Defining accountability for the success of marketing, advertising and communications campaigns has not always been pursued with as much vigour and determination as the campaigns themselves. This author writes that the time has come to design and implement actionable measures. In this article, he outlines his vision for a more scientific approach to making marketing and its practitioners truly accountable.
New frameworks for marketing optimization and accountability
Billions of dollars and the careers of thousands of marketers ride on the proper evaluation and measurement of the efficacy, performance, cost, and impact of increasingly complex and integrated marketing activities. To that end, the ‘Black Art’ era of marketing is quickly disappearing. In its place, a new systems approach is emerging, one built on the principles of design – structure, process, and content, and on an understanding of the customer experience. Once established, this new approach will enable marketers to create synergies, while simultaneously breaking down barriers between creative, strategic, technological, and analytic efforts.
The effective evaluation of marketing’s impact on sales is as much an integration of research tools and methods as it is an outcome of marketing strategies and a deployment of new technologies. In fact, measurement approaches should start from the perspective of marketing strategy (i.e., the clients needs, challenges, and goals), rather than from the perspective of research technique or new technologies, as it so often does. As the rapid emergence and proliferation of marketing channels and new technologies increase the ability to reach people in multiple ways, success in evaluation, measurement, and marketing optimization becomes built on an adherence to best practices in the fundamentals that answer client’s most important questions and issues.
Customer measurement approaches exist – direct measures of what people see, hear, feel, and do and why they do it (rational and emotional factors) – to support the holistic framework the client needs to be successful. Organizations who have overcome the ‘silver bullet’ fallacy recognize the value of combining and using transactional, historical, convenience, and survey data as a basis for quantitative guidance to assess the impact of marketing efforts. They have built processes that meet marketers’ day-to-day needs and desires to measure, track, and optimize the impact of their creative, communications, relationship, and marketing efforts, as well as the larger strategy, planning, and financial payoff of marketing activities. Ultimately, a continuous customer and marketing learning cycle is generated, fed by the distribution and application of the appropriate measurement techniques and methods as described in more detail in this paper.
Measuring the impact
Art meets science: The challenge of measuring the impact of marketing
It’s a question as old as business itself: How can an organization be sure it is spending the right amount of money on the kind of advertising, marketing, and relationship building that can impact and influence behavior and attitudes, and ultimately, sales?
To be sure, some marketers, especially those focused solely on direct marketing or involved exclusively in e-commerce, are able to determine how responsive consumers are to a targeted offer. But things are not that simple anymore. More than ever, the marketing discipline is art informed by science: most organizations still spend vast amounts of money trying to create awareness, shift attitudes, or influence behavior without knowing the relationship between costs and impacts.
Some marketing executives may secretly feel that they have little choice but to throw money at the wall and hope that at least some of it will stick. That kind of thinking, however, is rapidly disappearing. These days, business leaders are under increased pressure to make marketing more a quantifiable science and less a vague “black art.” Achieving accountability in marketing has been tossed down as a major challenge from the executive suite. Marketing, advertising, and communications professionals are under the gun to solve these pressing issues by proving that they can spend their dollars wisely to attain greater return on their marketing investments.
Understanding marketing’s impact: The Longwoods Quadrant Map
Most would agree that the primary goal of marketing and advertising is to attract attention, persuade through rational and emotional means, and to sell something (influence and change behavior). The wise marketer recognizes that the marketing battle is not just for the pocketbook; it is for the heart and mind of the consumer. Getting a consumer to hold your brand top of mind, to associate it with positive images, and to develop a strong motivation to respond and remain loyal – these communications and relationship objectives, coupled with profitable sales, provide unparalleled competitive advantage.
So how are organizations today measuring the “incremental” impact of marketing on changing attitudes, behaviors, or the bottom line? The Longwoods Quadrant Map (LQ MAP) was developed in a confidential report for government by Longwoods International of Toronto, Canada for use in classifying the level and quality of marketing and communications efforts. It depicts the four primary types of measurement that are used in marketing and advertising. (See Figure 1) The LQ MAP is useful for framing the strengths and weaknesses of a wide variety of methods, tools, and techniques being used to measure the impact of marketing:
- Description: the basic forms of measurement take place at this level. Descriptive advertising and media tools are sometimes used erroneously to predict sales or short of sales behavior. As we will see ahead, this is not only unwise, but it can be a serious waste of money.
