Download Framework for Marketing Accountability And Optimization

Framework for Marketing Accountability
And Optimization
Customer experience management enables companies to look through the eyes of their clients.
Defying the Limits
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Dr. Raymond Pettit, Longwoods International
ccurately assessing the impact of marketing, advertising and
communications efforts is critical. Billions of dollars and
the careers 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. With it,
the protection once afforded by its mysterious measures of success
and failure has evaporated. In its place, a new systems approach has
emerged that builds on the principles of design – structure, process and
content – and understanding of the customer experience to establish
synergy, while simultaneously breaking down barriers between creative,
strategic, technological and analytic efforts.
It is safe to say that 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 deployment of new technologies. In
fact, measurement approaches can, and probably 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, we must not lose sight of the fact that success
in evaluation, measurement and marketing optimization is built from
adherence to best practices in the fundamentals – research design, quality
data and collection, and deep, rich diagnostic and predictive analysis –
that answer a 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 that 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 about
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 can be put in place, fed by the distribution and
application of the appropriate measurement techniques and methods.
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 right kind
of advertising, marketing and relationship building so that it can
successfully impact and influence behavior and attitudes, and
ultimately, sales?
To be sure, some marketers, especially those from data-rich firms,
focused solely on direct marketing or those involved exclusively in
e-commerce, are able to determine how responsive consumers are to
an individual coupon, offering or price reduction. 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 precisely the relationship between costs and effects.
Many marketing executives 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, chief marketing officers, and the people who
work with them are under increased pressure to make marketing more
a quantifiable science and less an ephemeral black art. Numbers-driven
corporate leaders demand to know how efficiently their marketing
dollars are being spent. New legislation is looming that will demand
that marketers and advertisers show they are accountable. 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
t Dr. Raymond Pettit is VP of product development and intelligence at Longwoods International, a professor of advanced marketing topics at the M.B.A. and
graduate level, and author of a new book commissioned by the Advertising Research Foundation, Learning from Winners: What the David Ogilvy Research Awards
Have Taught Us (April 2006).
3 : Insight
Predict
Describe
Explain
Interpret
■
description, interpretation and explanation and, indeed, feed the
next level, which is prediction.
Prediction: The final level, prediction, is the ultimate goal of
many marketers. As mentioned, the ROI Marketing method is a
generative force for this level. ROI Marketing focuses on gathering
converging evidence for the success or failure of a marketing
campaign, while also helping discriminate between these factors.
The final goal is construct validation, which is also an outcome of
prediction. Marketing ROI uses an empirical method, as opposed to a
class of techniques called econometric modeling, which attempts to
discern and evaluate a picture of reality. 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 distinguishes between subjective descriptive effects, and
objective explanatory effects. Much of traditional marketing research
has focused on describing and subjectively interpreting the impact of
marketing (particularly media) communications. Thus, any linkage
from here to accountability measures is more or less 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 firms (although this is slowly changing) are addressing
the third quadrant that focuses on explicating the what, why and
how much impact of marketing. Yet, here is where the most important insights and relevant guidance toward improved accountability
can be found.
Defying the Limits
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) depicts the four primary types
of measurement that are used in marketing and advertising (see
Figure 1). While the features making up these types sometimes
overlap, or may appear somewhat arbitrary, the distinctions are
useful for framing the strengths and weaknesses of a wide variety
of methods, tools and techniques being used to measure the impact
of marketing:
Figure 1: The Longwoods Quadrant Map
■
■
Description: The most 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,
this is not only unwise, but can be a serious waste of money.
Interpretation: The next level of research 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 overlooked or ignored because of the expense associated
with them.
Explanation: The third level in the Longwoods 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 allow for an understanding of the interactive effects of
complex multichannel 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
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, essentially, are
based on measuring, evaluating and understanding customers along
the spectrum of experience. Marketing ROI is a newer method that
measures and evaluates the efficacy of marketing immediately 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. In brief:
■ To measure and evaluate pre-campaign
• Qualitative focus groups
• Pre-testing
• Control-test group markets
■ To measure and evaluate post-campaign
• An empirical approach: Marketing ROI
• A statistical technique: Marketing Mix Modeling
• A proprietary, prepackaged brand model that is tracked on “short
of sales” variables over time: brand (equity) tracking or monitoring
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■
Strengths and Weaknesses of
Primary Measurement Approaches
What It Does
Framework for Marketing Accountability and Optimization
Qualitative
Focus Groups
Pre-Testing Ad
Copy or Creative
Control-Test
Group Markets
Marketing ROI
Marketing Mix Modeling
Gather in-depth “voice
Qualitative way
Solid scientific
Valid scientific method to
Sophisticated statistical
Valid way to assess global
of the customer.”
to address
method to test
capture the rational and
techniques to assess an
changes in brand resonance,
A good way to get
potential impact
campaigns before
emotional impact of creative
artificial or convenience
awareness and perception,
at perceptions,
of creative ideas.
full launch.
and communications on the
model of the marketing mix
against a baseline measure,
attitudes and
Solid planning
bottom line. Diagnostic results
or, more commonly, the
over time. But should be made
feelings.
device.
drive creative and marketing
available databases.
clear thatthese are proxy equity
Brand Equity Tracking
measures, e.g., “short of sales.”
improvements leading to
How It Is Useful
Not a test – should
Not definitive –
Expensive, requires
Expertise required creating
Expensive, requires difficult
Brand equity models are linear
not be used for
should not be
test markets; can
design, setting controls, doing
to find expertise, not efficient
or associative, not valid for cross -
prediction.
used for prediction.
require advanced
deep-dive analysis and
at a campaign level. Models
media efforts; no way to
Historical norms can
statistical expertise.
evaluating results. Marketers
are synthetic “picture” of
determine how brand “equity” is
lack of understanding of
reality, missing the emotional
distributed amongst customer
experimental design is the
elements that typically
segments; concept of brand
biggest stumbling block to
differentiate brands,
“equity” is misleading. Expensive.
effective use.
and drive their power.
be misleading.
