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ANA Marketing Accountability

Task Force Findings

October 8, 2005
Table of Contents
Purpose and Background.................................................................................................................2
Summary and Conclusions...............................................................................................................4
Approach and Methodology..............................................................................................................5
Accountable For What......................................................................................................................6
The Culture of Accountability............................................................................................................9
Definition and Types of Metrics.......................................................................................................11
Metrics Maturity Model...................................................................................................................13
Emerging Characteristics of Current Best Practice..........................................................................16
Metrics Are Not Enough.................................................................................................................21
About EMM Group, Inc..................................................................................................................23
Contact Information........................................................................................................................23
Bibliography: Marketing Metrics Resources and References...........................................................24


In a January 2005 ANA survey of senior from permanent calendar-overload took the
marketers, accountability was listed as their time to participate is testimony to the urgency
number one issue. Work in this area has and timeliness of the subject. We thank the
been and is a key initiative of the ANA and to ANA Board of Directors, currently chaired by
respond to the concerns of its members, the Jim Stengel, Global Marketing Officer, Procter
ANA convened a marketing accountability & Gamble, for their invaluable input into this
task force. The purpose of the task force was project.
twofold: (1) to review current best practices
used by ANA member companies to improve Lastly, the ANA thanks Gordon Wade, Founding
their marketing accountability; and (2) to Partner of the EMM Group, for his tenacity,
provide a practical catalog of accountability enthusiasm and skillful leadership of this task
metrics used by industry practitioners from force.
which marketers may choose those appropriate
to their unique situation. We hope this report contributes to making
marketing more accountable so that
Twenty ANA member companies participated consumers and customers have an enhanced
in this task force and we are indebted to them sense of value, profitable brands may flourish,
and their representatives for sharing their shareholders may be enriched and marketing
accountability experiences, their organizational professionals may see their chosen profession
issues, successes and challenges. The fact that recognized for its irreplaceable contribution to
companies of this caliber and people suffering our economy and culture.

Study participants reveal several trends that have coalesced to
create intense interest in marketing accountability

. Every other function is held accountable 4. Marketers know they cannot fulfill their
for its return on investment. No longer role as drivers of growth and as satisfiers
can marketing expect a free pass of consumer needs unless, and until, they
from management and shareholders. prove the worth of their function.
Marketing is competing with every other
function in the company for a limited pool 5. Marketers are beginning to understand
of shareholder dollars. If this function embracing accountability has its rewards
alone cannot or will not prove its relative as well as challenges. With the appropriate
efficiency, management will not keep metrics from a robust accountability
feeding the beast. initiative, marketers can now optimize
expenditure choices across the entire
2. Management has no other place to spectrum. Instead of wondering which half
turn for additional savings. Every other of last year’s expenditures were ‘wasted’,
function has been six sigma’ed and marketers can determine how to make
TQM’ed into fighting trim. Management virtually all of next year’s dollars count.
believes the supply chain has no more
slack. Management believes operations 6. The focus on accountability has an ethical
are wound tight. The view from the corner aspect. Many marketers understand
office sees the marketing function as the that marketing funds aren’t ‘theirs’.
last grape with any juice left unsqueezed. They understand these funds belong to
shareholders who have a right to expect
3. Marketing can be measured more more professional stewardship of their
precisely today than in the recent past. funds.
The confluence of a torrent of data,
powerful hardware and agile software 7. Lastly, some marketers are beginning
has totally changed the measurement to abandon the historic defense that
environment. Marketing can no longer marketing is an art which cannot be
claim with any credibility that its measured, only ‘appreciated’, like a fine
effectiveness can’t be measured. Relatively wine or an evocative perfume. The modern
precise results from new marketing marketer is beginning to see marketing as
alternatives such as the Internet, have a ‘process’ with measurable inputs and
fed management’s desires to understand outputs producing reliable, repeatable
the relative efficiency of all marketing results. The process approach which
expenditures. Ignorance of the law of ROI revolutionized the supply side has finally
is no longer an effective defense. come to the demand side.

Summary and Conclusions

• Accountability is more dependent • Every business vertical, indeed every

upon corporate conviction than upon company, will have unique metrics
algebra on steroids. Create a culture dependent upon what management
of accountability. expects marketing to deliver. Start
by understanding management’s
• Marketing should aggressively strategic expectations of marketing,
embrace the responsibility for the and then measure that.
short-term ROI of its expenditures
and go beyond to demand • A best practice metrics profile
accountability for nurturing brand has emerged along with a metrics
equity, the single most valuable asset maturity model. Each company
of any company. should measure itself against this
profile and maturity model.
• Measuring marketing ROI can be
done with significant accuracy but • Although a precise map remains to
it takes process, determination, and be delineated, the view from different
money. No magic bullet exists but peaks on the analytical landscape
the capability to measure upwards of clearly shows the way to the land
90% of what most companies spend of superior financial outcomes goes
on marketing is available today. through brand equity and leads to
brand loyalty. Once bound to a brand
• Superior metrics will not in-and-of- by a combination of brand experience
themselves deliver superior marketing and emotional benefits, consumers
results defined as robust brand equity are willing to reward brand owners
leading to volume and profit growth. with higher margins for each
Metrics are a thermometer, a simple individual purchase occasion, often
but powerful diagnostic tool. No one for a lifetime.
was ever cured by a thermometer
and marketing will not be cured
by metrics. The cure demands
a rigorous end-to-end marketing
process within which metrics play the
same critical role they played in Dr.
Deming’s total quality reformation of
the supply side.

