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Marketing accountability is a term that signifies management with data that is understandable to the management of the enterprise.[ citation needed ] "Accountable Marketing" is another name that can be given to this process.
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Marketing accountability is a term that signifies management with data that is understandable to the management of the enterprise.[ citation needed ] "Accountable Marketing" is another name that can be given to this process.
Within marketing accountability the expression “integrated marketing communications” (IMC) implies that marketing and communications are integrated within the business and management of the enterprise, not as a stand-alone functional silo. Analogous to other business functions like manufacturing and sales, accountable marketing is based on a set of valid outcome performance indicators and the associated activity input costs. Outcome performance indicators are called Effectiveness Metrics; Effectiveness combined with costs is called Efficiency (effectiveness per dollar spent). [1]
According to the Common Language Marketing Dictionary, Marketing accountability refers to the use of metrics to link a firm's marketing actions to financially relevant outcomes and growth over time. This accountability allows marketing to take responsibility for the profit or loss from investments in marketing activities, and to demonstrate the financial contributions of specific marketing programs to the overall financial objectives of the firm, including brand asset value. Return on marketing investment (ROMI), customer acquisition costs, and retention rates are examples of commonly employed marketing accountability metrics. [2]
Marketing Accountability was the subject of a report published in 1997 by Financial Times Management Reports [3] It investigated a widespread problem that consultants McKinsey & Co. had described as "marketing's mid life crisis".[ citation needed ]
Recent research by the Forbes CMO Practice [4] and the Marketing Accountability Standards Board [5] shows CMO are under growing pressure to show returns on rising investments in marketing assets, new media, data, analytics and technology needed to compete for digitally enabled customers. The complexity of marketing accountability has growth as marketers must add many more investments to the marketing portfolio to adapt to changing customer preferences and compete effectively for market share. According to Forbes research, the CMO of the average Global 5000 company must now allocate resources across at least 20 primary investment types in their annual budget.[ citation needed ]
In order for indicators to be considered valid for accountability, they must meet a few minimum requirements. They need to measure marketing outcomes from the consumers’ point of view, they need to include all marketing activities, they must be repeated over time, and they must meet statistical and technical criteria required of all measurement systems.
The measurements need to be true outcome indicators. Unlike sales where the outcome is easily quantifiable, marketing is more difficult to define: there is not a direct, fast-acting relationship between marketing activities and sales. Some marketing materials are designed to inform, others attempt to portray the product or service attractively, yet others attempt to influence purchasing behavior. Most marketing campaigns include all three orientations; a brand may have glossy ads to boost attractiveness, brochures to convey information, and coupons with expiration dates to stimulate purchases. Thus a multiplicity of channels and contacts that influence target consumers needs to be measured together in order to understand the overall effect, and the separate effectiveness of the programs. The outcome indicator can be called “Brand Experience”, and only consumers can discern the resultant brand experience in the clutter of the marketplace as each message competes with others for attention. [6]
To assure meaningful comparisons among activities, brands, markets, and points in time; the metrics must use a common scale—a “common currency”. This is quite obvious in accounting systems for multinational corporations, but in marketing all too often this principle is ignored. Different communications activities are evaluated using different measurements. These methods fall short of accountability in that the activities cannot be compared directly and their synergies cannot be discerned. Only measurement systems that use common units – to evaluate each contact, each market, and each competitor — can result in marketing accountability. [7]
Marketing activity outcomes must be gathered on a continuous basis in time. While a single reading may provide some insight into the condition before marketing begins, accountability comes from understanding cause and effect. This knowledge comes from repeated examinations over time that show changes from marketing initiatives (from brand and competition) and the evolution of consumers’ needs. Harold Geneen in his groundbreaking book “Managing” explains the role of an effective CEO: to repeatedly evaluate performance numbers on a continuous basis. Only long term observation brings true insight of unanticipated changes and “red flags” in the data. [8]
All measurement systems are prone to misinterpretation and error. Together these form the science of metrology. Measurement accuracy, repeatability, reproducibility, bias, data shifts, and data drifts are only a few common issues identified in measurement, and any useful system must be evaluated from the technical point of view to assure that it addresses these criteria. It is essential that measurement error is quantified so that managers react to changes in conditions, but not changes due to measurement variation. At the very least, all measurements need to show statistical confidence intervals or so-called “error bars”. [9] Independent organizations like the Advertising Research Foundation evaluate the validity of commonly used measurement systems. [10]
These outcome indicators, representing the condition in the marketplace, are combined with financial data to show efficiency of the marketing process. The financials are inputs: dollars spent for marketing activities. The best and most informative systems use Activity based costing (ABC) that track costs by each marketing activity, rather than traditional cost accounting by salaries, facilities, equipment, and materials. [11] ABC methods have the best fidelity as they show contribution efficiency (Brand Experience/$ spent) of each activity, and they may be summed in desired combinations (or campaigns). Understanding competitors costs and brand experience can lead to benchmarking, a comparison to what is considered the best in class.[ citation needed ]
Brand equity, in marketing, is the worth of a brand in and of itself – i.e., the social value of a well-known brand name. The owner of a well-known brand name can generate more revenue simply from brand recognition, as consumers perceive the products of well-known brands as better than those of lesser-known brands.
Marketing management is the strategic organizational discipline which focuses on the practical application of marketing orientation, techniques and methods inside enterprises and organizations and on the management of a firm's marketing resources and activities.
In business, operating margin—also known as operating income margin, operating profit margin, EBIT margin and return on sales (ROS)—is the ratio of operating income to net sales, usually expressed in percent.
