenues over $100 billion annually. But… these tools are among the least likely to be measured for ROI (despite their profusion of data) Marketing measurement, however, has not kept up with the rapid pace of adoption for new digital media. In particular, measurement of digital marketing with financial metrics (such as market share, revenue, profit, or lifetime customer value) is lagging. Only 14% of those companies using social network marketing are tying these efforts to financial metrics. And only 17% of companies using mobile advertising are tying it to financial metrics. By contrast, firms use financial metrics to measure 41% of their email marketing (a longer-established digital tool), and 47% of tradi- tional direct mail marketing. … and marketers are struggling to compare their efforts across their various digital media. As the number of marketing tools expands, the challenge of measuring and comparing them grows. 70% of CMOs report that a “cross-platform model for ROI” is a major goal for their business. But companies adopting digital marketing find this goal difficult to reach. 60% of companies report that comparing the effectiveness of marketing across their different digital media is “a major challenge.” Page 8
  • 9. Some of this is because digital marketing tools are often measured with metrics that are unique to them – e.g. “retweets” measure customer engagement on Twitter, whereas “likes” and “shares” measure it on Facebook. These channel-specific metrics create a particular measurement problem: comparing digital marketing efforts is often like “comparing apples to oranges.” As shown in Table 4, digital marketing channels are much more likely (vs. traditional marketing channels) to be measured with metrics that cannot be easily compared with other channels. These channel-specific metrics pose an obstacle to the integration of digital and traditional marketing in a single measurement model. Unsurprisingly, 77% of marketers report that getting their traditional and digital marketing to work better together is still a major goal for their business. The issue is being considered at the organizational level as well: 50% of companies report that they have recently, or soon will, re-organize their marketing departments to improve the integration of traditional and digital. Table 4 Social network accounts 48% Use of “channel-specific” Digital content 32% engagement metrics for different marketing channels Email marketing 30% Mobile ads (app/SMS) 27% Direct mail 23% Print advertising 21% TV & radio ads 20% Sponsorship & events 19% Digital channels Traditional channels 0 10 20 30 40 50 Recommendations: In order to effectively harness the capabilities of new digital tools, marketers need to: • Set clear business objectives for any digital marketing effort • Develop a variety of metrics for new digital tools—from audience metrics, to engagement metrics, to financial metrics • Develop models that link channel-specific digital metrics (like retweets or Facebook interactions) to universal metrics, including your key performance indicators (KPIs) • Continuously innovate new measurement models, as new digital tools and marketing rapidly evolve Page 9
  • 10. ROI – Marketers Know They All Need It, But Can’t Even Agree What It Is In this study, we tried to learn which organizations believe that they are doing well with respect to measuring marketing ROI. What are they doing that allows them to succeed in measuring marketing ROI? What are some of the barriers organizations face in measuring marketing ROI? How does knowing their marketing ROI affect how they view and use metrics? We found that some organizations are satisfied with their ability to measure marketing ROI. They have achieved that success through leadership and persistence. In turn, their knowledge of their marketing ROI allows them to base their marketing spending decisions on a financial foundation. Marketers think that they should be measuring their marketing ROI … Marketers know that they need to justify their decisions financially. 70% say that their marketing efforts are under greater scrutiny than ever. 39% go so far as to say that they consider it important to spend only on marketing activities where the financial effects can be measured. …but many managers aren’t measuring marketing ROI either consistently or effectively. Only 43% of organizations are establishing their marketing budgets based on marketing ROI analysis. By contrast, 68% base their marketing budgets in part on “historical spending,” and 28% on “gut instincts.” When it comes to specific marketing spending decisions, 21% are using financial metrics for little or none of those specific decisions, and 7% are making all or most of those spending decisions with no metrics at all. Instead of marketing ROI, managers continue to use many traditional metrics such as recall, brand favorability, purchase intention, and willingness to recommend. Of those using some kind of universal metric, 22% make all or most of their marketing decisions with brand awareness alone. What organizations are satisfied with their measurement of marketing ROI? Overall, 45% of the organizations surveyed are satisfied with their ability to measure marketing ROI. Those most likely to be satisfied with their ability to measure marketing ROI are large organizations (55.5%) - sales of $25 billion or more - and service organizations (48.8%). Only 33.1% of consumer product organizations and only 26.1% of industrial product organizations are satisfied with how they measure marketing ROI. Satisfaction depends on your viewpoint: 54% of CMO’s are satisfied with their ability to measure marketing ROI, but only 43% of those below the vice president level are satisfied – perhaps because they are closer to the problem of determining how to most effectively measure marketing ROI. 57% are not basing their marketing budgets on any ROI analysis Page 10