Approach and Methodology

This project began with a sharing meeting of a Then we searched the Internet to identify
group of companies held at Procter & Gamble white papers, monographs and journal articles
in September, 2004. The meeting revealed the dealing with the broad subject of accountability.
diversity of practical challenges faced by different Suffice it to say that this subject has generated
verticals. An especially obvious difference was lots of interest from a broad variety of industry
that between business to business (B2B) and participants ranging from various marketing
business to consumer (B2C) companies. The trade organizations, academics, consulting firms
key driver of difference among the verticals is the and more than a few practitioners. We have
availability of reliable, granular, malleable and included some of the more helpful articles in the
relevant data. Some verticals, such as consumer bibliography of this report. Where we can identify
packaged goods and consumer financial a specific original source for a concept or idea
services, are awash in a tsunami of data. For (like ‘net promoter score’) we have provided
them, the challenge is merely organizing the specific attribution. We readily acknowledge
data upon powerful software platforms permitting that the overwhelming percentage of the
sophisticated analytics limited only by the concepts have emerged over the years from the
analyst’s imagination. Other verticals had unique work of countless pioneers and practitioners
sources of data and unique expenditure options too numerous to identify and in most cases
enabling and requiring unique metrics. anonymous.

For that reason, beginning in May, 2005, One thing is certain, the work in this study
we invited a diverse group of companies draws from many sources, most importantly the
representing numerous verticals in both contributions of the participating companies. We
B2C and B2B, to join the ANA marketing wish to acknowledge them all even if it must be
accountability task force. The companies who done as a group rather than individually.
chose to participate, were a diverse group which,
taken together, offered a 360 degree view of One group who deserves special mention is the
the opportunities, challenges and alternatives to third-party marketing services providers such as
enhancing marketing accountability. research houses, advertising agencies and the like.
These professionals often lead the way in developing
new techniques to measure accountability and ROI.
We asked the companies to fill out a short
Two firms specifically were quite helpful, Marketing
survey primarily to orient the study organizers Management Analytics (MMA) and the Advanced
towards areas of specific interest. Then we Technology Group (ATG) of the media buying giant,
had conversations with representatives of Mindshare. Each group was careful to sift through their
the participating companies to clarify our vast experience, remove any client specific detail and
then summarize their findings for our study team. We
understanding of the state of accountability. deeply appreciate their help.
After these conversations, we collected internal
It should go without saying that the authors of this summary
scorecards as well as other internal documents report accept ‘accountability’ for any errors in fact or conclusion.
relevant to the subject.

Accountable For What

Much of the discussion around ‘marketing During our discussions with the participating
accountability’ is focused intently around ROI or companies, one of the representatives put the
ROMI, the return on marketing investment. This question quite artfully: “I know that this year’s
focus, some would say obsession, reflects an expenditures affect only a small portion of next
understandable desire for a ‘one-number’ metric year’s sales. I know that we have ‘carryover.’
that puts marketing on the same evaluative What I want to know is how much each short
standard as all other business expenditures. term marketing expenditure contributes to
The reasoning goes that if marketing can long-term carryover.”
provide reliable standard ROI figures for each
of its expenditures, top management will then The technical answer to her question is
be enabled to deploy capital efficiently among contained in the box below:
the various competing demands for corporate
resources such as buildings and grounds, capital
equipment, research, operations, and marketing.

The problem with the ROI focus on specific

marketing line items is that these expenditures
affect a very small percentage of the company’s
volume even in the short-term. For most
companies in almost every vertical, marketers
could spend zero dollars over the next twelve
months and the company would still generate
sales from what the analysts call ‘carry over’ or
‘base line’. The table below shows that for most
companies the expenditures being measured
effect about 20 to 25% of next year’s sales and
the carryover is 75 to 80% or more. What’s this
so called carry over? Who’s accountable for that?

But she is actually asking a more profound question:

For what should marketing be accountable? (1) the ‘book value’ of the corporation, the hard
For the short-term response to this year’s assets such as buildings, capital equipment
expenditures? Or for something qualitatively and cash; (2) the adjusted net present
different and more fundamentally important? Is value of this year’s profits and then (3) the
there something of permanent value for which ‘difference’ between those two amounts and
marketing is responsible beyond the short-term the total value of the company represented
return on a few line items in the budget? by share price multiplied by the number
of shares outstanding. That ‘difference’ for
The table below attempts to provide an most companies turns out to be a fairly large
answer by looking beyond the annual income number, something in the range of 35 to 50%
statement to shareholder value as measured of total shareholder value.
by Wall Street. For most companies, total
shareholder value could be deconstructed into
three components:

Economists call that large somewhat is responsible (or should be responsible) for
mysterious value by several names: things understanding consumer needs, facilitating
such as ‘intangible value, market effects or development of critical functional and
good will.’ Some call it ‘brand equity’ because it emotional attributes and positioning the brand
represents the belief that investors have in the with consumers.
long-term profit-generating value of the brand
behind the stock ticker symbol. Whatever one So when critics and colleagues demand that
calls that difference number; everyone agrees marketing be accountable: a fair retort is
that it is tied to an expectation driven by a ‘accountable for what?’ The answer should be
series of rational and emotional beliefs about that marketing is accountable for efficiently
the future performance of the company. One building long-term brand equity.
might even suggest that it is related to the
‘carryover’ a company will get in the absence Therefore, any ‘marketing accountability’
of any short-term marketing expenditure. It’s project has to respond to the returns on short-
the loyalty the company has earned with a term expenditures but even more importantly
core group of customers who prefer the brand for the effect that any marketing expenditure
because of the value stored in their minds from has upon those perceptions of the brand that
positive brand experiences, impressions and drive the rational and emotional loyalty to a
promises. brand that we often perceive as ‘brand equity’’

The question remains, who owns this enormous As marketers we should accept the
component of shareholder value, or equity? responsibility for prudent investment of this
Certainly the CEO is ultimately responsible for year’s budget while reminding management of
overall shareholder value but marketing can our responsibility for building long-term brand
and should accept a major responsibility for equity, a responsibility of far greater value to
that intangible because it is marketing which the shareholder.

