Companies recognize the importance of metrics, but continue to fear their perceived complexity; lack of vendor awareness is also a factor.
Posted Sep 6, 2005
Roughly 90 percent of North American technology companies and their European counterparts see marketing performance management (MPM) as a major strategic priority, but fewer than 20 percent have formal MPM systems in place, according to a report being unveiled at the CMO Council MPM Forum on Wednesday in New York. "Measures and Metrics: The Marketing Performance Measurement Audit" also found that roughly 50 percent of North American and European companies surveyed said their MPM systems are an informal or anecdotal accounting of metrics taken on an ad-hoc or semiregular basis.
"It's not a cost thing--it's perceived as an incredibly complex endeavor," says Scott Van Camp, editorial director of the CMO Council. "Think of the traditional mindset of a marketer: not too numbers-oriented, more campaign-oriented. As the C-seat has demanded more accountability for them, it's a hard concept for them to grasp. They have to think more like a CFO than a CMO. The mindset of today's marketer has changed, because there's pressure from CFOs. Some of them are afraid to measure--they may not want to know. But their bosses want to know."
Central motivators behind the trend toward MPM are departmental effectiveness, justification of budgets, and improved status for the marketing function within the organization, according to the report. "CMOs are looking to MPM as a means of getting better at what they do [and they] view MPM as enabling them to truly command an equal seat at the executive table," the report states. "MPM is viewed as providing the quantitative measurements that prove the investment in marketing programs and people is paying off for the organization." Yet roughly 80 percent of respondents said they are not happy with their ability to measure marketing performance.
One significant barrier to adoption is lack of vendor awareness: Only 25 percent of respondents could name a company providing MPM tools, an indication that the market is still in its very early stages, according to the report. "As vendor products add features and gain maturity, and as more companies tackle the problem of marketing measurement, vendor awareness and the total available market will grow," Van Camp says. About 60 percent of the European survey respondents intend to increase the amount of money they spend on MPM over the next two years. By the end of next year 25 to 30 percent of North American and European organizations will have MPM systems in place, and that number will grow to 50 percent in three to four years.
Companies with a formal, comprehensive MPM system in place significantly outperform those that don't in sales growth, market share, and profitability, and also enjoy higher CEO satisfaction with the marketing function, according to the report. Using metrics generated from campaign events and Web-site traffic allows companies to do a total analysis of where marketing dollars are going, what most successful campaigns are, and what leads were generated by marketing. They can run two dozen campaigns at a time all over the world, track results 24 hours a day, and make immediate changes compared to waiting a week or even a month to see an Excel report on the same information, according to Van Camp.
"Marketers feel they are on the outside looking in. The C-suite sees them as the voodoo," Van Camp says. "[Organizations] must expect marketers to be like any other department to show what they're contributing to the bottom line."
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