Cost per mille (CPM), also called cost per thousand (CPT), is a commonly-used measurement in advertising. It is the cost an advertiser pays for one thousand views or impressions of an advertisement. Radio, television, newspaper, magazine, out-of-home advertising, and online advertising can be purchased on the basis of exposing the ad to one thousand viewers or listeners. It is used in marketing as a benchmarking metric to calculate the relative cost of an advertising campaign or an ad message in a given medium.
In marketing, brand loyalty describes a consumer's positive feelings towards a brand and their dedication to purchasing the brand's products and/or services repeatedly regardless of deficiencies, a competitor's actions, or changes in the environment. It can also be demonstrated with other behaviors such as positive word-of-mouth advocacy. Corporate brand loyalty is where an individual buys products from the same manufacturer repeatedly and without wavering, rather than from other suppliers. Loyalty implies dedication and should not be confused with habit, its less-than-emotional engagement and commitment. Businesses whose financial and ethical values rest in large part on their brand loyalty are said to use the loyalty business model.
Customer satisfaction is a term frequently used in marketing to evaluate customer experience. It is a measure of how products and services supplied by a company meet or surpass customer expectation. Customer satisfaction is defined as "the number of customers, or percentage of total customers, whose reported experience with a firm, its products, or its services (ratings) exceeds specified satisfaction goals." Enhancing customer satisfaction and fostering customer loyalty are pivotal for businesses, given the significant importance of improving the balance between customer attitudes before and after the consumption process.
Market share is the percentage of the total revenue or sales in a market that a company's business makes up. For example, if there are 50,000 units sold per year in a given industry, a company whose sales were 5,000 of those units would have a 10 percent share in that market.
Marketing effectiveness is the measure of how effective a given marketer's go to market strategy is toward meeting the goal of maximizing their spending to achieve positive results in both the short- and long-term. It is also related to marketing ROI and return on marketing investment (ROMI). In today's competitive business environment, effective marketing strategies play a pivotal role in promoting products or services to target audiences. The advent of digital platforms has further intensified competition among businesses, making it imperative for companies to employ innovative and impactful marketing techniques. This essay examines how various types of advertising methods can be utilized effectively to reach out to potential consumers
Copy testing is a specialized field of marketing research, that determines an advertisement's effectiveness based on consumer responses, feedback, and behavior. Also known as pre-testing, it might address all media channels including television, print, radio, outdoor signage, internet, and social media.
Return on marketing investment (ROMI) is the contribution to profit attributable to marketing, divided by the marketing 'invested' or risked. ROMI is not like the other 'return-on-investment' (ROI) metrics because marketing is not the same kind of investment. Instead of money that is 'tied' up in plants and inventories, marketing funds are typically 'risked'. Marketing spending is typically expensed in the current period.
Marketing Mix Modeling (MMM) is statistical analysis such as multivariate regressions on sales and marketing time series data to estimate the impact of various marketing tactics on sales and then forecast the impact of future sets of tactics. It is often used to optimize advertising mix and promotional tactics with respect to sales revenue or profit.
Customer engagement is an interaction between an external consumer/customer and an organization through various online or offline channels. According to Hollebeek, Srivastava and Chen S-D logic-Definition of customer engagement is "a customer’s motivationally driven, volitional investment of operant resources, and operand resources into brand interactions," which applies to online and offline engagement.
Sales effectiveness refers to the ability of a company's sales professionals to “win” at each stage of the customer's buying process, and ultimately earn the business on the right terms and in the right timeframe. Improving sales effectiveness is not just a sales function issue; it's a company issue, as it requires collaboration between sales and marketing to understand what is working and not working, and continuous improvement of the knowledge, messages, skills, and strategies that sales people apply as they work sales opportunities.
Return on investment (ROI) or return on costs (ROC) is the ratio between net income and investment. A high ROI means the investment's gains compare favourably to its cost. As a performance measure, ROI is used to evaluate the efficiency of an investment or to compare the efficiencies of several different investments. In economic terms, it is one way of relating profits to capital invested.
Human Resource (HR) metrics are measurements used to determine the value and effectiveness of HR initiatives, typically including such areas as turnover, training, return on human capital, costs of labor, and expenses per employee.
The Marketing Accountability Standards Board (MASB), authorized by the Marketing Accountability Foundation, is an independent, private sector, self-governing group of academics and practitioners that establishes marketing measurement and accountability standards intended for continuous improvement in financial performance, and for the guidance and education of users of performance and financial information.
One of the indicators of the strength of a brand in the hearts and minds of customers, brand preference represents which brands are preferred under assumptions of equality in price and availability.
Annual growth rate (AGR) is the change in the value of a measurement over the period of a year.
Charity assessment is the process of analysis of the goodness of a non-profit organization in financial terms. Historically, charity evaluators have focused on the question of how much of contributed funds are used for the purpose(s) claimed by the charity, while more recently some evaluators have placed an emphasis on the cost effectiveness of charities.
Data-driven marketing is a process used by marketers to gain insights and identify trends about consumers and how they behave — what they buy, the effectiveness of ads, and how they browse. Modern solutions rely on big data strategies and collect information about consumer interactions and engagements to generate predictions about future behaviors. This kind of analysis involves understanding the data that is already present, the data that can be acquired, and how to organize, analyze, and apply that data to better marketing efforts. The intended goal is generally to enhance and personalize the customer experience. The market research allows for a comprehensive study of preferences.