  • 11. 37% of respondents did not include any mention of financial outcomes when asked to define what “marketing ROI” meant for their own organization To what extent is marketing ROI used for decision-making? Among the roughly half of marketers that are very or somewhat satisfied with their ability to measure marketing ROI, 57% use marketing ROI for their budget decisions and 59% use financial metrics to evaluate their marketing spend. 54% go as far as to say they consider it important to try to spend only when they have financial metrics. Understanding what marketing ROI is In the organizations surveyed, however, managers do not appear to have a consistent understanding of what marketing ROI is. When asked to define marketing ROI, 37% of the respondents did not mention financial effects and 82% did not mention that ROI consists of both financial return and spending. 31% think that just measuring the audience you reach is “marketing ROI.” Even when prompted, 19% do not think that “measuring the financial impact of our marketing” is marketing ROI. In place of marketing ROI, many traditional measures are used. 37% of the respondents claimed that they used brand awareness as a universal metric to make marketing decisions. More troubling, of those using brand awareness, more than 60% said it was their only marketing ROI measure. To be useful, brand awareness must be coupled with some measure of brand perception. Brand awareness by itself is a lagging indicator of brand strength. Using it as the sole or main measure to make marketing decisions is truly managing by looking in the rear view mirror. How can an organization improve its ability to measure marketing ROI? Specific actions appear to improve the ability to measure marketing ROI (Table 5). Companies are much more likely to be satisfied with their marketing ROI measurement if they provide incentives to both their employees and to their research vendors. Compensation is the most effective incentive for employees while setting objectives is most effective for vendors – most likely because if the vendors achieve objectives, they might expect repeat business. Table 5 Incent employees 46.3% Performance objectives Incentives and satisfaction 24.2% with ability to measure 63.1% Compensation plans marketing ROI 15.5% Recognition programs 54.8% 25.8% Incent marketing vendors Performance objectives 67.8% 13.6% Compensation plans 60% 11.4% Satisfied Dissatisfied 0 10 20 30 40 50 60 70 Page 11
  • 12. 72.4% Table 6 Culture 52.2% 88.9% Importance of drivers and Leadership 51.0% barriers to measuring marketing ROI 87.3% Data 52.6% 81.8% Tools 56.1% 77.1% Skills 47.1% 81.5% Process Drivers 49.0% Barriers 0 10 20 30 40 50 60 70 80 90 All the respondents considered leadership and data the most important drivers of success in measuring marketing ROI (Table 6). While little difference was found in the use of data by those satisfied and not satisfied with their ability to measure marketing ROI, there appear to be differences in leadership. Organizations satisfied with measuring marketing ROI tend to use more metrics in general than organizations that are less satisfied (Table 7) and their leaders set measurable objectives for marketing actions (Table 8). Set measurable objectives 56.1% Table 7 for all campaigns 21.1% 60.0% Use of metrics and Audience metrics 20.0% satisfaction with ability to measure marketing ROI Channel engagement 75.0% metrics 18.8% Universal engagement 54.3% metrics 14.3% Financial metrics 58.6% 21.2% No metrics 11.8% Satisfied 58.8% Dissatisfied 0 10 20 30 40 50 60 70 80 Page 12
  • 13. Important to 54.0% Table 8 spend only when have financial metrics 21.0% Attitude toward metrics All right if some marketing measured only 47.8% and satisfaction with ability with engagement 26.3% to measure marketing ROI Some aspects of marketing 46.7% cannot be measured 26.2% Marketing metrics accepted 57.9% by finance 18.7% If cut marketing by 10%, 48.6% know sales impact 26.8% Satisfied Dissatisfied 0 10 20 30 40 50 60 Achieving success in measuring marketing ROI Measuring marketing ROI for most organizations is a work in progress. The factor most highly associated with satisfaction with measuring marketing ROI is time spent working on it (Table 9). There appears to be a clear learning curve for understanding how to measure marketing ROI. Continuing to work on measuring marketing ROI does move the organization forward. In addition, organizations satisfied with their ability to measure marketing ROI tend to stay there, while other organizations can move from dissatisfaction to satisfaction, even over two years. Among organizations surveyed, 22% of those dissatisfied became satisfied after two years, while only 3% of those who were satisfied became dissatisfied over the same period. Table 9 0 8.3% Years Years spent measuring marketing ROI and satisfaction with ability to measure marketing ROI 1-2 Years 46.2% 3-5 Years 51.2% More than 5 Years 63.8% Satisfied 0 10 20 30 40 50 60 70 Page 13
