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).
Marketing expert Tony Lennon believes marketing effectiveness is quintessential to marketing, going so far as to say It's not marketing if it's not measured.[citation needed]
History
The concept of marketing effectiveness first came to prominence in the 1990s with the publication of Robert Shaw's Improving Marketing Effectiveness[1] which won the 1998 Business Management Book of the Year Award.
In the book What Sticks[2] ( ISBN1419584332), authors Rex Briggs and Greg Stuart calculated that marketers waste 37% of their marketing investment. Reasons for the waste include failure to understand underlying customer motivations for buying, ineffective messages, and inefficient media mix investment (pg 19–20).
Corporate: Each company operates within different bounds. These are determined by their size, their budget and their ability to make organizes act in similar ways leading to the need to segment them. Based on these segments, they make choices based on how they value the attributes of a product and the brand, in return for price paid for the product. Consumers build brand value through exposure to the brand and branded information over time.[citation needed] Brand information can be received through many sources, such as, advertising, word-of-mouth and in the (distribution) channel often characterized with the purchase funnel, a McKinsey & Company concept. Lastly, consumers consume and make purchase decisions in certain ways.
Timeframe of impact evaluation: The "long and short of it" is a principle of marketing effectiveness that dictates a balanced approach between long-term brand building and short-term sales activation. Neglecting either one is a "wrong-term"[7] strategy that ultimately limits a company's sustained growth and profitability. This concept, popularized by marketing effectiveness researchers Les Binet and Peter Field[8], is based on extensive analysis of advertising campaigns and demonstrates that a focus on immediate sales alone will not maximize long-term business success. Their research suggests an optimal ratio for marketing budgets, with approximately 60% allocated to long-term brand-building efforts (e.g., emotional advertising and mass-reach campaigns) and 40% dedicated to short-term sales activation (e.g., direct-response ads and promotions). This balance ensures that brands build the mental availability needed to drive future sales while also capturing immediate demand.
Exogenous Factors: These external influences can be categorized into economic conditions, social trends, technological advancements, legal frameworks, and competitive dynamics among others. Economic conditions play a pivotal role in shaping marketing decisions. In times of recession or inflationary pressures, marketers often need to adapt their approaches to align with consumers’ reduced purchasing power. For instance, during periods of high unemployment rates, promotions may focus more heavily on value-for-money products or services. Similarly, when interest rates rise, individuals might delay major purchases like cars or homes, affecting demand for certain goods and services such as housing loans or automobiles. Therefore, understanding prevailing economic indicators becomes essential for crafting realistic market forecasts and formulating appropriate marketing plans. Societal changes also have profound implications for marketing strategies. Demographic shifts, cultural transformations, ethnic diversity, gender equality issues, environmental consciousness - all these factors influence how companies perceive their target audiences. For example, increasing awareness around sustainability issues compels many businesses to incorporate eco-friendly practices into their operations and communications. Moreover, changing societal norms regarding LGBTQ+ rights could lead some brands to modify their messaging accordingly, ensuring inclusivity. Hence, staying attuned to evolving societal values helps marketers tailor campaigns effectively while avoiding potential pitfalls associated with outdated assumptions.
Technological advancements represent another critical aspect impacting marketing management. The advent of digital platforms has revolutionized advertising methods, enabling personalized communication at scale. Social media channels offer direct engagement opportunities wherein companies can connect directly with customers, gauging preferences and feedback instantaneously. Furthermore, data analytics tools provide valuable insights into customer behaviors and market trends, facilitating informed decision making. On the flip side, rapid innovation necessitates continuous learning and adaptation, lest organizations become obsolete due to lack of technological literacy.
Legal frameworks constitute yet another exogenous factor influencing marketing practices. Laws governing privacy protection, false advertising, intellectual property rights, and competition law impose restrictions on how marketers operate. Failure to adhere to regulations can result in severe penalties ranging from fines to loss of reputation. Conversely, well-crafted legislation can foster healthy market competition and protect consumer interests, thereby benefiting both businesses and consumers alike. Lastly, competitive dynamics significantly shape marketing activities. Markets are never static; they are always subject to intense rivalry amongst players vying for supremacy. Competitors' actions drive marketers towards adopting defensive or offensive strategies based on perceived threats or opportunities. For instance, if a key competitor introduces a new product or service, other firms may need to follow suit quickly to maintain parity or risk losing ground. Therefore, keeping tabs on industry competitors is vital for devising robust marketing plans.
Marketing Strategy: Improving marketing effectiveness can be achieved by employing a superior marketing strategy. By positioning the product or brand correctly, the product/brand will be more successful in the market than competitors’ products/brands. The match-up between the product, the consumer lifestyle, and the endorser is important for effectiveness of brand communication. Even with the best strategy, marketers must execute their programs properly to achieve extraordinary results.
