The key to driving marketing ROI

Today, marketing’s contribution to the business is coming into question more than ever. The CEO or CFO oftentimes doesn’t see, or fully understand, the direct connection between marketing and the company’s business results; the lack of visibility has eighty percent of CEOs indicating they ‘don’t trust or are disenchanted by their CMOs’ .¹ CEOs and CFOs are asking, “What am I actually getting for those dollars spent?”

It’s imperative that CMOs overcome this challenge and build trust. With the tips outlined below, you’ll bridge the gap between the marketing and the CEO and CFO suites and make smarter, higher impact marketing decisions along the way.

Build trust by implementing a rigorous marketing effectiveness measurement program

It starts with systematically embedding marketing analytics into your marketing organization. Here’s what this looks like:

1. Determine and align, across the C-Suite, on the overarching business goals and objectives you are hoping to achieve – then, design your measurement program to assess marketing’s impact on those business objectives

We know that marketing is critical to driving sales, but it is also critical in driving other business metrics, such as awareness, consideration, engagement, penetration, loyalty, advocacy, etc. That said, not all marketing initiatives can achieve all of these objectives; a media plan must leverage a variety of tactics in order to drive results across multiple business goals and objectives. For example, Connected TV spend might be very effective in driving consideration and penetration for cord-cutting Millennials, but the tradeoff may be that it comes with a lower ROI in the short term.

To establish a marketing measurement program that will evaluate performance against C-suite objectives:

• The C-Suite must align on business goals to be driven by marketing
• The program should be designed with a holistic, ‘connected’ mindset (e.g., consider a broad set of customer-influencing tactics, like trade, promotions, pricing, etc.)
• The program must be bought into as the marketing effectiveness and performance source of truth

2. Diagnose the “Why?” behind marketing performance changes to connect the dots between marketing decisions and business results 

Measuring the effectiveness and profitability of marketing investments is a great starting point, but it may not lead to meaningful change on its own. If results are viewed in isolation, there’s a good chance the “so what” behind the numbers will be missed. When reviewing results, think about the following:

• Were there any strategy or execution changes that were made?
• Can we learn from any copy test scores for creative and campaigns that were executed?
• Were there any internal, non-media changes, such as pricing or distribution?
• What competitive pressures might have impacted the results? How can you best combat those pressures in the future?
• Were any macroeconomic factors impacting performance?
• How do these results fit in within the context of your other measurement studies?

Understanding the factors influencing your marketing performance will help formulate a stronger story, build credibility within the organization, and become the foundation for actionability in future planning cycles.

3. Act on your measurement results with an agile approach to marketing planning; continuously forecast / optimize plans and refresh measurement

A marketing measurement program only generates success if your organization does something with the results. For example, a performance forecasting and optimization tool that takes full advantage of the results and insights is a great way to inform decisions and take immediate action to improve future plans. It’s also important to recognize this isn’t a one-time act. Marketing plans should be reviewed continuously throughout the year as budgets, business factors, the competitive environment, macroeconomic factors, etc. are constantly changing.

Similarly, the overarching measurement program isn’t a one-time act. Model results should be refreshed at least once a year, if not more frequently, to calibrate any new impacts and responses into your forecasts and optimizations. Continuous measurement, forecasting, and optimization allows smarter investment decisions and drives incremental, compounding improvements to marketing’s effectiveness and ROI over time.

4. Secure marketing dollars with confidence by testing new marketing initiatives prior to hard launch

Organizations that adopt and abide by a “test and learn” mindset mitigate a lot of the inherent risk that comes with spending against marketing initiatives. A “test and learn” framework also helps marketing organizations battle preconceived notions that marketing is all “guesswork” or executed based on “gut intuitions”. 

Developing an actionable test from which to learn takes thought and consideration. When planning to test a new marketing initiative, ask yourself the following questions:

• What is the objective of this initiative? What defines success?
• Pending the type of initiative, should the test be regional or national?
• What is the right measurement approach to determine test’s performance?
• How much should be spent on executing the test? 

1. Source: Texas CEO Magazine, “CMO and CEO Alignment: An Imperative for Growth” (May 2022)