‘
Excellent way to
Best used as part
If test markets
Excellent way to build on the
With the proper data and
generate hypotheses,
of a system that
are available,
use of pre-tests to generate
variables in place, a good way
considered brand “resonance,”
underlying motivations,
includes test
a good way to
valid ROI measures. Can also
to handle planning and
not equity. It can be improved
ideas and feelings.
markets and/or
link the creative
improve MMM and BE
decision support for a wide
with ROI marketing elements
post campaign
into the testing
tracking with credible, valid
portfolio of campaigns, brands
included.
ROI methods.
methodology.
data that can generate the ROI
or communications.
BE tracking should be
link directly. Currently, the only
valid method to achieve this.
Comments
Defying the Limits
Challenges
optimization of efforts.
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Misused for
Rarely done,
Should be used at the
Misused as a “silver bullet”
BE tracking may be best revised
prediction
but can be
campaign level, continuously,
solution for campaign ROI.
into an ROI marketing
based on norms,
used to forecast
to contribute to prediction,
Econometric methods can
tracking system, as “equity” in
which can be
before a large
forecasting and tracking
produce misleading results,
the brand sense is not
misleading.
investment.
efforts. Less expensive than
particularly with cross-media
financial, but “short of sales.”
MMM or BE tracking.
efforts.
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Figure 2: The Strengths and Weaknesses of Current Tools and Methods for Measuring the Impact of Marketing
Figure 2 compares each of these in relation to: what they accomplish;
challenges; how they are useful; and comments about efficacy.
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 need an
approach of marketing measurement, evaluation and optimization
from a strategic, process-based analytic perspective. In this new
framework, market research and measurement techniques and
methods are infused 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
A new book entitled Learning From Winners was commissioned by the
Advertising Research Foundation and sponsored by Microsoft to bring
together leading-edge case studies of organizations that have brought
Weblink
Read about the benefits of managing marketing assets in
“Managing Market Assets: Improving Business Performance”.
3 : Insight
A major corporate brand observed a precipitous decline in sales over many
years. Their flagship product was in a category that was notorious for “copy cat”
advertising, but also one that had become perceived as a commodity. The
organization decided that it was time to break out of the traditional, safe,
familiar, but increasingly unprofitable, mode of operation. After a number of
strategic discussions, they realized that the key was to better understand their
customers’ experience through the eyes of how their product was used. This
included both qualitative and quantitative explorations into perceptions and
attitudes about how their customers experienced their products in day-to-day
usage, as well as in relation to their total lifestyle (both business and home).
Recent trends in the CRM movement and emerging BPM space, coupled with emerging
regulatory pressure from the Sarbanes-Oxley Act, is again moving organizations and
management discussions onto the playing fields of integration, alignment and accountability.
Six distinct, but integrated, research phases brought the company to a place that
totally transformed them from a commodity broker to one that connected them
to their customers’ 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.
Multiple, in-market metrics showed that this new focus reversed a five-year
downward sales trend. Unit share and sales volumes increased 20 percent in less
than one year, even as brand, satisfaction, and loyalty measures climbed. This
exercise completely changed the way the organization conceives 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, customer service, and even product development. As this case example
shows, the road to CEM (customer experience management) 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
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. That said,
recent trends in the CRM movement and emerging BPM space, coupled
with emerging regulatory pressure from the Sarbanes-Oxley Act, is
again moving organizations and management discussions onto the
playing fields of integration, alignment and accountability. The quest for
corporate and business efficiency and effectiveness is not going to go
away, particularly as chief executives, managers, investors and changing
consumer expectations are so high. At some point, marketing and
advertising will be swept forward, kicking and screaming, into the
future. In many ways, we are already experiencing it. Wise counsel
would advise that we consider taking the reins toward 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 through the eyes of the client to
their needs, problems, challenges and issues, rather than through our
own opaque, and possibly self-serving, lenses. ■
Defying the Limits
A case example from Learning From Winners illustrates this new focus:
metrics that were linked to corporate-level valuations, business
process management (BPM) efforts, executive reporting of “metrics
that matter” across the company, and ultimately back into marketing
resource planning and evaluation. Thus, this framework supports
the credible, valid and useful research designs found in testing,
measurement and marketing ROI methods, while also providing a
more appropriate platform for brand/finance metrics and forecasting
calculations, mixture (portfolio and decision-support) modeling, and
enhanced brand/ROI tracking. 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 are subjugated
to the process, and utilized where they can best serve the purpose:
to drive, integrate or move the marketing effort forward to more
efficient spending and effective outcomes; to higher-level corporate
accountability and, ultimately, corporate valuation; and to loop back
to inform large-scale marketing program evaluation and planning.
History has shown that business data silos exist and are hard to
reconcile and integrate, even when it is technically feasible to do so.
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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.