Marketing Creative: Even without a change in strategy, better creatives can improve results. Without a change in strategy, AFLAC was able to achieve stunning results with its introduction of the Duck (AFLAC) campaign. With the introduction of this new creative concept, the company growth rate soared from 12% prior to the campaign to 28% following it. (See references below, Bang). Creatives are an integral part of any marketing campaign, as it establishes the corporate identity and plays a significant role in brand recollection. These may include designing point of purchase displays, brochures or even product packaging. Apart from communicating the brand, consistency in design across various mediums helps reinforce a specific offering in the minds of the audience. Using typography, imagery and color, marketing creatives evoke emotion related to a brand.[citation needed]
Marketing Execution: By improving how marketers go to market, they can achieve significantly greater results without changing their strategy or their creative execution. At the marketing mix level, marketers can improve their execution by making small changes in any or all of the 4-Ps (Product, Price, Place and Promotion) (Marketing) without making changes to the strategic position or the creative execution marketers can improve their effectiveness and deliver increased revenue. At the program level, marketers can improve their effectiveness by managing and executing each of their marketing campaigns better. It is commonly known that consistency of a Marketing Creative strategy across various media (e.g. TV, Radio, Print and Online), not just within each individual media message, can amplify and enhance the impact of the overall marketing campaign effort.[citation needed] Additional examples would be improving direct mail through a better call-to-action or editing web site content to improve its organic search results, marketers can improve their marketing effectiveness for each type of program. A growing area of interest within (Marketing Strategy) and Execution are the more recent interaction dynamics of traditional marketing (e.g. TV or Events) with online consumer activity (e.g. Social Media). (See references below, Brand Ecosystems) Not only direct product experience, but also any stimulus provided by traditional marketing, can become a catalyst for a consumer brand "groundswell" online as outlined in the book Groundswell.
Marketing Infrastructure (also known as Marketing Management): Improving the business of marketing can lead to significant gains for the company. Management of agencies, budgeting, motivation and coordination of marketing activities can lead to improved competitiveness and improved results. The overall accountability for brand leadership and business results is often reflected in an organization under a title within a (Brand management) department.
American Productivity & Quality Center, Maximizing Marketing ROI (2001) American Productivity Center. ISBN1-928593-57-7
Aspatore Books Staff, Improving Marketing ROI: Leading CMOs on Adding Value, Calculating Return on Investments, and Creating a Financial Impact (2006) Aspatore Books. ISBN1-59622-434-7
Briggs, Rex, Stuart, Greg, What Sticks: Why Most Advertising Fails and How to Guarantee Yours Succeeds (2006) Kaplan Business. ISBN1-4195-8433-2
Farris, Paul W., Bendle, Neil T., Pfeifer, Phillip E. and Reibstein, David J., Marketing Metrics: 50+ Metrics Every Executive Should Master (2006) Wharton School Publishing. ISBN0-13-187370-9
Kotler, Philip.; Kevin Lane Keller (2006). Marketing Management, 12th ed.. Pearson Prentice Hall. ISBN0-13-145757-8.
Laermer, Richard; Simmons, Mark, Punk Marketing, New York: HarperCollins, 2007. ISBN978-0-06-115110-1 (Review of the book by Marilyn Scrizzi, in Journal of Consumer Marketing 24(7), 2007)
Lenskold, James, Marketing ROI: The Path to Campaign, Customer, and Corporate Profitability (2003) McGraw-Hill. ISBN0-07-141363-4
Mann, Don, Brand Ecosystems, the relative harmony among all marketing elements that support brands (2008)
Powell, Guy R., Return on Marketing Investment: Demand More From Your Marketing And Sales Investments (2003) RPI Press. ISBN0-9718598-1-7
Schultz, Don E., Measuring Brand Communication ROI (1997) Assn of Natl Advertisers. ISBN1-56318-053-7
Thaler, Linda Kaplan, Koval, Robin, Marshall, Delia, Bang! Getting Your Message Heard in A Noisy World (2003) Doubleday Publishing. ISBN0-385-50816-6
Harcsová, Henrieta. 2023. “Effectiveness of Marketing Innovations.” Studia Commercialia Bratislavensia 16 (55): 25–34. https://search.ebscohost.com/login.aspx?direct=true&AuthType=shib&db=bth&AN=169843790&authtype=sso&custid=s8441008&site=ehost-live&scope=site Tarka, Piotr, and Elżbieta Jędrych. 2023. “Toward an Exploratory Framework of Determinants of Marketing Research Effectiveness in Business Organizations.” Journal of Marketing Analytics 11 (3): 503–22. doi:10.1057/s41270-022-00182-7 Prodea B-M, Constantin CP. The Role of Augmented Reality in Digital Marketing Strategy. Bulletin of the Transilvania University of Brasov, Series V: Economic Sciences. 2023;16(1):39-46. doi:10.31926/but.es.2023.16.65.1.5 Dall’Olio, Filippo, and Demetrios Vakratsas. 2023. “The Impact of Advertising Creative Strategy on Advertising Elasticity.” Journal of Marketing 87 (1): 26–44. doi:10.1177/00222429221074960
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