From Marketing Spend to Marketing Accountability

Christine Moorman
Marketing News
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Key Takeaways
  • Marketing budgets are expected to increase 6.7% in the next 12 months.
  • When asked, “Which best describes how your company shows the short-term impact of marketing spend on your business?” only 35.7% report the ability to prove the impact quantitatively, 50% state that they “have a good qualitative sense but not a quantitative impact,” and 14.3% state that they “haven’t been able to show the impact yet.”
  • Most CMOs agree that marketing analytics contribute only moderately to their companies’ performance, which is a sign that the challenge of demonstrating the value of marketing has not been adequately addressed.

Marketing budgets are on the rise, yet marketing leaders still struggle to demonstrate the impact of their spending. The solution to this accountability challenge lies not in marketing metrics, but in how marketers think through the impact of their marketing strategies.  

According to the February 2014 edition of The CMO Survey​, the latest iteration of a biannual survey of more than 400 marketing executives across all major industries that my team and I conduct at Duke University in partnership with McKinsey & Co. and the AMA, marketing budgets are expected to increase 6.7% in the next 12 months. This is a sizable jump over the projected increase of 4.3% that was reported in the previous edition of the survey, released in August 2013, and a massive boost over the 0.5% increase reported in February 2009.

At the same time, The CMO Survey shows that marketing leaders still struggle with how to demonstrate the impact of marketing spending. When asked, “Which best describes how your company shows the short-term impact of marketing spend on your business?” only 35.7% report the ability to prove the impact quantitatively, 50% state that they “have a good qualitative sense but not a quantitative impact,” and 14.3% state that they “haven’t been able to show the impact yet.” 

These figures are worse when it comes to demonstrating the long-term impact of marketing spend, in which only 28.6% report the ability to prove the impact quantitatively, as depicted in the chart below. Top marketers at business-to-consumer product companies rate their organizations as significantly more advanced on this capability. Specifically, 64.9% of B-to-C product companies state that they prove the short-term impact of marketing using quantitative tools and 39.5% state that they do so in the long term.

These numbers are too low. Dem-onstrating the impact of marketing means developing hypotheses about how your marketing actions and other competitor and macroeconomic factors will affect customer behaviors; developing measures to detect those effects, and then designing a good test to study the impact of your actions.  ​

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Author Bio:

 
Christine Moorman
Christine Moorman is the T. Austin Finch Professor of Business Administration at Duke University’s Fuqua School of Business.
moorman@duke.edu

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