Injecting Analytics Into the Mix

How to Give Measurement More Than Lip Service

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By now, it's a truism: Accountability is top of the agenda for marketers. But a key question remains largely unanswered: How, exactly, do you weave accountability into the everyday marketing practice?

Ironically, while functions outside of sales and marketing have made complex analytics available to decision makers for decades-supply chains of most manufacturing companies have been analyzed and optimized for decades using advanced tools and processes-sales and marketing organizations are just now catching up.

In fact, a 2005 survey by Forrester Research, the Association of National Advertisers (ANA) and Marketing Management Analytics (MMA) found that fewer than 40% of executives surveyed reported successful deployment of any of the major marketing tools, including CRM, customer datamarts and real-time decision tools.

Analytics-including dashboards, continuous marketing effectiveness tools, and integrated marketing databases-historically have been viewed as a threat, "'a report card,"' says Sharon Otterman, VP-integrated media & marketing planning at ESPN. "It's been challenging in some instances to get people to see analytics not as a measurement of someone's performance but as an objective assessment to help us keep getting smarter."

NEED FOR CHANGE

In an increasingly competitive, 24/7 global marketplace, real-world pressures are driving the need for just-in-time analytics over backward-looking reporting.

"Fifty percent of any marketing spend is worthless. As competition gets tighter each year, we need to continue to find the 50% that is working and take advantage of it," says Marc Kershisnik, who oversees U.S marketing and research at Eli Lilly.

"In today's fast-paced environment, critical decisions are made constantly, and you can't wait for the market research department or the analytics group to postulate, pontificate and formulate its opinions," adds Jim Gabriele, VP-business strategy & insight at McNeil Consumer & Specialty Pharmaceuticals. "Unless you make your analytics and information readily available to key decision makers when they want and need to make decisions...the information you have may be great. But it will almost always be late."

Unfortunately, marketing organizations traditionally have not been structured to integrate analytics into the marketing process. And in the Forrester/ANA/MMA survey, 46% of marketing executives said that marketing, finance, and strategic planning only exhibited "some cooperation," and an additional 25% reported either frequent conflicts or no meaningful relationship at all among the groups.

To overcome that challenge, CMOs must empower a "center of competence" to lead the integration. At McNeil, its Business Strategies & Insight department has helped senior management establish a formal link between marketing and research. And Mr. Gabriele has been given the authority to drive change. Armed with a brand management and consulting background, he also carries the broader perspective to untangle the data and make analytics meaningful for the rest of the company.

"The challenge for us is to take the analytical knowledge that we have created over the years and package it into a solution that makes the information intuitive and useful for very senior people and available at the point of decision," Mr. Gabriele says.

True integration

Beyond simplifying the information, marketers need to develop a process to integrate it into the everyday practice. That means understanding when, where, how and by whom decisions are made so that analytics are relevant and able to support improved decision making. It requires real-time tools, structured data and a strong partnership with key internal cross-functional stakeholders.

In upfront planning, industry pioneers are deciding what brands to invest in by using portfolio optimization tools that leverage marketing mix models. The brands most responsive to marketing get a greater share of budget. Marketing tactics like TV, Internet and print are invested in based on the incremental sales they are measured and projected to deliver.

For Eli Lilly, "tools and analytics allow us to quantify how each element of the marketing mix impacts our key objectives and develop a series of what-if scenarios," Mr. Kershisnik says. Lilly's forecasting capability, he says, "allows us to predict how each marketing effort will drive incremental growth and to link these results with production and scheduling processes."

Marketing and brand managers, and, in some cases, marketing researchers, calibrate marketing plans against supply-chain forecasts to ensure advertising is synchronized with product availability and distribution schedules. During the year, they compare plans with actual results, on a monthly basis or more frequently. Web-based enterprise reporting tools and dashboards can be easily accessed by decision makers to view up-to-date results. And plans are "course-corrected" based on this current information; budgets get reallocated, shipments are rerouted and forecasts adjusted.

Finally, at the end of the cycle, results and metrics are stored in a knowledge base for year-over-year comparison. Rotating teams of marketing managers have a single source of information to review past decisions and their results.

The result is an analytic foundation that supports every step of the business process-a far cry from the limited ROI reports that are the extent of many organizations' marketing analytics platform.

Business Results

For McNeil, integration has more than paid off. "Over the past two years, our marketing and sales organizations have delivered double-digit increases in ROS [return-on-sales] and ROI for advertising and media, as well as increases in consumer and sales promotion ROI," Mr. Gabriele says. Beyond that, "We are making more informed decisions about how much to spend on our businesses in total and how much to spend by each marketing vehicle. Through analytics and modeling, we now know at any given time where we are on the 'optimal spending curves,' or the amount of spending that optimizes marginal revenue and profit, for all of our brands," he says. "We can estimate for marketing and management very quickly what the impact of a dollar increase or decrease in spending will deliver to the total company, franchise or brand sales and profit. We also know our ROS and ROI for all or our marketing vehicles and are working aggressively with our sales and marketing partners to help improve effectiveness and efficiency each year."

Similarly, at Eli Lilly, "the integration of marketing analytics, tools and processes," says Mr. Kershisnik, "has allowed us to close the gap each year on the forecasted impact of marketing on the business vs. the actual results. The outcome has been a 10% to 15% year-over-year increase in marketing effectiveness for many of our brands."

Looking ahead, the integration process promises be even more seamless. Many marketers are moving to Internet-based decision-support tools for marketing and sales management. "It puts the power of our analytics into the hands of marketing and sales managers every day," Mr. Gabriele says. "It does so in a user-friendly, intuitive way that we hope will increase the use of this type of information for daily decision making and make our marketing results even stronger."
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