I was shocked to read the other day that a survey of 243 Chief Marketing Officers revealed that 57% of them don’t set up budgets according to any kind of Return On Investment metrics. 68% say they base budget decisions on historical spending levels. And 28% said they go with gut instinct. 7% said most of or all their spending decisions aren’t based on any metrics at all! Seriously!!??
With the whole professions’ talk about the emergence and implementation of such good and accurate measurement tools over the last 10 years you’d think the vast majority of CMO’s would be using them. Some are, but obviously most are not.
And that brings me to a webinar I attended last week wherein the speaker touted his philosophy of using the best measurement tools for digital and traditional media to make marketing a predictable revenue source as opposed to a perennial blank check – blank in the sense that there is no connection between spending strategy and results. He laid out a strategy of creation, deployment, and tracking that allowed his department to accurately project the results of each campaign before it was launched. So his advertising efforts bore fruit just like sales.
Writing blank checks is absurd in this day and age. Every best practice I’ve seen for at least the last 5 years has insisted on tracking methods, media, and creative in such a way as to make success predictable and duplicable. If you’re not analyzing the impact of every campaign, you’re never going to be able to repeat your success or avoid reliving your failures. Geez! Why did God create computers, anyway?
Fully half the respondents in the CMO survey didn’t include any financial outcomes when defining marketing ROI, many of them falling back on brand awareness as the only metric. Band awareness can really suck as a measurement tool because people who hate your product are aware of it. In the long run it has nothing to do with revenue or sales.
And how does one monetize brand awareness? If 50% of the market is aware of your service or product, what is that worth? 8.645% of the US population being aware of your service or product doesn’t mean anybody is going to buy from you. It’s possibly a good number to know, but what does it have to do with marketing ROI or future strategy? Nothing. Absolutely nothing.
A lack of solid metrics are part of the problem when valuing a brand. But marketing ROI doesn’t need to be. The metrics are there. Pick some, see if they work – if what they report matches results – and keep revising those systems.
According the CMO survey 85% of the marketers surveyed use social networks. But only 14% of that 85% have any kind of financial metric linked to their social media. Granted that data is a little harder to put a dollar value on, but it can be done.
There is a solution. There are options for any company or marketer wanting to build accountability into their campaigns. It’s the only sane way to spend money on marketing and advertising.