The Culture of Accountability

Metrics, and the accountability they imply, . Leadership from the top. Unless top
create problems in all functions within all management demands accountability
company cultures. Metrics and marketing and helps resolve disagreements among
is an especially volatile mixture because competing approaches to accountability,
the marketing function has had few metrics the culture will reject metrics or simply
in the past and other metrically dense freeze in place. If management is unhappy
functions within the company are deeply with the pace of cultural accountability, the
suspicious about marketing’s sudden ‘foxhole’ first place to look is the mirror;
conversion to the discipline of metrics. Add
in the assumption within marketing itself that 2. Inclusivity. Metrics can not be successfully
metrics are directly connected to personal deployed by or within one functional
compensation and career advancement then silo. By their very nature, metrics have a
one has the recipe for major cultural push transfunctional intercompany significance.
back. Unless various functions within the
corporation such as finance, operations,
Nothing emerged quite so clearly from our business information and HR are aligned,
discussions with study participants as the the entire edifice of metrics will collapse;
cultural impedimenta associated with metrics and
and accountability. Indeed, several participants
voiced the opinion that unless a company 3. Process. The key to creating cultural
created a ‘culture of accountability’, no amount buy-in is an inclusive process that creates
of analytical artifice would succeed. Marketers confidence in the numerical accuracy
must WANT to be measured, must embrace and relevance of the metrics as well as
accountability or even the most artfully their perceived fairness and comparability.
designed metrics program will ultimately fail. Please see the brief discussion in the inset
box regarding a metrics process on the next
According to study participants, three page.
conditions seem essential to creating this
culture of accountability:

The chart below outlines a metrics development and embedment process.
Following a process such as this accomplishes several critical objectives:

(1) it aligns the marketing

metrics with other
corporate stakeholders in
the larger accountability
culture thereby enhancing
marketing’s credibility
within the company; (2) it
focuses the company on
management’s expectations
for the marketing function;
(3) it ties marketing’s
metrics into the larger
business planning process
so that the company
provides the resources
which are required to meet
the expectations embodied
in the metrics; and (4)
it mandates sharing of
marketing’s progress with
the larger internal corporate
stakeholder group thereby
providing visibility to
marketing’s contributions.

Using metrics developed

from a sub-process such
as this to knit together a
larger end to end marketing
process is one of the
principal hallmarks of a
best practice marketing

Definition and Types of Metrics

In any discussion of a complex subject, some A classic ‘output’ metric produced by ‘market
confusion is introduced by the use of words mix modeling’ is that for every one dollar invested
which understandably have different meanings in night network TV, a brand generated $2.50 in
to different people. This requires that we incremental profit for an ROI of $2.50.
occasionally stop to define terms which are
regularly used in any accountability discussion. Another caveat relates to the time period
Words such as ‘measure’ and ‘metrics’ have two represented by the metric. Most are remarkably
have importantly different meanings. short-term in nature, even though everyone
recognizes that many marketing expenditures,
A measure is a one-number fact such as 100 especially advertising, may attract a new loyal
miles or 5 gallons. A metric is almost always some customer who creates a stream of profit for
combination of measures that permit an analysis decades. To counterbalance the frenzied focus
or a conclusion. For example, I drove 100 miles on the immediate, an understandable response
and used 5 gallons of gas therefore I got 20 miles to Wall Street’s incessant demands for quarterly
per gallon. 20 miles per gallon is a metric. If I earnings, some marketers are beginning to
paid $3 per gallon for that gas, my cost per mile develop metrics around the ‘lifetime value of
(another metric) was 15 cents. With this data I consumers and customers’. This is a useful and
can benchmark the efficiency of other cars, of revealing concept except in a few industries
types of gas and perhaps even of personal driving where purchase cycles and decision processes
styles. negate its value (e.g. power generation dynamos).

Many different kinds of metrics exist. One type Another definitional distinction involves attitudes
is an ‘input’ metric. In marketing, a well known, versus behaviors. The purpose of marketing is
frequently quoted metric is the cost per thousand changing attitudes. The purpose of changing
viewers of a specific media buy. e.g. ‘we spent attitudes is changing behaviors. Not surprisingly,
$20 per M target viewers’. This is a classic ‘input’ metrics come in two flavors, those that measure
metric. attitudes and those that measure behaviors. Most
non-marketers (such as CFO’s) prefer behavioral
A second type of metric is an ‘intermediate’ metrics, an understandable bias. Most marketers
metric, a calculation along a stream of inputs spend lots of time looking at various kinds of
and outputs which measures some sort of result attitudinal metrics because they believe that
but not an ultimate result. Awareness metrics attitudes drive behaviors, another understandable
are classic ‘intermediate’ metrics. We know that bias.
investment ‘A’ generated more awareness than
investment ‘B’ and that has some value. What
we don’t know is the effect or outcome of that
awareness on behavior. That takes us to the third
type of metric, an ‘output’ metric.

