Marketers better able to measure ROI

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Marketers have substantially improved their ability to measure and act on ROI data, but only just over a third (36%) have coordinated their marketing accountability programs with the finance division or a cross-functional team, according to the third annual ANA Marketing Accountability Survey.

A quarter of those polled described their measurement efforts as "siloed" within the marketing department.

The survey, the results of which were presented at the 2006 ANA Marketing Accountability Forum in New York last month, was produced in conjunction with Marketing Management Analytics (MMA) and the ANA's marketing accountability task force.

The survey, conducted online and via follow-up phone conversations in April and May, generated responses from 101 senior-level marketers/ANA members.

Cross-functional cooperation is "one of the most important aspects of the [marketing accountability] process," said John Nardone, exec VP-chief client officer at MMA. "A cooperative relationship with finance is particularly important."

Marketing consultant Gordon Wade, founding partner of EMM Group, said he sees signs the disconnect between marketing and finance may be diminishing.

"We're seeing the beginning of change," he said. "There's growing collaboration between finance and marketing. Finance is beginning to understand what marketing does."

MMA said one clear area of improvement is how confident marketers feel about their ability to quantify their contribution to the bottom line. In last year's survey, when asked if they could measure the sales impact of a 10% cut in marketing spending, only 15.6% of respondents said yes. That response nearly doubled to 30% in this year's survey.

Fifty-seven percent of respondents said they had established a formal marketing accountability program.

"It's really taken off in the last year," said Ed See, COO of MMA. "We see the industry getting to a tipping point."

Tami Young, ROI marketing director for Microsoft Corp.'s MSN division and a member of the task force, is among the marketers who've established a formal marketing accountability program.

MSN drafted research company Millward Brown to help develop a modeling technique using MSN's marketing data. "I call it regression analysis on steroids," Young said.

Using that analysis model, MSN was able to predict the outcome of marketing projects to within 2% of the actual revenue generated. "All along we knew we were doing a good job," Young said. "Now, I could tell them this is what the actual return was on the investment.' "

Allstate Insurance Co. has implemented a marketing accountability program as well. "Allstate marketing is now able to make apples-to-apples program comparisons," said Pablo Azar, assistant VP-marketing strategy, measurement and insights.

Marketing programs now compete for funding at Allstate, Azar said. "We're boxing in the program managers, saying, `You guys have to be focused on what you are bringing into the organization,' " he said.

Azar added the process has brought about major change at the company. "Now, people are recognizing that we have a very good sense of the numbers," he said.

The ANA survey also found differences between so-called "capable and confident" marketers-defined as those who said they can both predict the impact of a 10% change in their marketing budget and have senior management's confidence-and the rest of the survey sample.

From an organizational standpoint, 64% of the "capable and confident" marketers have a cross-functional team involved in marketing measurement; almost 40% reported "full cooperation" between marketing and finance.

"Capable and confident marketers don't get there by accident," MMA's Nardone said. "Their programs are formal and cross-functional in nature, but they also have dedicated budgets with meaningful levels of spending." Nardone said 60% of the "capable and confident" marketers have a dedicated budget for marketing accountability.

"The accountable marketers understand the past, they manage today and they are positioned to exploit the possible," See said.

In the end, senior-level advocates can make or break any effort towards accountability. The survey revealed a disconnect between how senior executives rank the importance of accountability and their involvement in these initiatives. While 65% of respondents said that understanding the sales impact of marketing is important to senior executives, only about a third (32%) indicated there was a senior-level sponsorship of measurement initiatives.

Editor Ellis Booker contributed to this report.

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