Friday, November 09, 2007

Financial imperative of marketing

This week while discussing the challenges of true accountability my colleague Pradeep Kumar mentioned that he believes that every relevant metrics in our discipline centers around one idea: Growth. He calls this focus on Growth metrics the financial imperative of marketing. I like the concept of focusing on financial growth metrics, which could be Sales, Market Share, Lead Volume, Share of Wallet, Customer Lifetime Value etc. Our marketing discipline gets too easily focused on any non-financial market metrics like Brand Preference, Brand Awareness, Click-through rates, etc. We are shying too fast away from connecting our marketing activity with truly growth centered financial metrics. It’s just so much easier to focus on the more indirect metrics not directly related to financial business impact.

Over the next 12-15 months I will write more often about my observations and learning in this critical area of correlating marketing activities to financial success variables. There are a few reasons why we should see quite some progress over the next 2-3 years in addressing this subject:

  • The science to understand causal correlation patterns between traditional brand attributes research and actual consumer behavior that drives financial metrics is getting more and more attention. I expect some further breakthroughs in this discipline.
  • More and more Fortune 500 companies follow the model of Capital One and implement a culture of ongoing testing and optimization The proliferation of In-Market-Tests will help improve the accuracy of predictive modeling between marketing activities and sales metrics.
  • The early excitement of using the Web as the much more measurable and accountable media channel is slowly subsiding. The realities of the vast amount of data and the still very immature state of consistent Web metrics motivate marketers to return their focus on every single marketing channel, not just Online. Google alone will not solve the accountability challenge for marketers. Fortunately most marketers have realized it and are stepping up to address it.

The year 2008 might be the first year where marketing service providers are able to match the confidence of large consulting firms that promise (and sometimes even prove) a 5-10 fold Return on their consulting fees. It’s time for marketers not just too complain about the increasing accountability pressure but to build impactful models that justify the marketer’s existence.

4 Comments:

Blogger Grant said...

Good post.

Accountability today is key, and that accountability begins and ends with relevancy. The only way to get to relevancy is through testing.

Grant A. Johnson
www.johnsondirect.coom

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