Much of the exciting, breakthrough work in objectives towards which marketers are gradually
marketing metrics today is being done at the advancing is identifying key metrics for virtually
frontier where attitudes transform into behaviors. every marketing decision from customer insights,
Sophisticated analyses measure which attitudinal where all successful marketing begins, to some
drivers change brand preference and link to a of the more ephemeral areas of endeavor such as
purchase change. From there, it is a few short public relations and product placement in a TV
steps back up the marketing value stream show.
to identify which investments change which
attitudes the most efficaciously. One intriguing variant of this longitudinal
search for metrics that interconnect across a
Some of our study participants are enabled to demand creation chain is the identification of
do this today primarily because of the felicitous purchase decision ‘funnels’ in industries such as
convergences of attitudinal and behavioral data pharmaceuticals, insurance and autos. In these
from identical sources. industries, marketers are looking at each level in
the purchase decision funnel to tease out the ROI
Just as some metrics address attitudes and of marketing effort to see which alternative works
other behavior, metrics also occur at different more efficiently at each level in the purchase
points on the marketing value chain. One of the decision process.

Metrics Maturity Model

We speak of ‘accountability’ as if it were a state That model has four major axes:
of being much like hypnosis. Accountability
is actually a journey which has many stations . Data;
along the way. When evaluating your company’s 2. Analytics;
unique location on the journey, marketers may 3. Culture, and
find it useful to review the emerging metrics 4. Process embedment. Each deserves a brief
maturity model show below. discussion.

. Data — Accountability implies quantification market mix analytics embedded in real-time
and quantification implies data, most marketing spending models permitting rapid
desirably time series data, permitting changes in marketing spending by target
sophisticated analytics. Data is so basic that consumer and marketing element. Some
it becomes a critical factor in determining are experimenting with advanced analytical
how ‘accountable’ any marketer can techniques such as ‘agent based modeling’
be. One of the major problems for many that permits the use of non-time series data
marketers, especially B2B marketers is and often uncovers ‘emergent behaviors’
the paucity of data directly connecting not revealed by conventional multi-variant,
marketing expenditure to a shift in attitudes market mix modeling.
or behavior. This inhibits the development of
accountability. But there is light at the end of Still further out are marketers trying to
the tunnel. The Internet is now enabling the measure the value of new permission based
capture of survey data at levels of granularity media, the relative ‘engagement’ value of
previously not affordable. This offers one medium versus another and the ‘ROI’
marketers, especially B2B marketers a new of ‘emotion’ versus rationally-based ad
way to capture the data needed to create copy appeals. Some of these issues are
metrics and establish their accountability. in their early stages of understanding but
creative marketers are making progress in
At the other end of the data spectrum all these areas. (Please see below for a brief
are companies with astounding levels of discussion of engagement.)
transaction data captured at the level of
the individual customer. In these fortunate Engagement Metrics
verticals, this data becomes of enormous
Marketers are attempting to develop metrics
value when it is mounted upon a software around ‘engagement’, the capability of a marketing
platform permitting manipulation through investment, most typically an advertisement of
one of the online analytical processing some type, to capture and retain the attention of a
tools (OLAP). These tools enable a level of consumer in a favorable manner. Many academic
and commercial third parties are addressing this
analysis only dreamed about as recently as a subject primarily because of the concern over wasted
decade ago. ad investment against today’s harried, multi-tasking
consumer. Work in this area, some of it by an ANA
2. Metrics and Analytics — The confluence committee, is on going and will unquestionably
evolve over time.
of masses of time series data, powerful
computer hardware and agile software At present, the most mature approach to
has enabled a revolution in analytical engagement seems to be one developed by a third
sophistication. Unfortunately many party commercial firm located in Nicosia, Cyprus,
marketers have not advanced past the use Integration-imc. Their model develops engagement
metrics around ‘brand experience points’ and
of virtually useless marketing input data ‘brand experience shares’ which appear to have
(e.g., ‘cost per 1000 impressions down some predictive value. We have not included their
10% versus last year!’). At the opposite metrics in this paper because they are proprietary to
end of the spectrum are companies with Integration-imc.

3. Culture — We spoke above about the to develop fair measures which can be
‘culture of accountability’ in which marketers sustained over time. In the immature
not only expect to be measured but demand organization, no metrics process exists.
it. In these cultures, accountability is so Individual departments or even managers
deeply ingrained that an attempt is made create measures without attaining the
to measure virtually all expenditures with organizational input from experts in finance,
metrics recognized company-wide. At the IT, operations and market research who
other end of the spectrum are companies are often critical to the development of a
where metrics are owned by Finance or serious metrics effort. By contrast, mature
created intermittently according to standards organizations have a robust metrics process
separate for each SBU or operating which involves key stakeholders and takes
location. In these immature organizations, pains to integrate marketing metrics into
metrics becomes part of a game aimed at an overall balanced corporate scorecard
avoiding serious accountability. Between approach which gets wide visibility across
these extremes are organizations who all SBU’s and functions. A critical objective
struggle to establish fair and sustainable of the process is to provide marketing
metrics understood as such by all the key metrics with the same credibility that is
departments across all SBU’s. accorded metrics in operations, finance and
4. Process Embedment — A key to creating
a culture of accountability is a process that
enrolls key members of the organization

Emerging Characteristics of Current Best Practice
Shown below are the emerging characteristics of current best practice.

