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Marketing Metrics

Accountability in Marketing

We have all been there - the annual forecasting and budgeting. For accountants the numbers are easy, but for the rest of us, this is where the trouble starts. It is not enough to have to estimate our sales, market penetration over the next 12 months, we also need to do the 'numbers'!

Accountability doesn't stop there though. There is a new focus in corporate reporting that wants to quantify marketing assets (primarily the brand), and marketing spend. As a result, marketing has to do the numbers game more than ever. There has been an increase in the number of advertised jobs for 'Marketing Controllers' - financially savvy marketers.

Campaign Measures

The main reason that it is good practice to measure and track performance is to be able to repeat good and successful campaigns, and to learn from the errors and failures of the bad ones.

Good campaigns will have been developed against carefully planned objectives, focused on carefully targeted customer groups, etc. Even in new product development (NPD), you will find that the successful products are carefully planned, targeted and executed, reducing the development time, and increasing profit.

Marketers often think that many of their activities are too 'fuzzy' to warrant this detail, but there is now pressure for them to quantify these activities.

The Measurement

One of the most common measurements for marketing campaigns and NPD projects is the Return on Investment (ROI). This is essentially a breakeven analysis to show when the campaign or new product will have returned its investment costs. This is a time measurement.

Campaign responses are another simple metric that can be part of the original project brief, and therefore the objectives. If your campaign wants to sell 1,000 products, and you estimate that you need to talk to at least 3 customers for each sale - you need the campaign to attract 3,000 customers!

A similar measurement is the Opportunities to View (OTV). Place an advert in a newspaper with a circulation of 100,000, and this will be the approximate OTV. Place it on a busy web page, and you can take the traffic divided by the number of appearances.

Staying on the Internet theme, we now have a metric called Cost per Click (CPC). If you are using the Pay per Click (PPC) advertising with Google AdWords, or Yahoo! or MSN, you will know how much each click costs you. You can also track whether that click has resulted in a sale, giving you an ROI on that campaign. If your CPC is high, but your customers are not responding this indicates your advert is mistargeted or poorly constructed.

Google also has a metric called the PageRank. This is linked to the performance of the web page on the search engine. Very successful sites with huge amounts of traffic have high rankings (up to 10). Small business sites will be around 2 or 3 on average, though many are not listed at all!

Brand values are also increasingly being reported in financial accounts. This is something that a business owner or marketing manager can do themselves, though we normally find that the valuations are wild - either far too high or far too low. But what would you think the value of the brand - it's goodwill, image and reputation - would be in the marketplace should you sell it today? This is only the brand, not your company, or any other assets.

What's Stopping You?

There are good reasons why marketers have resisted collating metrics up to now. One of the main ones is the lack of data available. In the era of high-powered computing, and dedicated software packages, this should not be the case. Data should be available for every company.

Of course, the company does run the risk of double counting every sale. The Sales Manager will want to claim ever sale for themselves - they are, after all on the frontline. I have always seen marketing's role as providing Sales with the ammunition it needs - the right product, pricing, brochures, demand, etc, to do its job. So a success should be enjoyed throughout the company - even if more than 1 department or person claims it.

Sales data is one of the easiest to collect – you know how many widgets have been sold and the revenue that has come in from it. OTV is more difficult, and an inexact science. If you have a TV advert running during Coronation Street, you can find out how many viewers were watching – but you can't say how many made tea or went to the loo during the break.

The business environment has changed, and the whole organisation - irrespective of it's size - is now being held accountable. Marketing people need to fall into line, and the days of unfettered spending on Internet projects has now long gone. And, of course, you want to be able to repeat your successes, and limit your failures, so the advice is - plan, understand and measure!

About the Author.

Thom Poole is a Chartered Marketer with the Chartered Institute of Marketing, and a member of the Marketing Society. A marketer with over 19 years experience in online marketing and web strategy, Thom is strategic e-marketing consultant for Jack Marketing Solutions, working with SMEs. He also teaches people web design from beginners to professionals, as well as CRM, eCommerce, etc., and is a lecturer for the London School of Business & Finance and Birkbeck College – University of London. A regular speaker on the CRM and e-marketing event circuit, Thom has also written a book on ethical e-marketing, called "Play It By Trust". The book is available at the publishers as a hardback or download.

For more details visit www.jack-marketing.com

Article first published: Daily Telegraph Business Club (October 2006)

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