We're five or so years into the "Era of Accountability," and what do we have to show for it? Is marketing any closer to demonstrating to CEOs and CFOs what they're getting for their money? Are we marketers more comfortable in our own skins, confident of our ability to measure and improve the effectiveness of our strategies and programs?
Unfortunately, the answers to all these questions are not what we'd expect, considering that accountability has been at the top of the vast majority of marketers' to-do lists for as long as it has.
According to a recent study from Marketing Management Analytics and Financial Executives International, barely 7% of financial execs feel satisfied with their company's ability to measure marketing return on investment (ROI).
Two studies released at the Association of National Advertiser's (ANA's) Marketing Accountability Conference found that the majority of financial executives don't believe the ROI numbers or forecasts coming from Marketing:
- Nine out of 10 said they don't use ROI metrics to set marketing budgets in the annual budgeting cycle.
- Seven out of 10 said their companies don't use marketing inputs and forecasts in financial guidance to Wall Street or public disclosures.
- Six out of 10 said their companies' marketing departments have an inadequate understanding of financial controls.
- A surprising four out of 10 said marketing forecasts made inside their company can't pass the muster of a standard corporate audit. Finance isn't the only department that is skeptical of Marketing's accountability efforts.
According to the 2008 Marketing ROI & Measurement Study from the Lenskold Group and MarketingProfs, we don't believe our numbers, either! A scant 17% of marketers said their company's ability to measure the financial return generated from marketing investments is "a source of real leadership" and "as good as it needs to be."
Adding more fuel to the fire, the ANA's studies mentioned earlier found as follows:
- Only one out of 10 marketing executives said they could forecast the effect of a 10% cut in spending.
- Fewer than two out of 10 said senior management had confidence in their firm's marketing forecasts.