• A culture of accountability — We have B (e.g., magazines). Third-party providers

discussed this above but it is so basic it understand this issue well and are prepared
needs to be re-iterated here. Best practice to address it.
companies embed accountability into their
culture. Leadership must demand it and • Optimization modeling — The calculations
marketers should welcome it. on marginal ROI developed by what
is commonly referred to as ‘market
• An inclusive process — Another basic mix modeling’ is necessary to drive
and complementary characteristic of mathematical models that optimize
accountability. A top-down endorsed, marketing spending. These sophisticated
inclusive process insures metrics that are software enabled models are offered by
more credible across the all functions within third-party providers but many companies
the company. create their own using off-the-shelf
software or licensed proprietary software.
• Metrics tied to strategic expectations These models represent a quantum leap
— Metrics must be tied to management’s in marketing efficiency and are correctly
expectations about marketing and to viewed as one of the two or three major
company strategy. If management expects developments in the history of marketing.
marketing to build brand equity then
measures that. If delivering sales prospects • Experimental design — This relatively new
is important, measure that. If increasing testing design protocol enables marketers
the lifetime value of customers is important, to optimize an individual marketing
measure that. Do not try to build a dashboard program (such as a direct mail campaign)
with fifty dials and dropdowns. Focus on what which may have dozens of independent
management expects from marketing. Please variables producing thousands of potential
see the Appendix to this report for a catalog of combinations. Using proven mathematical
metrics by strategic intent. techniques, experimental design enables
marketers to winnow down a field of dozens
• Measures of marginal productivity — of variables to the small combination of
Optimizing marketing ROI requires marketers alternatives that produce the optimal result.
to measure not only the average ROI of an
expenditure but also the ROI of the last dollar • Lifetime value of a customer — Many
invested behind marketing vehicle A. Unless measures of marketing efficacy tend to
marketers understand the ‘slope of the yield be short-term in nature i.e., the revenue
curve’ by expenditure type, one cannot know generated over the next 12 months by a
the point at which expenditure must be specific expenditure. Given the unfortunate
shifted from vehicle A (e.g., TV) to vehicle focus on short-term results from Wall

Street, such myopia is to be expected if not the value of a consumer insight that
desired. But, consumers have needs which provides a profound competitive advantage.
sometimes last for decades and therefore How do we determine the ROI of our
some brand owners find it desirable even market research expenditures? Packaging
necessary to compute the lifetime value of expenditures? Promotional signage at retail?
a customer. This measure helps companies Sales collateral?
calculate how much to invest to convert a
customer to a brand. A longer-term focus • Factors contributing to brand equity
casts a more favorable light on conventional enhancement and market share growth.
advertising which often shows a negative — Many marketers use brand tracking
ROI in the short-term but a positive ROI studies to ascertain perceptions of the brand
when that advertising is given credit for across a battery of emotional and functional
the long-term revenues generated by a benefit characteristics. Leading-edge
loyal customer attracted by the advertising. marketers have gone beyond to understand
Lifetime value measures are particularly what factors are driving brand equity, brand
valuable in many business verticals such as preference and market share. They then
finance, insurance and CPG. By contrast, this design their marketing plan to change the
calculation probably has little value in some attitudes and behaviors around the factors
long purchase cycle categories (e.g., power driving overall brand equity and brand
generators). In most instances, however, the share.
LCV calculation is worth the time it will take
practitioners to develop a set of assumptions The chart below shows how one marketer can
prove that increases in brand equity are directly
and accounting conventions necessary to
associated with increases in brand share. This
produce the measure. marketer is able to deconstruct equity into various
‘contribution to preference’ drivers and focus effort
• ROI down a transaction funnel — Many on the functional and attitudinal elements which
practitioners, especially those in ‘considered are associated with increasing equity and share.
purchase’ categories such as automotive,
insurance and pharmaceuticals, have
identified a purchase-decision pathway or
decision funnel, through which the consumer
traverses on the way to a final decision. These
leading edge practitioners find different ‘ROI’s’
of effort at different stages in the decision
cycle and different response to different
marketing interventions at the same stage in
the cycle. This discovery raises a larger related
question regarding the ROI of expenditures in
the overall marketing process prior to these
relatively transparent expenditures on specific
media. For example, everyone recognizes

• Brand equity and brand loyalty links to • The link between long-term brand equity
brand profitability and shareholder value and the ROI of specific expenditures
— Marketing’s most important long-term — We have discussed this above but
responsibility is building brand equity. two other data points need to be added.
Therefore the discussion of accountability Several third-parties provided evidence
often leads to a discussion of the relationship that it is possible to ‘deconstruct’ the
between the ROI of building brand equity, short- and long-term effects of various
its effect on profitability and ultimately marketing expenditures, i.e., which
on shareholder value. This subject has expenditure seem to build longer-term
generated numerous academic studies over equity and which seem to degrade
the past decade. A particularly interesting it. Without endorsing a method or a
study was conducted by Stern Stewart, the supplier, suffice it to say that this can be
developers of the ‘Economic Value Added’ done. To no one’s surprise, these studies
metric for financial analysis. In this study, indicate that advertising expenditures
Stern Stewart linked economic value added are more associated with building
to aspects of brand equity using the Brand long-term strength while various price
Asset Valuator model of Y&R. expenditures may be more efficient
in the short-term but tend to degrade
No one study answers these questions equity longer-term.
definitively but our review has identified
pieces of a mosaic such as the Stern • Data Availability — This is by far the
Stewart study which clearly suggests higher most universal and frustrating problem
brand equity drives brand loyalty which in inhibiting accountability especially in
turn produces higher margins and greater many B2B verticals. In these verticals,
shareholder value. Some leading edge companies often lose track of their
marketers are focusing on developing loyalty product in a complex supply chain
metrics to help them understand the ROI replete with third-party distributors. In
implications of moving customers up from these situations, marketers have one
one lower level cohort on a loyalty ladder to basic alternative… get clean data from
a higher level cohort or the relative effect of a new source outside the value chain
one marketing investment against cohort A and build metrics around the new
at point B etc. data. This means collecting customized
data either from direct interviews or
Major areas of challenge — As a part of our from one of the relatively new Internet-
study, we asked participants what issues based panels. This costs money but
were particularly vexing to them. Some have the alternative is to keep spending
been mentioned elsewhere in this document, money year-on-year with no idea of
others are new. Here’s a quick enumeration the relative worth of expenditure A
and response based on data collected from vs. B. Any management team that is
participants and third-parties such as research demanding marketing proves its worth
providers. should have some logical difficulty in

