According to a study by McKinsey & Company, nearly 20% of all global marketing budgets, or about $200 billion, is poorly used.
The reason for this state of affairs is common among marketers – it’s the lack of connection between their work and the finances of the organization. This, in turn, has its origins in the difficulty of linking marketing metrics with typical business measures.
But first, a bit of diagnosis:
According to a study by the Fournaise Group:
- 80% of CEOs say they do not have confidence in the work of marketers, while 90% of them DO trust the CFO!
- 80% of CEOs are not at all interested in open-mailing rates
- 80% of CEOs say that marketers do not understand the connection between their work and company finances
- 74% of CEOs want marketing to be 100% focused on MROI
According to a study sponsored by Eloqua and ORACLE:
- Only 42% of CEOs and 22% of CFOs see the impact of marketing on the organization
According to a 2013 survey by ITSM & Forrester:
- 27% Marketing is able to provide information on the impact of their work on business
- 38% Marketing has an impact on organizations, but no one knows neither how nor how large
- 29% marketing has little impact on the organizations, but it cannot be measured
- 6% of marketing activities do not change anything and do not report anything
Marketers tend to be treated as an expensive interface for advertising agencies. This is unfair but hardly surprising. Reporting the results of their work by the number of produced spots, flyers, and posters, the number of inputs on the page, or the number of likes and followers does not help to build confidence between the CEO, CFO and CMO.
Marketing’s next innovation is really the lifeblood of business. The problem is that without proper reporting, the input of a marketing organization will not be considered at all. Hard data used by the business always wins out over "In my opinion" marketing.
Changing this situation will occur only when marketing reports talk about the results of their work in purely business language. Number of likes in relation to the number of hits on the site and correlation with open-rate mailings can certainly raise goose bumps for many marketers, but for the CEO this is less important than a drawing by his five-year daughter.
Correlating process data (that is, data that describes what is happening in marketing, such as the amount of gadgets, generated likes, followers, etc.) with business data should be a priority for any marketing team. This is the only way to take business responsibility for marketing.
But building a marketing dashboard that speaks the language of business is difficult. It requires not only the creation of a suitable platform for data collection and processing, but a mass of concentrated effort in order to correlate this data with business metrics.
How long is the route? Quite long, and it consists of several stages:
- Hope that enough of the budget is left by the end of the year
- Count anything, even likes (but in a systematic way)
- Count unit costs, for example the total cost of the campaign, the unit cost of sending an email to the customer, MQL or likes
- Implement meters measuring the impact on the business purely as ROI and market share
- Implement predictive analytics, such as the ability to calculate the effectiveness of a particular campaign before it takes place (Campaign Lift Modeling)
The above steps will also affect the perception of the CMO by the CEO and CFO. The overall perception of marketing will likely pass through the following steps:
- The marketer is an artist, and his role in the organization is purely decorative
- The marketer blows a measurable budget for a measurable amount of unmeasurable results
- The marketer controls your spending
- The marketer turns a profit for the organization
- All strategic and tactical decisions are consulted or initiated by marketing
The whole effort is the intersection of conceptual, technical and business – as a result of the close collaboration of IT developers, data analysts and marketing. But the effect is worth the investment – it moves marketing from the "fancy" through the "tactical" to the "strategic" level, where it belongs.
Of course this is the final result. It will be followed by an increasing number of positive changes in marketing, because hard data and continuous contact with results can’t help but lead to the effective verification of marketing activities.