Unformatted text preview: 10/9/2019 Evaluating Marketing Performance | Boundless Marketing Boundless Marketing
Introduction to Marketing Evaluating Marketing Performance … 1/11 10/9/2019 Evaluating Marketing Performance | Boundless Marketing The Importance of Evaluating Marketing
Performance
Evaluating marketing performance guides future marketing initiatives
and helps a company achieve its goals. LEARNING OBJECTIVES Review the importance of performance evaluation from a
marketing perspective KEY TAKEAWAYS Key Points Ideally, marketing performance measurement should be
a logical extension of the planning and budgeting
exercise that happens before a company’s scal year.
Marketing performance metrics or key performance
indicators (KPIs) are useful not only for marketing
professionals but also for non-marketing executives.
Determining what areas of the marketing mix to modify,
as well as whether company goods, services, and ideas
meet customer and stakeholder needs, are some of the
primary reasons why companies evaluate the marketing
performance.
Key Terms bottom line: The nal balance; the amount of money or pro t left after everything has been tallied. … 2/11 10/9/2019 Evaluating Marketing Performance | Boundless Marketing key performance indicators: considered industry jargon for a type of performance measurement, KPIs
are commonly used by an organization to evaluate its
success or the success of a particular activity in which it
is engaged.
return on investment: Return on investment (ROI) is one way of considering pro ts in relation to capital
invested. Why Evaluate the Performance of Marketing
The intangible bene ts of marketing – improving and enhancing brand
awareness; educating customers and prospects about product bene ts;
and strengthening stakeholder relationships – make measuring its
nancial impact a perplexing and challenging process. Ideally, marketing
performance measurement should be a logical extension of the planning
and budgeting exercise that happens before a company’s scal year.
The goals that are set should be both measurable and applicable to
every marketing role within an organization. Companies employ various
methodologies to measure marketing performance and ensure they
meet those performance goals. Business Report: Evaluating marketing performance helps companies
plan and budget for the next scal year. … 3/11 10/9/2019 Evaluating Marketing Performance | Boundless Marketing Importance of Marketing Performance Metrics
Marketing performance metrics or key performance indicators (KPIs) are
useful not only for marketing professionals, but also for non-marketing
executives. From the chief executive o cer to the vice president of
sales, the senior management team needs marketing KPIs to gauge how
marketing activities and spending impact the company’s bottom line.
This is particularly important since companies are prone to reduce
marketing budgets during economic downturns, downsizing, and
mergers.
As marketers face more and more pressure to show a return on
investment (ROI) on their activities, marketing performance metrics help
measure the degree to which marketing spending contributes to pro ts.
It also highlights how marketing contributes to, and complements,
initiatives in other areas of the organization, such as sales and customer
service.
Other reasons why companies evaluate marketing performance include:
Monitoring marketing’s progress towards its annual goals
Determining what areas of the marketing mix – product, price,
place, and promotion – need modi cation or improvement to
increase some aspect of performance
Assessing whether company goods, services, and ideas meet
customer and stakeholder needs
Establishing marketing performance metrics is integral to helping brands
satisfy customers, establishing a clear company image, being proactive
in the market, and fully incorporating marketing into the company’s
overall business strategy. Marketing Performance Metrics
Marketing metrics are numeric data that allow marketers to evaluate
their performance against organizational goals. … 4/11 10/9/2019 Evaluating Marketing Performance | Boundless Marketing LEARNING OBJECTIVES Summarize how marketing metrics impacts company
operations and goals KEY TAKEAWAYS Key Points Marketing metrics have di erent elements of
measurement, including net sales billed, number of
product or design registrations, and brand surveys to
measure brand awareness.
By monitoring and analyzing marketing performance
metrics, brands can increase their competitive
intelligence, assess their market strengths and
weaknesses, and make calculated budgetary decisions
across the marketing mix.
Return on marketing investment (ROMI),marketing
return on investment (ROI) and return-on-marketingobjective (ROMO) are examples of marketing
performance metrics used by major brands to prioritize
and allocate marketing investments.
Key Terms analytics: the discovery and communication of meaningful patterns in data, which rely on the
simultaneous application of statistics, computer
programming, and operations research to quantify
performance.
contribution margin: cost-volume-pro t analysis, a form of management accounting; the marginal pro t per unit
sale … 5/11 10/9/2019 Evaluating Marketing Performance | Boundless Marketing Marketing Performance Metrics
As companies seek to run leaner and more e cient businesses, more
marketing professionals are tasked to demonstrate how marketing
generates revenue and contributes to companies’ business goals.
Marketing metrics provide frameworks that public relations specialists,
brand managers and marketing directors can use to evaluate marketing
performance, as well as back their marketing plans and strategies.