denying a request for research funds to The chart below demonstrates an analysis of an
measure that worth. Many companies integrated campaign by MMA. The chart shows the
are understandably enamored with the relative contribution of each element of the campaign
and goes beyond to estimate the ‘synergy’ traceable
simplicity and apparent power of the ‘net
to the combination of elements, i.e. the incremental
promoter score’ metric. We would simply effect of the combination above that generated by the
point out that one must expend some individual elements. In MMA’s experience; ‘synergy’ is
research funds to develop this metric if it relatively small in most integrated campaigns.
isn’t being provided within some existing
brand tracker.

• Integrated Marketing Campaigns (data

clarity) — Many marketers report
problems in deconstructing the effect of
individual components of an integrated
campaign involving the use of multiple
simultaneous marketing channels or
investments. From a technical analytical
perspective, this is a common challenge
to third-party analysts and one which they
can effectively address.
• Innovation et al — Some participants
The most difficult challenge is when these mentioned difficulties in developing
components of an integrated campaign: measures for specific strategic
(a) Occur perfectly co-terminously so responsibilities of marketing. For
that analysts cannot use variations in example, one participant mentioned that
timing as an analytical lever; or (b) When management wanted marketing to lead
one of the elements of a campaign is so ‘innovation’ so her department needs to
advance a metric that would provide insight
small that the natural variations in the
into their performance in this regard.
data simply overwhelm the reading of
Still others cited ‘competitiveness’ as a
a component comprising, for example,
marketing responsibility for which metrics
‘3%’ of an overall campaign. Under
were being sought, ‘customer centricity’
these circumstances, analysts can apply was still another responsibility for which
certain advanced techniques to provide some marketers were looking for metrics.
perspective but by far the most desirable
path is to prepare for analysis by creating This need relates directly to one of our
test and control groups. The willingness principles of best practice, identifying
to create test and control panels is a management’s strategic expectations
leading edge indicator of a ’culture of of marketing and developing metrics to
accountability’. express progress or lack thereof in the

targeted responsibility. In the appendix to Linking metrics to planning —
this report we have started the compilation A persistent challenge for all marketers is
of metrics by strategic intent so that linking metrics to the broader process of
marketers may begin the process of marketing planning. Too many marketers see
choosing a metric or set of metrics to meet the development of metrics as an end unto
their management’s expectations. itself and have not realized that metrics are
a component of an overall more advanced
The chart below shows the standard format marketing process. This, in turn, presents
used to present metrics by ‘strategic intent.’ virtually all marketers with a major challenge
For example, if management determines that because they have no well-defined marketing
marketing’s strategic intent is to increase the process. Therefore even if they have the
overall lifetime value of the customer base at the metrics, they are thoroughly bamboozled by
lowest cost in marketing $’s, this metric offers where and how to use them other than to
a way to measure marketing’s success. This mount them on a dash board and duck.
approach rewards marketing, especially the
advertising component for attracting customers Several marketing service companies are
who contribute profits for years. It also rewards providing a partial answer via very sophisticated
selling more product to current customers or computer models that incorporate market
trading current customers up to higher value mix modeling ROI’s into real-time budgeting
products. models. These software-enabled models
represent a major breakthrough but they deal
Metrics Definition Template more with the tactical aspects of marketing and
do not address the more strategic end-to-end
Marketing marketing process beginning with consumer
Efficiency ∆LCV/ annual marketing cost
and customer insights.
Definition/ LCV Current yr –LCV yr last yr / mar-
Calculation keting $’s current year

Source of data Syndicated panel data, company

sales records and marketing budget

Calculation or Compute the aggregate lifetime value

technique of customers in franchise, subtract
last year’s value. Divide the differ-
ence by annual marketing costs

Verticals where Valuable across many verticals, B2B

appropriate and B2C

Problems or Requires sophisticated calculation

concerns regarding customer loyalty decay
curve. LCV not universally appropri-

Metrics Are Not Enough

Metrics are not an end unto themselves. is demanding metrics will start demanding a
Metrics play the same role in marketing that a serious marketing process tomorrow.
thermometer plays in medicine. Although it is a
powerful diagnostic tool, a thermometer alone Get ready.
has never healed anyone. Metrics alone won’t
save marketing. But metrics can be a powerful In the meantime, use the catalog of metrics
ingredient in an integrated regimen that can build in the appendix to identify or suggest an
brands, drive customer loyalty, and grow volume appropriate approach for your situation. Start
and profits. That overall regimen is a holistic by asking your management to identify their
marketing process that starts by gaining insights strategic expectations of marketing. If it’s trial,
into the customer’s deepest needs and moves choose some trial generating metrics, etc. At
down an orderly path to which each preceding most companies, management has several
step serves as input to the next and all are driven expectations of marketing ranging from building
by insights, metrics and best practice marketing brand equity to generating trial, spending dollars
content. efficiently and building a stronger more capable
marketing resource. That’s why most practitioners
The process approach described above is will want to build a balanced scorecard of
standard, even required, in virtually every complementary metrics.
other business function except marketing. The
extraordinary improvements in supply side To facilitate the building of a balanced scorecard,
productivity are directly traceable to the broad we have labeled the examples by strategic intent.
scale embedment of process advocated by Drs. The appendix contains more than 50 different
Deming and Juran. Despite the proven value metrics that address different strategic intents.
of process, marketing remains strangely, some We hope these samples provide useful input as
would say shamefully. averse to process. One you assemble you scorecard.
thing is certain, the same management that today

About EMM Group, Inc.

