There’s one debate that keeps coming up in my professional career among CMOs and CFOs, it is marketing accountability and how they should be measured. Instead of thinking about what is needed, most just make some adjustment based on their last year spend without questioning “why”? That’s why CFOs questioning marketing spend but never given a simple answer to justify them. The problem isn’t the absence of an ROI on marketing’s expenditures; it’s the absence of any semblance of coherence and rationale for why the investment was made. On the marketing side, the issue is the changing face of media makes it even hard to justify any spend on emerging media.
Finance is frustrated that marketers don’t seem to understand the concept of opportunity cost which is not marketers use to evaluate spend. The opportunity cost does not mean much particularly you are close to year end, if you don’t use the budget you will not get it again next year. So what opportunity costs? Marketing people frustrated that finance don't seem to understand brand infrastructure spend is necessary.
So much is said about how effective the Internet is as a marketing tool. Equally many struggle to measure it outside of direct transaction, particularly the transaction happens through a broker. Online marketing has many enticing characteristics like tractability and targeting, but I’ve witnessed more than a handful of times when clients and agencies struggle with linking that with larger business goals.
The Internet is not different from traditional branding tools when it comes to measuring brand building effectiveness, never easy to draw a direct link. It is not about online or offline. We need to understand the very nature of the campaign and whether it use for demand creation, demand enhancement or demand fulfillment. Demand creation is about sending the right messages to the right target with a compelling propositions, demand enhancement is to educate the target the benefits of the products particularly for high-involvement products and demand fulfillment is closing the transaction and getting the sale.
Digital marketing fulfills demand much easier than it creates it. TV and print are primarily demand creation medium with some exceptions. The digital tactics that work best (search marketing, social media etc) work because they reach an audience that is either already aware of your brand or a need was already established.
Branding spend should be considered infrastructure spend. And social media capabilities should be considered infrastructure too, as well. They enable firms to engage with customers and prospects in ways that the firms weren’t able to previously have. Trying to measure the ROI on all these investments could be a challenge.
