In the wake of the branding fiascoes of the dot-com bubble, marketing departments at technology companies are losing their place at the "executive table," according to a report released Friday by the CMO Council.
"Marketing has a PR problem in the executive suite," writes Bill Glazier, a venture partner at Redwood Ventures, who is editor in chief of the report "Measures + Metrics: Assessing Marketing Value + Impact." Glazier, who wrote the 227-page report with Robert Nelson and Don O'Sullivan, also states that "accountability—not brand or eyeballs—is the new watchword for the chief marketing officer."
The report takes an exhaustive look at marketing performance measurement, or MPM. It presents MPM as a systematic way for technology or other b-to-b companies to track the effectiveness and return on investment of their marketing efforts.
The report grew out of a previous study by the CMO Council, a peer group of marketing executives representing almost 1,000 technology companies, including such heavyweights as Oracle, SAP and Xerox. Fewer than 20% of the marketing executives surveyed for the earlier report said their companies employed comprehensive and meaningful metrics to measure the effectiveness of their marketing efforts. More than 80% said they were dissatisfied with their ability to measure marketing ROI.
"Measures + Metrics" positions itself as a road map for CMOs, whether in technology or general b-to-b, for implementing MPM and finding a pathway to that Holy Grail of marketing: tabulating genuine return on investment. The report contains three main sections:
The CMO Council/BusinessWeek MPM Survey is the distillation of about 1,000 interviews with CMOs and other marketing executives about the state of MPM at their companies.
The CMO Council MPM Model discusses the key metrics that should be part of an MPM program.
The implementation guide explores the challenges of the 12-to-18 month process of creating an MPM program.
While the study found that most companies did not have an MPM program worth mentioning, those marketing departments that did have established MPM programs had more respect from the CEO.
"The typical CMO—according to our research—is able to neither measure nor systematically communicate on the fundamental business processes in the marketing function and their results. This can set the stage for a CMO's failure," the report said.
In its discussion of the MPM model, the report states: "MPM at its simplest is about the mindset that marketing can and should be measured with an eye to justifying its activities and programs."
The report argues that what should be measured is not simply the amount of leads, but how those leads contribute to the business as a whole in terms of requests-for-proposals, business in the pipeline or overall revenue. "It's not about measurement for the sake of measurement," Glazier writes. "Many marketers measure a lot—too much, in fact."
Glazier added in an interview with BtoB , "MPM is not about data but about outcomes. MPM is about business performance, not theoretical statistics."
In a phrase that should be in the marketing ROI hall of fame of quotations—alongside John Wanamaker's chestnut, "I know half the money I spend on advertising is wasted, but I can never find out which half—-the report quotes Albert Einstein: "Not everything that can be counted counts, and not everything that counts can be counted."
Four suggested metrics
The CMO Council suggests that marketers measure activity in four main areas:
Business acquisition/demand generation, which can include such metrics as market share gains, lead acquisition and deal flow.
Product innovation/acceptance, which can include market adoption rates, user attachment and affinity, loyalty and word-of-mouth.
Corporate image and brand identity, which can include growth in brand value and financial equity, awareness and retention of employees.
Corporate vision and leadership, which can include share of voice and discussion, retention and relevance of messaging, and tonality of coverage.
The report suggests that not all these categories are of equal importance. A typical breakdown might weight the relative importance of the categories: business acquisition (50%); product innovation/acceptance (20%); corporate brand (20%) and corporate vision (10%).
The report's implementation guide explores how a company might go about selecting the metrics that are most important to driving bottom-line results. "It is the business outcomes associated with the program and activities [that matter to the CEO]," Glazier writes. He also takes pains to say that an MPM program needn't be expensive or involve the installation of a software application.
None of this will be without its challenges. A key hurdle is measuring what many believe to be unmeasurable: the art of persuasion. Glazier said in an interview that marketing has enough science in it and buyers are rational enough agents that genuine measurement can be applied to the discipline of marketing.
"A technology buyer is far more analytical than a consumer who's buying a Coke," he said. "But if consumer packaged goods can analyze their customers and predict market share to a few percentage points based on their marketing metrics, then technology b-to-b buyers can be analyzed in that way, too."
Changes effect others
Another difficult hurdle in implementing an MPM program is that it involves a change not only in the marketing department but also in other units of the company, such as finance and sales. "MPM is about a process, a culture and mindset, and a series of outcomes," Glazier writes.
In the interview, he scoffed at the notion that the sales and marketing departments at many companies were not on speaking terms. "Sales and marketing do talk to each other when marketing has something useful to say to sales," he said.
And to those who suspect that MPM is an admission of sorts that marketing is a weak department, the report argues that genuine marketing professionals shouldn't bridle at proving their discipline is effective.
As You Man Tsang, CMO of Biz360, put it in the report, "Strong marketers want to be measured. They are not afraid because they know marketing works."
Biz360 was one of the underwriters of the CMO Council's report. Other underwriters included Cognos, Google, Unica and WebTrends.