  • 14. 22% are using brand awareness as their sole measure to evaluate their marketing spend Outcomes Organizations that report satisfaction in their ability to measure marketing ROI utilize it in their decisions, but they also understand that all decisions need not be made with marketing ROI (Table 8). As one would expect, they are savvier with respect to the financial effects of their marketing decisions and, for example, are more likely to be able estimate the financial impact of any cuts in their marketing budgets. Recommendations Above all, get started. Start with the basics of determining marketing ROI so you will create the largest impact on your organization: • Make sure you’re using some kind of metrics on most of your marketing. • Be ready to invest in getting some kind of data relevant to your measures. • Make coordinating your traditional and digital media campaigns a goal. • Set specific measurable objectives for all your campaigns. • Put ROI in stated objectives for all your vendors (so they know your expectations to retain them or to cut them loose). • Link marketing ROI to employee compensation, perhaps a bonus. • Start today… as the pay off and learning curve will likely take a few years. Then, move on to ROI best practices: • Make sure your marketing metrics are accepted by finance. • Make sure your data is: timely, actionable, linked at the customer-level, used to personalize marketing and target customers. • Share your data across your organization. Page 14
  • 15. Conclusions Chief Marketing Officers face a dynamic and challenging environment for marketing today. They will find no simple answers to effectively measuring marketing ROI amidst the growth of big data and new digital marketing tools. Innovative marketing and effective measurement will both be works in progress that require leadership, agility, and constant learning. To lead effectively, CMOs should focus on five key leadership imperatives: 1. Set objectives first. It is critical that all marketing efforts be focused on delivering on key business objectives, or KPIs (key performance indicators). Even with new technologies like social networks and mobile advertising, experimentation needs to quickly give way to focused strategies linked to clear objectives that are set in advance. 2. Design metrics to ensure marketing is linked to those objectives. Once objectives are set, marketers need to develop appropriate metrics for any marketing effort that will be able to measure whether and how it is succeeding. Last year’s metrics should not determine what this year’s objectives can be. (“I know how to measure it, so that must be my goal.”) Rather, marketers must be prepared to develop new metrics and new measurement models as they develop innovative marketing programs, in order to clearly tie these to their intended objectives. 3. Gather the right data for those metrics. Once metrics are set, they should be used to identify what types of data are required. Marketers must avoid the temptation to analyze or purchase data simply because it is available, brand new, or being promoted by a vendor. By starting from defined marketing objectives, and from the metrics chosen to measure them, marketers can clearly identify which data they need, and which they do not. 4. Communicate to the entire organization what your objectives are, and how they are being measured. With a process for effective marketing measurement in place, it is essential that all relevant staff be aligned. That includes knowing what the firm’s key marketing objectives are, knowing how they are being measured, and responding to incoming data in order to continuously improve marketing efforts, and innovate new ones. 5. Evaluate and reward employees in part on how well objectives are achieved. Once employees understand the organization’s marketing objectives and the metrics being used to measure them, evaluation and compensation should be linked in part to their measurable success. By demonstrating that measurable results matter to everyone in the marketing department, CMOs give all employees the initiative to show leadership of their own at every stage of the marketing process. Page 15