- Interpretation: the next level seeks to interpret basic measurement and observations of customer tendencies, intent, or behavior. Much of marketing research’s work is done here, and, more often than not, results-to-action are weakly presented, sometimes based on experience, intuition, or pure guessing. Also included here would be basic in-market tests, which are potentially valuable, but are often dismissed because of their expense.
- Explanation: The third level in the LQ MAP is the least used, in general, by marketers, yet is the most dynamic, actionable, and understandable guide to the assessment and evaluation of the drivers of marketing’s impact. ROI Marketing experimental design procedures support an understanding of the interactive effects of complex multi-channel marketing and communications programs while also linking the results of a campaign to the incremental dollars generated by that program. The outcomes of this method encompass description, interpretation, and explanation, and feed the next level, prediction.
- Prediction: The final level is the ultimate goal of many marketers. The ROI Marketing method is a generative force for this level, as it focuses on gathering converging evidence for the success or failure of a marketing campaign, while also helping discriminate between these factors. Marketing ROI uses an empirical method, as opposed to a class of techniques called econometric modeling. While valuable in their own right for overall marketing planning and ‘what-if’ decision making, statistical models are not a substitute for direct, grounded testing and evaluation of what marketers do on a daily basis: create, plan, and manage marketing and communications campaigns.
The LQ MAP distinguishes between subjective descriptive effects and objective explanatory effects. Much of traditional marketing research has (and still does) focused on describing and subjectively interpreting the impact of marketing (particularly media) communications. Thus, any linkage to accountability measures is more or less based on a leap of faith.
At the opposite extreme, recent advances in database technology, CRM, and data mining techniques have unearthed highly sophisticated predictive modeling techniques that lie unconnected to the more experience-based, subjective quadrants in this framework. Relatively few (although this is slowly changing) firms are addressing the third quadrant that focuses on explicating the ‘what’, ‘why’ and ‘how much impact’ of marketing. Yet, it is here that the most important insights and relevant guidance toward improved accountability can be found.
Strengths and weaknesses of primary measurement approaches
There are currently three major approaches to evaluating the efficacy of marketing campaigns before they are launched and three that measure the impact of marketing after it occurs. All are essentially based on measuring, evaluating and understanding customers along the spectrum of experience. Marketing ROI is a newer application that measures and evaluates the efficacy of marketing soon after a campaign is completed. It is meant to be used to benchmark and establish an ongoing marketing evaluation, optimization, and ROI improvement loop both within single campaigns, and across campaigns over time. (Please see Figure 2).
Learning from winners
Based on new business realities and demands for innovation shifts to improve the status quo, the need for a process-based approach to marketing performance evaluation and optimization is at hand. This is driven by the following points:
- There is no ‘silver bullet’ tool or technique to handle the complexity and sophistication of today’s marketing realities.
- Given that reality, and the challenges it brings, firms that are winning approach marketing measurement, evaluation, and optimization from a strategic, process-based analytic perspective. In this new framework, market research and measurement techniques and methods are designed at the proper strategic, analytic and tactical points to:
- Optimize within the marketing function – whether it be at the campaign, flight, or the customer level
- Enhance Accountability, by transporting accountability information, data, and metrics outside of marketing and into the corporate business intelligence stream.
What marketers need
Currently, there are gaps between existing practices and those practices that will enable marketers to claim that they are accountable.
- Efficiency and effectiveness – marketers need to increase efficiency, but also the effectiveness of their efforts. To turn a phrase, they need to do things better, but also do better things.
- Creative (advertising message and content) impacts – oddly enough, the impact of creative is considered a ‘random’ variable (stochastic in statistical terms) by economists. Thus, this element of advertising is held constant, almost as a nuisance variable. In reality, the creative element is perhaps the most powerful influence on effectiveness and success in marketing. As such, it needs to be included in the “equation.”
- Multidimensionality of marketing – As all marketers know intuitively, marketing, advertising, messaging (creative content), and channel all work together to communicate, influence, and persuade audience and consumer to do something. Some more advanced econometric models actually discard interaction effects in the pursuit of efficiency, thus missing one of the most important sources of marketing insight and guidance available.
