Marketing ROI and Marketing Accountability among CMO's top Strategic Priorities for2008

According to the CMO’s Council 2008 Marketing Outlook survey of 800+ senior marketers across the world, marketers are seeing the need to implement performance measurement systems and to re-tool their organizations to further yield and accountability. Clearly, investments are being earmarked to better integrate and align marketing with sales and to leverage customer insight and intelligence to improve acquisition, conversations and relationships.

“It’s not just what marketers are spending, it’s where dollars are going and how effectively they are being used,” noted Donovan Neale-May, the CMO Council’s executive director. “There’s definitely more attention to the analytics side of the business and the use of more tangible and targeted forms of personal interaction, contextual communication and online demand generation.”

When asked how they tracked and measured return on marketing spending, nearly 20% of marketers said they did not, and 34% said they were planning to introduce a formal ROI tracking system. Typical measures included revenue, profits and market share; volume, caliber and conversion of leads; and direct response metrics.

Key Findings

• Improved accountability of the marketing organization and using customer data and analytics for better targeting and effectiveness were the two top accomplishments in 2007.
• Marketing is making significant or reasonable progress in improving the perceived value of the function, as believed by 79% of the respondents.
• Quantifying and measuring the value of marketing programs and investments remains the top challenge in the year ahead, report some 53% of respondents.
• Important organizational and operational changes planned for 2008 include adding new competencies and capabilities, improving accountability of the marketing organization, deploying content and website management solutions, and implementing marketing ROI and/or resource allocation capabilities.
• Key areas of Marketing staff development and recruiting for 2008 are marketing/customer analytics, strategic planning and business development, product marketing, database marketing, vertical market expertise and customer intelligence.
• Biggest sources of aggravation and frustration for senior marketers are organization culture, senior management mindset, insufficient budget, having to do more with less, politics and power plays and being too reactionary and tactical.

2008 Marketing Dollar Allocation

The 12 leading areas of marketing dollar allocation in 2008 are expected to be the following:

• Strategy and branding
• Events and trade shows
• Operations
• Direct marketing (including telemarketing, mailings, email)
• Sales support
• Online marketing (website, SEO, SEM, viral, podcasts/blogs, communities)
• Advertising
• Market research
• Systems
• Merchandising and promotions
• Public and analyst relations
• Customer data integration and analytics

Marketing Automation

Another insight from respondents is their “having to do more with less.” The CMO Council identified several areas of investment in marketing automation to automate processes, optimize lead generation, and improve measurement. The top six areas of planned investment include:

• Email campaign management
• Customer relationship management (CRM)
• Marketing performance measurement dashboards
• Customer intelligence and solutions
• Search engine marketing (SEM)
• Sales and marketing integration tools

Agency Relationships

Marketers reported significant agency turnover in 2007 with advertising (41%), web design (38%) and public relations (26%) firms most frequently changed in 2007. Performance issues were the most prevalent reasons for swapping out agencies in 2007:

• Lack of innovation
• No value-added thinking
• Poor creative
• Quality of work
• Results and deliverables

45% of marketers expect to change an agency resource function in 2008 with web design and development topping the list, followed by direct marketing, advertising and public relations.

Emphasizing Marketing’s Value

Those marketers gaining ground in raising credibility and stature point to the following factors as key to highlighting marketing's value:

• Impactful branding and communications
• Awareness and reputation gains
• Building internal relationships with sales & finance
• Improved customer relationships
• Quality of leads and opportunities

2008 – The Year of Solid Marketing Execution

2008 results will depend largely upon solid execution – delivering on commitments while demonstrating productivity gains. Effective execution, in turn, requires enhanced relationships, improved alignment, and better resource allocation.

1. Enhanced relationships: Marketers should focus efforts on enhancing relationships with colleagues in sales, customer service, finance and IT. Each of these organizations contributes to the effectiveness of Marketing. Go on a sales call, visit a contact center, collaborate with Finance in developing new approaches to tracking and analyzing marketing spend, and encourage IT to explore and evaluate emerging tools that will help Marketing improve its effectiveness and productivity.
2. Improved alignment: Leverage internal relationships to drive cross functional alignment between the brand promise and the delivery of the brand promise at all customer touchpoints. Take the lead within the company to make sure that every function understands its role in delivering the desired customer experience. It only happens when activities are well orchestrated, managed, and measured.
3. Better resource allocation: Nearly 55% of the Marketing Outlook 2008 survey respondents indicated they do not track and measure the effectiveness of marketing spending or have minimal 'line of sight' between business results and marketing efforts. Only 7% perform analysis to understand the causal relationships between marketing, revenues and profits.

Make this the year to better understand the drivers of market response:

• Know which marketing activities generate the greatest near and long term ROI.
• Quantify the trade-offs, inter-relationships, and elasticities of brand, advertising, promotions, trade shows and other sales and marketing levers – to know where you’re investing too much or too little
• Understand how public relations, competition, and other external variables affect sales

In 2008, execution will matter more than ever to marketing organizations. The savvy marketers will be those who pull the right levers in getting there.