Marketing Metrics: The Manager’s Guide to Measuring Marketing Performance, Third Edition

11. Marketing and Finance

Introduction

Key concepts covered in this chapter:

Net Profit and Return on Sales (ROS)

Return on Investment (ROI)

Economic Profit (aka, EVA®)

Project Metrics: Payback, NPV, IRR

Marketing ROI (MROI or ROMI)

As marketers progress in their careers, it becomes increasingly necessary to coordinate their plans with other functional areas. Sales forecasts, budgeting, and estimating returns from proposed marketing initiatives are often the focus of discussions between marketing and finance. For marketers with little exposure to basic finance metrics, a good starting point is to gain a deeper understanding of “rate of return.” “Return” is generally associated with profit, or at least positive cash flow. “Return” also implies ...