EMM Group is the creator of and world leader

in enterprise marketing management, the
marketing transformation that combines process,
best practice marketing content, metrics and
technology to build strong brands that drive

Our mission is to embed the discipline of

enterprise marketing management at thought
leading companies in every business sector
around the world.

Our approach is detailed in our book, The New

Marketing Mission, How Process, Metrics and
Technology Can Unleash Growth.

Contact Information

Gordon Wade, Founding Partner

Ph: 513.608.9461
E Mail:

Chris Charyk, Metrics Practice Partner Leader

Ph: 781.929.3418
E Mail:

Bibliography: Marketing Metrics Resources and References
Here are articles, Web sites, and Blogs we found helpful when preparing this report.

Articles: 2004 paper documenting findings from the

Australian Marketing Institute’s Marketing
Coming Up Short On Nonfinancial Performance Metrics project. The paper outlines a
Measurement, Ittner & Larcker, Harvard framework for marketing metrics, and
Business Review, 2003 documents the most commonly used
This article makes a compelling case for the marketing metrics in various areas. Much of
power and importance of “causal modeling” the framework material is derived from Tim
in the creation of non-financially oriented Ambler’s 2003 edition of “Marketing and the
marketing metrics, such as consumer Bottom Line.”
attitudinal states.
The One Number You Need to Grow, Frederick
Brand Portfolio Economics, 2002 Mercer Reichheld, Harvard Business Review, 2003
Management Consulting white paper Reichheld’s classic article outlines the
This article describes a framework for brand justification, calculation, and appropriate
portfolio management, and outlines an interpretation of the elegantly simple and
analytical approach for assessing brand equity powerful Net Promoter metric.
and its impact on consumer buying behavior
The Value of Strategy Decisions, 2005
The Power of Brand Delivery, McKinsey Advanced Competitive Strategies article
Consulting position paper, 2001 This article provides a simple yet powerful
This paper provides a helpful overview into the approach to quantifying the impact of
use of choice-based analytical approaches to alternative strategic initiatives, an approach
understanding the drivers of brand equity, as that is worth consideration in the evaluation
an important initial step in the design of brand of assessing the potential impact of marketing
equity metrics. initiatives.

Customer Satisfaction, Cash Flow & Measuring Marketing Effectiveness and Value:
Shareholder Value, Gruca & Rego, 2003 MSI The Unisys Marketing Dashboard, Miller &
Working Paper Series Cioffi, 2004 Journal of Advertising Research
This article summarizes a study examining the article
impact of customer satisfaction on operational A comprehensive description of the design
cash flows. The report attempts to quantify and implementation of a marketing metrics
the impact of customer satisfaction on the dashboard at Unisys Corporation, with
magnitude and variability of future cash flow. particular emphasis on the critical corporate
cultural change management issues that need
What Value Marketing? – A Position Paper on to be addressed.
Marketing Metrics in Australia

Metrics for Linking Marketing to Financial How the Pursuit of ROMI Is Changing
Performance, Srivastava & Reibstein, 2004 Marketing Management, September 2004
Marketing Science Institute working paper Journal of Advertising Research article
A detailed overview about the current state of This article describes a framework and set
academic attempts to link marketing activities of criteria for successful implementation of
and financial outcomes marketing ROI (ROMI) programs

Exploring the Brand Value-Shareholder Value Promotion Effectiveness: More Important Than
Nexus for Consumer Goods Companies, Kerin Ever for Consumer Products Companies, 2005
& Sethuraman, 1998 Journal of the Academy AMR Research article
of Marketing Science article This article proposes a new set of metrics to
An important academic study exploring the link understand promotions effectiveness, focusing
between brand value and shareholder value. on key supply chain dynamics.

Getting Real About Customer Lifetime Value, Processes and methodologies for creating a
Werner, 2003 Marakon Associates paper global business-to-business brand, 2002 paper
A detailed exploration of the Customer Lifetime by Randall Rozin
Value (LCV) concept and its importance in The author of this paper is the Global Manager
understanding marketing importance of Branding and Marketing Communications
with Dow Corning Corporation. He provides a
The Customer Lifetime Value Concept & Its comprehensive framework for brand building
Contribution to Corporate Valuation, Bauer, in the B2B arena, complete with thoughts on
Hammerschmidt & Braehler, 2003 Yearbook of appropriate metrics.
Marketing and Consumer Research
A detailed exploration of the use of CLV and its Online Panels: The New Frontier of B2B
linkage to company shareholder value. Research, Richard Thornton, UK Director,
Market Research, Ciao GmbHBIG Annual
Economics’ Gift to Marketing, 2003 Mercer Conference, May 2005
Consulting Journal article This paper summarizes recent European
This article provides a useful introduction to research into the benefits and potential
the use of the analytical technique of choice limitations of using online customer panels
modeling to the assessment of brand equity. for B2B customer attitude assessment. Good
summary of the issues and considerations
Predicting the Unpredictable, Bonabeau, 2002 involved.
Harvard Business Review article
An introduction to the marketing modeling
technique known as agent-based modeling
(ABM), which offers the potential for delivering
unique insights into the financial and brand
equity implications of marketing investments.

