Marketing Profs

Several studies released in the past two months present different perspectives on marketing accountability, measurements, and ROI. This week Lenskold Group and Marketing Profs add to the list with our "2007 Marketing ROI and Measurements Study."

Our analysis of the 759 surveys completed with marketing practitioners worldwide focused on the difference between companies using profitability metrics and those using traditional marketing metrics with no financial metrics.

Among other findings, the research clearly shows that companies using profitability metrics for at least some of their marketing campaigns have an advantage in outgrowing competitors and earning the confidence of their CEOs and CFOs.

Our research, combined with the findings from studies conducted by the CMO Council, MMA and FEI, and Red Herring, indicate that marketing ROI measurements and processes face major challenges, but prove quite rewarding when achieved.

Are We There Yet?

Let's start with a perspective from senior-level financial executives. A survey conducted by Marketing Management Analytics and Financial Executives International found that just 7% of financial executives are satisfied with their company's ability to measure marketing ROI.

While this may seem extremely low, our study of marketing professionals found that only 9% of marketers believe their ability to measure the financial returns across all forms of marketing is "a real source of leadership" or "as good as it needs to be." The balance indicate it is somewhat short of or a long way from where it should be. So marketers are really no more satisfied than financial executives.

Working closely with companies implementing marketing ROI solutions, I've observed that while progress is being made and success stories are being shared, marketers are also raising their expectations on what they would like to achieve, which consequently influences their satisfaction levels. In fact, the proportion of marketers considering their ability to measure financial returns to be as good as it needs to be or better actually declined from 2006, when it was 16%.

ROI Metrics and Profitability Discipline Delivers

When asked to describe their company's growth in the upcoming year compared with their competitors', 60% of the companies using ROI expect somewhat or much greater growth than their competitors, compared with 48% of those using no financial metrics. For those measuring ROI, 30% indicate their CEOs and CFOs are very confident that marketing investments are profitable, while just 6% of those not using financial metrics report the same. An additional 51% of each group say CEOs and CFOs are somewhat confident, bringing the totals to 81% vs. 57%, respectively.

Expectations that improved profitability can come from better measurements are high and consistent regardless of the current metrics used. The majority of marketers (55%) say they could generate 10% or higher profit improvements if better measurements were in place to capture marketing's contribution to incremental sales.