Tracking the Value of Marketing
Relevant advice from an expert ROI consultant on how to track and evaluate your branding efforts.
At 5 by 5 Design we believe it’s possible to change the world by posing the right questions, listening to the honest answers, and following the path that emerges from the dialogue. Today’s discussion offers tips on how to determine the value of your marketing.
Patti P. Phillips, Ph.D., is the CEO of ROI Institute, Inc. She is also the co-author of ROI in Marketing: The Design Thinking Approach to Measure, Prove, and Improve the Value of Marketing (McGraw-Hill). Patti encourages organizations to use research to inform branding decisions, set benchmarks, and track progress. ROI Institute coined the following words to live by: Hope is not a strategy. Luck is not a factor. Doing nothing in not an option. The time is now. The choice is yours.
We’ve asked Patti a series of questions to help us learn how to demonstrate the value of marketing in a meaningful way. Here’s what she had to say.
1. Why is it important to determine if your marketing investments are creating value?
Between 2014 and 2020, organizations spent on average 11% of their budget on marketing compared to 6% today. There is an assumption that the budget will likely bounce back once we pull entirely out of the pandemic, but will it?
Before the pandemic, CEOs were already questioning the value of marketing. Today, there are new areas on which organization leaders need to focus, so if 6% is a good enough level of investment for marketing, why allocate additional resources to it? Other areas need funding. To make a case for funding, marketing leaders need to create and demonstrate value in terms that resonate with the decision-makers.
2. What are the most common ways to track and prove if your marketing efforts are working?
Ways to track and prove marketing efforts depend on how you define the value or results of marketing efforts. There is always a way to get the information we need to demonstrate the value of marketing. Sometimes, proxy indicators are all we have available, given the time to do the work. But we can at least garner some insight from those types of measures.
Measures such as number of customers reached, number of campaigns launched, number of telephone calls made, number of emails distributed and opened, and number of tweets posted and reposted do not define value. They define activity and if your marketing investment is intended to drive activity, then you might claim success when these measures improve. But these measures do not define value.
Value is defined in terms of the results coming from marketing activity, or the ‘so what?’ of the marketing effort. So what, you distributed 300,000 emails or reached an audience of millions? How does the audience react? Do they perceive you as the authority and view you as a credible source? Is the campaign even relevant to them? Are they learning what they need to know so they will take the action you want them to take? Are they even taking that action? If they are, what is the consequence of that action? Did they sign the contract, buy the product, commit to another year on a license? What is that worth to the company financially? How does the financial benefit compare to the cost of marketing effort that led to it?
Answers to these questions describe how well marketing efforts are working in terms of value creation.
Many people will argue that you can’t isolate the impact of marketing on improvement in key measures—but this is not entirely true. While experimental design is not always an option, there are other techniques that will help provide good enough insight to make a judgment about the value of a marketing project.
Often organizations encounter hurdles when trying to measure the real value of marketing including capability, access to reliable data, time, cost, convenience, and organization culture. All of these, however, can be overcome in some way. Success with measurement begins with a mindset for curiosity. Merely asking the right questions of the right people at the right time can go a long way in understanding how well marketing is working and the value it brings.
3. What is your process for helping organizations demonstrate value from their marketing investments?
We use a design-thinking approach. Our process, the ROI Methodology, begins with aligning the marketing initiative with the needs of the business. A marketing campaign should not begin until there is clarity in terms of the business measures that need to improve and the value of improving those measures. From there, we focus on determining what needs to change or what actions need to be taken to address the business needs. We work with the client to establish clear specific objectives for the marketing project. Then, the campaign is designed around the objectives, and implementation is evaluated against the objectives. While some people may view the process as difficult, it really isn’t. It is a systematic process that delivers reliable results, up to and including the ROI. We even include a step to isolate the impact of the specific marketing project on improvement in the business measures. This helps project owners answer the question, “How do you know it was your marketing campaign that delivered the results?”
A chapter from our book, ROI in Marketing, explains more about the approach.
4. What are some common mistakes you see organizations making when it comes to tracking marketing efforts?
They are too proud of the activity indicators. While it is important to track activity since the right activity will lead to results, wearing progress with activity as a badge of honor is a risky play. Activity represents cost, costs get cut. Marketing is too important to overall organization growth to be merely an activity-based function. Consider this—marketing is not just important to revenue growth and customer loyalty, but it is (or can be) a major influence on success with talent acquisition. Talent acquisition is a critical issue for organizations, especially in today’s environment. When a person is looking for a job, they go first to the brand they recognize and appreciate. Brand matters in talent acquisition—this is marketing.
Marketing can be a strategic lever across the enterprise. But it needs to demonstrate that it is. This requires asking the right questions prior to investing in marketing projects; setting clear objectives that include reaction, learning, action, impact, and ROI objectives; designing around those objectives; and evaluating success against those objectives. Then, project owners need to use the evaluation results to tell their story and improve their process.
We offer an assessment in our book, ROI in Marketing, to help determine if your marketing programs are results-based.
5. What can companies do with the information they gain?
The benefit of collecting the type of data we recommend is first, organizations will have marketing programs that clearly align with organization strategy. Second, project owners will be able to describe the complete story of marketing’s value contribution. Third, project owners will have the information they need to improve the marketing process—either for a specific campaign or the entire strategy.