The numeric data allow
marketers to not only justify their
e orts, but also highlight the
direct relationship between
marketing and larger
organizational goals. Marketing
metrics have di erent elements Analytical
Tools:
Quantitative
metrics
and
analysis help
marketers
make more accurate decisions and
predict risks associated with
decisions. of measurement, including net
sales billed, number of product or
design registrations, and brand surveys to measure brand awareness. By
collecting and analyzing marketing metrics, brands can build their
marketing performance in the following ways:
Increasing competitive intelligence and anticipating competitor
reactions to new marketing strategies
More accurately assessing company marketing assets such as
brand equity and its level of e ectiveness among target audiences
Building a knowledge base of current and historic data that help
drive marketing mix decisions and steer the company through
rapidly changing market conditions
Entities such as the Marketing Accountability Standards Board have
developed formal processes for connecting marketing activities to the
nancial performance of organizations. Moreover, industry experts have
developed various metrics – notably, return on marketing investment
(ROMI) – to help marketers measure the performance of activities across … 6/11 10/9/2019 Evaluating Marketing Performance | Boundless Marketing the marketing mix. The purpose of metrics such as ROMI is to measure
the degree to which marketing spending contributes to pro ts. How ROMI Works
Return on marketing investment is one of the most di cult
organizational aspects to measure. ROMI, a relatively new metric, is
marketing contribution attributable to marketing (net of marketing
spending), divided by the marketing “invested” or risked. ROMI is based
on the calculation:
[Incremental Revenue Attributable to Marketing * Contribution Margin (%)
– Marketing Spending] / Marketing Spending ($)
There are two forms of the ROMI metric: short-term ROMI and long-term
ROMI. Short-term ROMI measures revenue such as market share,
contribution margin or other desired outputs for every marketing dollar
spent. This metric is best used to determine marketing e ectiveness and
steer investments from less productive to more productive activities.
In a similar way, long-term ROMI can be used to determine other less
tangible aspects of marketing e ectiveness such as increased brand
awareness or consumer motives. However, long-term ROMI is often
criticized as a “silo-in-the-making”. Long-term ROMI creates a challenge
for brands unfamiliar with using business analytics together with
marketing analytics to determine resource allocation decisions. Despite
this challenge, long-term ROMI can be a sophisticated measure for
prioritizing investments and allocating marketing and other resources
within an established framework. Other Marketing Performance Metrics
Marketing return on investment (ROI) is another term that refers to
measuring company sales and pro ts. Author Rex Briggs also introduced
the term “ROMO” for return-on-marketing-objective. This re ects the
idea that marketing campaigns may have a range of objectives, where
the return is not immediate sales or pro ts. For example, a marketing
campaign may aim to change the perception of a brand. Nevertheless, in … 7/11 10/9/2019 Evaluating Marketing Performance | Boundless Marketing most cases, a simple determination of revenue per dollar spent for each
marketing activity can be su cient to help make important decisions to
improve the entire marketing mix. Methods for Evaluating Marketing Performance
KPIs, ROMI, and Accountable Marketing are all metrics that are used to
track marketing performance. LEARNING OBJECTIVES Illustrate the purpose and characteristics of marketing
performance evaluation methods KEY TAKEAWAYS Key Points When evaluating marketing performance, companies
should measure marketing outcomes from the
consumers ‘ points of view, include all marketing
activities, measure across a continuous time period, and
meet statistical and technical criteria required of all
measurement systems.
To accurately measure the e ectiveness of marketing
activities, KPIs must be integrated within the business
and management of the company.
To ensure meaningful comparisons among activities,
companies should employ a common scale, and
measurement error must be quanti ed so that
managers can react to changes in conditions.
Key Terms … 8/11 10/9/2019 Evaluating Marketing Performance | Boundless Marketing Advertising Research Foundation: The ARF is an association where practitioners from every avenue of
advertising—agency, academia, marketer, media, and
research—gather to exchange ideas and research
strategies.
return on investment: Return on investment (ROI) is one way of considering pro ts in relation to capital
invested.
key performance indicators: considered industry jargon for a type of performance measurement, KPIs
are commonly used by an organization to evaluate its
success or the success of a particular activity in which it
is engaged. Evaluating Marketing Performance
Organizations use various methods to evaluate marketing key
performance indicators (KPIs) or metrics. Marketing Performance
Measurement, Marketing Performance Management, Marketing Return
on Investment (ROI), Return on Marketing Investment (ROMI), and
Accountable Marketing are all metrics that companies use to connect
marketing performance to the nancial performance of the organization. … 9/11 10/9/2019 Evaluating Marketing Performance | Boundless Marketing Marketing Performance: Using an established methodology to evaluate
marketing e ectiveness helps companies measure performance and assess
business needs. In order for marketing KPIs to be integrated within the business and
management of the enterprise, and ensure consistency and reliability
across the marketing mix, they must meet these minimum requirements:
Measure marketing outcomes from the consumers’ points of view
Include all marketing activities
Be repeated over time
Meet statistical and technical criteria required of all measurement
systems Consistency is Key
Marketing materials can be designed to inform, portray products and
services attractively, and in uence purchasing behavior. The methods for
evaluating the performance of, and responses to, these materials range
from simple calculations measuring return on investment, to tallying the
number of visits to a website. Since marketing campaigns are typically
integrated across all channels (e.g., print, email, and social media), these -… 10/11 10/9/2019 Evaluating Marketing Performance | Boundless Marketing channels are measured together to understand the overall e ect on
target markets.
To ensure meaningful comparisons among activities, brands, markets,
and time periods, organizations may employ a common scale to analyze
performance metrics. Using di erent measurements to evaluate di erent
communications activities, competitors, and markets does not allow
direct comparison and results in lost synergies. Companies using
formalized methodologies continually gather and monitor marketing data
to understand where the marketing plan is strong and where it needs
improvement. Long-term observation also brings true insight about
unanticipated changes and “red ags” in the data.
All measurement systems should take into account accuracy,
repeatability, reproducibility, bias, data shifts, and data drifts.
Measurement error must be quanti ed so that managers can react to
changes in conditions, but not to changes due to measurement
variation. Independent organizations such as the Advertising Research
Foundation evaluate the validity of commonly used measurement
systems to produce standards and best practices for evaluating
marketing and advertising data. Previous Next -… 11/11 ...
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