- Dynamism – marketing and change are synonymous. Short of doing continuous, minute-by-minute experiments, it is very difficult to envision the straight ahead application of certain techniques without some sort of modification (short term, long term, incremental, and accretion effects need to be addressed).
- ‘Optimized’ variance – variance in marketing needs to be embraced. In marketing, there is a need for accuracy, a balance of bias and variance that may be at odds with some measurement tenets.
A new book, Learning From Winners, was commissioned by the Advertising Research Foundation and underwritten by Microsoft Corporation to bring together leading edge case studies of organizations who have brought holistic customer experience measurement to bear on driving outstanding business results. The primary reason that success was achieved is because these organizations have realized a carefully planned, strategic blueprint that includes robust customer measurement at key points in the marketing process.
Companies organize around a strategy that constantly interacts with the context of a dynamic marketplace. Winning firms consistently display the following traits:
- They have a holistic approach to understanding customers. This means that they are not averse to deep-dive research that is not necessarily real time but allows them to understand how customers use their product, perceive their brand, and how they feel about it. Anthropological approaches are applied to develop these insights. And the insight contributes to both strategic planning and tactical executions.
- They display a sense of thoroughness and discipline via a process approach to marketing and sales. This means that they generally do not take the easy road – the silver bullet approach – but instead define and stick with a planned and agreed-upon process to fully flesh out and inform their marketing, sales, and service activities.
- They are bold. This is evidenced by a deep desire to get below the surface in examining and understanding the customer experience. Sometimes this means overturning accepted paradigms, or trying new approaches. There is a level of confidence and trust in the fact that the organization is getting at the best possible understanding of the customer experience.
A recent case example illustrates these practices. A major corporate brand observed a disconnect between their internal motivations and true commitment to customers, and the perception of the firm based, one based on negative press and highly visible legal issues. The organization decided that this was a pivotal moment in their existence, and that they would ‘sweep the table clean’ to explore the essence of what they mean to customers. This included both qualitative and quantitative explorations into perceptions and attitudes, but also how the customer experienced their products in day-to-day usage, as well as in relation to their total life style (both business and home).
Seven distinct, but integrated, research phases bought the company to a place that totally transformed them from an inwardly focused organization to one that looked out to customers, their needs, their experiences, and also their dreams, visions, and aspirations. This not only affected marketing, advertising, and communications, but also brought the organization in alignment and dedication to serving the customer experience. Not to be forgotten, sales objectives were surpassed in record time, even as brand, satisfaction, and loyalty measures climbed. The analytic project completely changed the way the organization conceived of their relationship with customers, and the way they ‘speak to’ the customer at every possible touch point: advertising, marketing, the web, in person sales and service, and even product development. As this case shows, the road to ROI is not necessarily easy, but the benefits are real.
In essence, this organization crafted a double closed-loop system that allowed them to continually optimize marketing and advertising efforts at the campaign/flight level, while spinning off marketing metrics linked to corporate-level valuations, business process management efforts, executive reporting of ‘metrics that matter’ across the company, and ultimately back into marketing resource planning and evaluation. Instead of vain attempts to force-fit a single ‘silver bullet’ solution, all of the powerful techniques and tools of research, measurement, technology, and statistics were subjugated to the process, and utilized where they best served the purpose: to drive, integrate, or move the marketing effort forward to more efficient spending and effective outcomes.
History has shown that business data silos exist and are hard to reconcile and integrate, even when it is technically feasible to do so. Change is unsettling. Advertisers and marketers alike prefer not to dwell on measures of accountability. In addition, research firms and agencies have much vested in current approaches being used by their clients. So getting a new system off the ground is quite difficult when blocked by habit, tradition, and an unwillingness to change.
The quest for accountability is not going to go away, particularly as chief executives, investors, and customer expectations are so high. Recent trends in the CRM movement and Business Process Management (BPM) space, coupled with regulatory pressure from the Sarbanes-Oxley Act (in the United States), are moving organizations and management discussions toward integration, alignment, and accountability. Wise counsel would advise that we seek a new direction in marketing accountability that emerges from our own expertise, our experience and understanding of how to bring more science to the art of marketing, and a willingness to look at clients’ challenges and issues through their eyes, rather than through our own opaque, and possibly self-serving, lenses.