  • 16. About the Authors David Rogers is the Executive Director of BRITE at Columbia Business School and the faculty director of the school’s Executive Education program on Digital Marketing Strategy. He is the founder and host of the Center on Global Brand Leadership’s acclaimed BRITE conference on brands, innovation and technology. Rogers is a widely recognized leader on digital strategy and brands, known for his unique insights into customer networks. His latest book is The Network Is Your Customer: 5 Strategies to Thrive in a Digital Age, published by Yale University Press. Rogers speaks at conferences worldwide on the ways that digital technologies are transforming business strategy. He received the award for Brand Leadership at the 2009 World Brand Congress and has appeared on CNN, CNBC, Marketplace, Reuters, MSN Money, and Channel NewsAsia. David has advised and consulted on marketing and digital strategies for leading companies in the consumer packaged goods, technology, pharmaceutical, food & beverage, telecom, hospitality, non-profit, and media industries. Contact: contact@davidrogers.biz Don Sexton is Professor of Marketing and Professor of Decisions, Risk, and Operations, and Faculty Director, Center for International Business Education and Research, Columbia University. His articles have appeared in numerous journals such as the Harvard Business Review, Journal of Marketing, Journal of Marketing Research, and Management Science. His best-selling books, Marketing 101 and Branding 101, have been translated into several languages including Chinese, Turkish, Russian, Vietnamese, Polish, Romanian, and Indonesian. Don’s most recent book, Value Above Cost: Driving Superior Financial Performance with CVA®, the Most Important Metric You’ve Never Used (Wharton), explains how marketing drives financial performance and is also available in Chinese. He serves on the board of the NY-AMA, is President-Elect of the Association for International Business Education and Research (a consortium of 33 universities), and is an advisor to the Marketing Accountability Standards Board. He received the 2011 Marketing Trends Award for his work on marketing and branding strategy. Don is the founder of The Arrow Group, Ltd.®, a company that has provided consulting and training services to such companies as GE, IBM, Unilever, Pepsi, Sony, DuPont, Pfizer, Volkswagen, Citibank, Boeing, and Verizon. Contact: donsexton@mindspring.com Acknowledgements Special thanks are due to Randall Ringer, President of the New York American Marketing Association, for proposing this project, championing it, assembling the necessary partners, and guiding our efforts with expert advice and insight. The study would not have been possible without the critical support of Leonard Murphy (GreenBook), Morgan Buckley (Research Now), and Matthew Quint (Columbia Business School Center on Global Brand Leadership). Special thanks to Kartik Pashupati and Melanie Courtright (Research Now) for the survey programming and fielding, and to Sylvia Chu and Michael Dudley (Verse Group) for the visual design of this report. Page 16
  • 17. About the Research Partners Center on Global Brand Leadership The Center on Global Brand Leadership was founded at Columbia Business School in 1999 and has grown into the leading global forum on brands. The mission of the center is to turn the research and intellectual capital of academia’s foremost thinkers on branding into practical tools and insights for real-world application. The Center has worked with a wide range of sponsor companies to develop a variety of thought leadership including: conferences, case studies, videos and webinars, and sponsored research. More details at http://globalbrands.org. The Center’s flagship BRITE conference on brands, innovation, and technology presented was founded in 2008 and is presented each spring at Columbia University. BRITE ‘12 included John Hayes (CMO, American Express), Marc Speichert (CMO, L’Oreal USA), and Bob Garfield (host of On the Media, editor for Ad Age). More details at: http://www.BRITEconference.com The New York American Marketing Association (NYAMA) helps marketing professionals navigate to success in today’s dynamic business environment. We serve the marketing community by giving members opportunities to push the boundaries of marketing, expand their skills and exchange ideas with other experienced professionals. The BRITE/NYAMA study is one example of how we are contributing to the advancement of marketing. More details at: http://nyama.org Research Now is the leading global online sampling and online data collection company. With over 6 million panelists in 38 countries worldwide, Research Now enables companies to listen to and interact with real consumers and business decision makers in order to make key business decisions. Research Now offers a full suite of data collection services, including social media sampling, and operates the Valued Opinions™ Panel and e-Rewards® Opinion Panels. The company has a multilingual staff located in 24 offices around the globe and has been recognized for four consecutive years as the industry leader in client satisfaction. Visit www.researchnow.com to learn more. GreenBook® brings stimulating, practical, and timely resources to marketers and market researchers on both sides of the table. Through its targeted multi-media platform, GreenBook offers effective marketing and lead generation opportunities to businesses that communicate with buyers and users of market research. More details at: http://www.greenbook.org Page 17