Walking the Walk

Could it be that marketers have finally…gotten it?

Asked to list challenges, 44% said the top one this year is to quantify the value of their marketing investments. And 28% hope to improve ROI.

Those are among the findings of the CMO Council’s Marketing Outlook 2007 survey. If anything, they show that marketers want to measure and deliver return on investment.

And it may be that they’re now walking the walk instead of just talking the talk.

Last year, firms put emphasis on building sales and gave short shrift to ROI and analytics. But they’ve moved on. Of those polled, 42% hope to deploy a performance measurement dashboard in 2007 (see chart 2).

Why now?

“Marketers are receiving larger budgets this year, and there may be a sense that there is a higher level of accountability required,” says Brad Rukstales, president of Customer Asset Consulting Group Inc., and vice chairman of the Direct Marketing Association’s Analytics Council. “The quality of decision-making is enhanced considerably with accurate performance metrics.”

Of course, that need depends on a company’s size. Those with annual revenue of more than $500 million see dashboards and analytics among their top automation needs. They recognize the imperative to measure.

But businesses below that threshold gave priority to tools that help them with e-mail campaign management and lead generation. CRM systems followed, and then solutions for viral marketing/word of mouth. What’s next on the list? Dashboards. And analytics was further down.

Even if companies invest in a dashboard they might have to wait for it to pay off. “It may take more than one year to be in a position to significantly shift resources based on measurements of all a company’s marketing activities,” Rukstales says.

But he adds that “the quality of decision-making is enhanced considerably with accurate performance metrics. So is the re-balancing of marketing priorities in light of those metrics.”

Having trouble doing that? There are “processes, methodologies and technologies available today to assist marketers in addressing these challenges,” Rukstales continues.

In line with that need, 23% want to increase their credibility with senior management. Better metrics could help.

But it’s not all about ROI. Whatever their size, companies want systems to drive e-mail campaign management and lead generation. And they desire sales and integration tools. Almost a quarter hope to improve marketing resource and process management.

As for last year’s achievements, almost 46% of respondents restructured their marketing units to better support sales and drive demand (see chart 3).

In contrast, only 21% improved their marketing yield and accountability. And 15% introduced a performance measurement system. Still, these activities far outranked new channel development and use of digital media.

Judging by the results, 2006 was a bad year for agencies.

Of the marketers surveyed, 35.7% changed public relations firms last year and 21% dumped their Web design and development houses. Moreover, 20.5% replaced their advertising shops.

Why these shifts? More than 30% were unhappy with their creative work. Tied with 29% apiece, only 17.7% got rid of their agencies because of results.

But the turnover may have slowed down. Fewer marketers expect to drop their agencies in 2007. The most vulnerable vendors? Web design firms (17%).

And marketing budgets? Increases were predicted for this year by 65%, with 14% expecting hikes of 20% or more. Only 15.5% foresee reductions.

The CMO Council polled 350 marketers during last year’s fourth quarter.

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