Collective Accounting

If knowledge is power, quantifiable knowledge is even more potent — especially if you are a marketing executive with a vested interest in protecting the resources available for the promotion of your brand portfolio.

In fact, thanks to improving data tracking tools, those bean counters in the finance department might even become defenders of marketing budgets during belt-tightening periods. According to a study released last month by the Association of National Advertisers, 64% of self-described “successful” marketing program leaders engage a cross-functional team to keep marketing accountable. These teams involve marketing, research, strategic planning, technology and finance members. By comparison, only 24% of marketers who described their accountability efforts as “less successful” engaged peers from across the organization.

“The day of marketers acting as cowboys on their own range is over,” says Ed See, chief operating officer for Marketing Management Analytics, which conducted the research for the ANA this past spring. “Without a cross-functional team, marketers won’t get the funding and organizational buy-in they need to be successful. That’s why we’re seeing a broader base of participation across functions.”

That cross-teaming, which bridges marketing and finance, may also help to explain why a growing number of brand companies are investing more in their measurement capabilities.

“Marketers have told us that their [chief financial officers] want marketing to be measured carefully,” says John Nardone, MMA’s chief client officer.

Per the ANA study, 40% of corporate marketing groups with successful accountability programs are allowed to spend 2% or more of their total marketing budgets on measurement staff, tools and analysis, compared to 16% in the “less successful” category. Of those who invest 1% or more of marketing budget in measurement resources, more than half (55%) describe themselves as running successful programs, while just 18% of those in the less successful category spend 1% or more.

Further driving investment in marketing metrics are a growing number of chief marketing officers with operational backgrounds.

“These are marketers with a broad skill set who manage their businesses to an end,” Nardone says. “They manage their brands and research as they would an investment portfolio.”

These are digitally savvy CMOs, Nardone says, who are used to having a lot of data to manage. It helps that measurement tools and priorities have evolved in recent years, so marketing teams have a better grasp of must-know data.

According to the study, there has been an up-tick in the ability of senior-level marketers to define, measure the return on their marketing investment and ultimately act on that knowledge, up from 19% reporting being satisfied last year to some 30% this year.

“Investment in metrics programs is paying off at last. In the last two years or so, marketers have gotten the structures they need in place, and now they can act on those findings,” See says. While he estimates that half of the marketers surveyed are still frustrated with inadequate metric tools, and overwhelmed by the process of prioritizing data, the other half are “ready to use the metrics.”

Keeping it in-house?

The most successful marketers (those who say they are able to measure ROI to improve business results) are no longer relying on their advertising or marketing agency partners for marketing accountability.

“Accountable marketers need an unbiased evaluation of marketing results so they tend not to rely on their agencies for measurement,” Nardone says. “It’s a classic case of not wanting the wolf guarding the sheep.”

Instead, these brand marketers use their finance and strategic planning groups to track campaign results. The least successful marketers in the ANA study (those that confess to not being able to measure ROI to improve their business results) say they continue to rely on their ad agencies for marketing accountability.

Those findings are supported by the 2006 Industry Trends Report from PROMO, in which the majority of respondents (82%) indicated that brand management — not agency partners — were responsible for tracking and reporting ROI results. Only 12% of the brand executives in the PROMO survey said that they had agencies tracking ROI, while 5% used a third-party resource for ROI analysis and reporting.

Despite a strong tendency to keep marketing analysis in-house, those third-party analysts are, nevertheless, aggressively chasing brand accounts. IAG Research and TNS Media Intelligence, for example, have recently announced new programs to measure new forms of marketing, such as programming on the Internet, text messaging and podcasting. And Nielsen Media Research launched in June its Anytime Anywhere Media Measurement service, which will track television advertising impact and the medium changes in the home (to digital formats) and moves out of the home (via cell phones and personal electronic devices).

“We are [looking for] a better understanding of engagement in advertising,” said Susan D. Whiting, CEO of Nielsen Media Research, in a recent interview. She also cited Nielsen’s BuzzMetrics service, which looks at consumer-generated buzz on the Internet.

“[BuzzMetrics is] not a currency measure, like our TV ratings, but a scientific, technological way of looking at buzz around any specific topic,” Whiting says, including videogames. “We need to understand more about these platforms.”

The researchers at MMA couldn’t agree more that better understanding is the goal.

“With accountable marketing measurement, brands can get closer to two-way communication with their audiences,” See says. That “addressable marketplace” puts marketing on steroids.

Top-line Findings of the ANA Study

• 50% of marketers surveyed have a formal marketing accountability program in place.

• 70% of successful programs have a formal marketing accountability program in place compared to 42% of the less successful.

• 60% of successful marketing accountability programs have a dedicated budget compared to 28% of the less successful group.

• One-third of marketers are satisfied with their ability to measure and forecast ROI, up from 19% last year.

• 20% are satisfied with their ability to measure ROI but not with their ability to forecast and 50% are not satisfied with their ability to measure or forecast.

• 60% of successful marketing accountability programs have a dedicated marketing accountability budget compared with 28% of the less successful programs.

Tracking the Impact of Marketing Metrics

The 2006 Marketing Accountability Study was conducted in April-May 2006 by Marketing Management Analytics on behalf of the Association of National Advertisers. It included the following factors:

• Over 100 senior-level marketers were surveyed, spanning the following industries: computers/technology, financial services, food/beverage, health/beauty, pharmaceutical, retail, healthcare, telecommunications, among others.

• More than half of those surveyed represented companies with 2004 revenue of $1B or greater and more than half of those surveyed had advertising budgets of $30 million or more.

• The survey defined “successful” marketing accountability programs as those that could accurately forecast the impact on sales of a 10% marketing budget cut and had senior level management with a high level of confidence in those forecasts.