By Lisa Sanders
Survey Reveals Importance of Budgeting and Cross Functionality
NEW YORK (AdAge.com) -- It's considered the most important metric in marketing today, yet not even half of America's top marketers are satisfied with their company's ability to measure return on investment. And of those successfully blazing the path to ROI, most are doing so on their own: Fearing a "fox in the henhouse," only 36% rely on their agencies for help.
Those are some findings from the Association of National Advertisers third annual Marketing Accountability survey, conducted with Marketing Management Analytics, a unit of Aegis Group. The survey of 101 senior-level marketers conducted between April and May of this year found one-third satisfied with their ability to measure and act on ROI, up from 19% one year ago. Still, 20% of those queried reported that although they are making rapid progress in developing ROI-measurement programs, they have yet to complete the process. For the remaining half, ROI measurement remains a conundrum.
One conclusion already clear
Complete results from the survey will be revealed at the 2006 ANA Marketing Accountability Forum in New York City on July 20, but one conclusion already evident is that two elements are necessary to make ROI measurement work: Financial commitment and the cooperation of cross-functional teams.
"We went to senior marketers to find out if they have a good grasp on return-on-investment measures, and to discover the characteristics necessary for good return-on-investment programs," said Ed See, MMA's chief operating officer. Of those queried, more than 50% have a formal marketing-accountability program in place, said Mr. See, who conducted the survey with MMA Chief Client Officer John Nardone.
They found that research, finance and the creation of cross-functional teams involving members of marketing are all crucial elements of ROI-measurement success. "The day and age when marketing departments make decisions in a vacuum is over," said Mr. See. "Members of a cross-functional team review materials and program elements and drive the use of an ROI program in a business cycle." Added Mr. Nardone: "If, for instance, finance doesn't provide more money to fund a campaign, marketing will not have the budget to be successful."
Money is, indeed, an important factor. Sixty percent of marketers with satisfactory accountability efforts have a dedicated budget, compared to only 28% of those with less-successful programs. Forty percent of successful respondents spent 2% or more of their total marketing budget on an accountability program. "A lot of effort's required to collect and clean the data," said survey respondent Stephen Dull, VP-strategy at apparel manufacturer VF Corp., which has in the past several years made understanding marketing ROI a high priority. "It is a massive task."
VF works closely with outside partners, including its media agency, WPP Group's MediaEdge:cia, to interpret its data. But like most respondents with successful programs, VF did not rely substantially on its agency partners to determine marketing accountability. Only 36% of that group had their agencies involved in measuring ROI. "The survey didn't ask why," said Mr. Nardone, "but our experience is that marketers view agencies as biased. Do you want the fox in the henhouse?"
One of the survey's more surprising findings: A company's size, in terms of sales and marketing budget, had no bearing on the success of its ROI-measurement programs. Smaller companies can be just as successful as large ones; the important element is investment. "Companies can begin to be successful at about 1% of total marketing spend, and really take off at 2%," said Mr. Nardone.