Marketing Management For Non-Marketing Managers

11EVALUATING RETURNS ON MARKETING INVESTMENTS

Figure 11-1: Marketing Alignment Map

Does your company measure anticipated returns on marketing investments in financial terms? Do you do so before you approve the plan?

If you do, congratulations! You are at the forefront of a trend in marketing management.

If you don’t, then why not? There are several reasons companies don’t measure returns. The most common one is that they don’t believe it is possible. As one CEO once told me, ‘marketing is a black art that eludes measurement.’

He was wrong.

DEBUNKING THE MEASUREMENT MYTH

I call this belief that marketing, and particularly promotions, cannot be evaluated in financial terms the Measurement Myth. Not only is it untrue, but failing to measure marketing is one of the leading reasons companies fail to maximise returns on their market-facing investments.

Marketing can, and should, be measured in financial terms.

Most executives can figure out how to monetise new product innovation. They simply assume that the units will sell. Pricing, too, is easy. After all, a dollar of change need simply be multiplied out by volume. Of course, the estimator must also assume a change in demand. Distribution channels are also relatively easy to monetise. The expected volume, multiplied by the price point, less costs gives the company an idea of how a channel approach might affect the company’s bottom line. ...