Marketing Accountability

IES will improve the ROI of Marketing's expenditures 2-10% or more

• Marketing Accountability

  • Association of National Advertisers: As described by Bob Liodice, President and CEO of ANA on August 24, 2004:

    “Marketing accountability is one of the most important subjects we have in front of us at the ANA – and for very good reasons. Too often, the marketing industry had been blistered by criticism of our inability to connect "the cause" with "the effect." Often, marketers had to struggle and guess at the results of well thought out marketing and advertising campaigns. Trying to understand the impact on brands was even harder to assess….I am very pleased that the industry has taken the message to heart. Perhaps reacting to impatient CEO's, the industry has been hard at work to bring more measurements and common sense to this arena. Efforts have sprung up in most companies to enhance the level of marketing quantification and valuation. Some companies are well ahead of others – but, importantly, we feel that the movement is gaining important traction”

     

    ANA has held annual marketing accountability workshop every year since 2004. The last four have been in conjunction with Marketing Management Analytics. In addition, a marketing accountability task force workshop jointly sponsored by ANA and EMM Group reported its findings in 2005. (See 2008 ANA )

  • Another testimony to the importance of marketing accountability is provided by the Marketing Science Institute, http://www.msi.org/. Their #1 research priority for 2008-2010 is “Accountability and ROI of Marketing Expenditures.”
    
    The institute was founded in 1961, the Marketing Science Institute as a learning organization dedicated to bridging the gap between marketing science theory and business practice. MSI currently brings together executives from approximately 70 sponsoring corporations with leading researchers from over 100 universities worldwide.
    
    As a nonprofit institution, MSI financially supports academic research for the development—and practical translation—of leading-edge marketing knowledge on topics of importance to business. Issues of key importance to business performance are identified by the Board of Trustees, which represents MSI corporations and the academic community. MSI supports studies by academics on these issues and disseminates the results through conferences and workshops, as well as through its publications series.
    Membership is open only to invited corporations and qualified academics.

  • There a variety of metrics, dashboards and algorithms developed for measuring and assessing marketing’s accountability. See, for example,
    http://www.marketingnpv.com/articles/metrics_dashboards/metrics_selection

  • While some are more popular than others, there are differences within countries
    http://www.marketingnpv.com/articles/research/call_for_a_measurement

• IES Benefits, given current practice’s limitations:

  •    Notwithstanding progress, problems abound (See 2008 ANA)
    • The Problem: The Marketing-Finance Disconnect
    • problem is the walled-off nature of marketing accountability and ROI
    • most marketing departments have yet to rigorously apply best practices in accountability
    • Analytics and Metrics: Lacking Common Definitions
  • IN SUMMARY
    • Senior managers are having a hard time believing the numbers coming out of marketing, based on less-than-rigorous metrics and projections used in the past. Thus, management in many cases continues to view marketing as a necessary cost center rather than a revenue driver, and its operations tactical rather than strategic

• IES addresses and solves everyone of the problems cited above by accomplishing the following:

  • The definition of a successful marketing accountability program is one which accurately measures the degree to which marketing is contributing to the success of company initiatives, both in terms of revenue generation and cost savings/efficiency.

  • IES is necessarily cross-functional
    • Unites sales with marketing
    • Unites sales and marketing with finance
    • Unites sales and marketing and finance with operations
  • IES thrusts sales and marketing to the fore of the enterprise- wide planning and budgeting process in a way never previously imagined, let alone thought possible
    • Sales and marketing own the response curves developed in planning process (See One Model)
    • These response curves enable the development of a revised plan which will create 5-10% or more profit from the same resources
    • This profit improvement is rigorously developed, mathematically
      • This revised plan is the optimal plan; thus guarantees the enterprise is doing the right thing, not just the thing right
    • Sales and marketing own the response curve analysis performed monthly as the actuals (See Palladium Group)
      • This guarantees the enterprise CONTINUES to execute a plan that is, optimally, right thing.
  • An essential element in ensuring the cross-functional cooperation of sales and marketing is that there is no "mix modeling" decisions made within the IES model.  All IES can do is determine the most profitable level of TOTAL sales and marketing expenditures.  Traditional mix model decisions are made as they always have been.  (See , for example, http://www.mma.com/)