Web sites:
Site/magazine devoted to the broad area of B2B marketing, including some pragmatic and helpful
Magazine/website covering topics in the overall B2B metrics articles.
area of marketing ROI Site devoted to B2B marketing techniques,
Good source of current news articles pertaining technologies and processes. Good collection of
to marketing accountability and ROI. relevant white papers on a wide variety of B2B
marketing and technology topics.
A magazine/site (free content with registration)
offering surprisingly actionable and specific Content and paid download site devoted to
articles devoted to media metrics. marketing ROI and related topics – good unique
Publications site for the Marketing Science
Institute (MSI) – many metrics-related white Blogs:
papers available here One of the better blogs devoted to B2B
Magazine/website with intriguing and unique marketing topics, with a particular emphasis on
content, and a reasonably active blog. Good public relations metrics
editorial integrity, as evidenced by their
distinguishing “vendor whitepapers” from other
content. General marketing blog with some unique
perspectives and entries on creating a “culture of marketing ROI”
Lots of academic-oriented marketing metrics
content, some pearls among the more theoretical
pieces. The official blog of BuzzMetrics, a word-of-mouth
research and planning firm, and co-founder of the Word of Mouth Marketing Association
Some unique brand valuation and brand (WOMMA). Unique reflections on the “discipline”
scorecard white papers on this brand of word-of-mouth marketing and the societal and
consultancy’s site business impact of consumer-created content.
This site contains several articles on the subject “Professional services marketing blog” which
of corporate performance management with many entries devoted to the discussion of
specific applications in marketing and marketing marketing ROI
Interbrand’s site offering unique white papers on
the assessment of brand equity

Introduction to the Appendix
(Appendix to ANA Marketing Accountability Task Force Findings)

The work of the ANA Marketing Accountability Every company and every vertical is different.
task force was twofold: (1) to review current That’s why the appendix includes several
best practices used by ANA member metrics under each strategic intent. These
companies to improve their marketing unique metrics represent different ways
accountability; and (2) to provide a practical which study participants responded to their
catalog of accountability metrics used by management’s request for accountability about
industry practitioners from which marketers a specific strategic intent they attribute to the
may choose those appropriate to their marketing function.
unique situation. This need relates directly
to one of the task force’s principles of best The appendix provides a method of calculation,
practice - identifying management’s strategic likely data sources and the types of verticals
expectations of marketing and developing for which this metric may be appropriate. We
metrics to express progress or lack thereof in do not claim this list is exhaustive. We expect,
the targeted responsibility. indeed we hope that this ‘starter’ list will inspire
users to develop different but more appropriate
Current best practice suggests that metrics metrics for their company.
reflect the strategic intent which a company’s
management has for its marketing function. This appendix represents but a beginning. We
If management expects marketing to build welcome comments, questions and additions
brand equity then measure that. If delivering from every marketer.
sales prospects is important, measure that. If
increasing the lifetime value of customers is
important, measure that. With this principle in
mind, the appendix that follows groups metrics
by strategic intent.


In many companies, marketing has at least a innovation pipeline to the gap in their sales forecast
partial responsibility for innovation. Some study between the total sales gain needed to meet Wall
participants reported difficulty in developing Street’s expectations and the projected value of
appropriate metrics for innovation. When we current products. Another participant claimed to
queried others about how they were measuring measure ‘speed to market’ with innovation as a
‘innovation’, they reported the metrics listed below. critical metric in a category where product news is
Two of these metrics seemed particularly creative. of paramount importance.
One compared the projected sales value of their

Definition/ Source of Calculation or Verticals where

Innovation Calculation data technique appropriate Problems or concerns
$ sales Sum of sales of Internal Com- Simple addition. Virtually universal Simple, broadly applicable,
products/services/ pany sales Results compared practical measure
retail locations < 3 to previous year
yrs old

% of $ sales Sum of sales of Internal Com- Simple addition Virtually universal Simple, broadly applicable,
from innova- products/services/ pany sales and division practical measure
tion retail locations <
3 yrs old divided
by total sales com-
pared to previous

Innovation Sum of sales of Internal Com- Simple addition Virtually universal Competitive data sometimes
competitive- products/services/ pany sales, and division hard to calculate. Requires
ness retail locations < estimate of agreed internal data collec-
3 yrs old divided competitive tion protocol
similar sales of sales from
leading competitor third party
data or com-
petitive public

Profitability of Ratio of margin Internal Com- Divide profit Virtually universal Accounting conventions
New product/ of new products pany cost and margin of new required to determine
service /services versus profit data products /services overhead attribution among
existing product/ by that of existing new/current products
services products /services

New prod- Ratio of estimated New product Addition of new Virtually universal Determination of time
uct/service sales of new prod- estimates product estimates periods for comparison.
pipeline suf- uct portfolio vs. from 3rd party divided by stated Source of new product sales
ficiency stated sales goals or internal sales goals estimates (e.g. external
source and third party new product es-
stated com- timation service or internal
pany sales source)

Definition/ Source of Calculation or Verticals where
Innovation Calculation data technique appropriate Problems or concerns
Customer % of new prod- Household Divide new cus- Virtually universal Determining number of new
growth from uct/service/location panel data, tomers/consumers customers. Some verticals
new products/ customers new to customer of product/ service may require customer sur-
services brand/company survey, CRM by known cus- vey to ID new customers
customer base sales records tomer /consumer
set before new

Research Number of patents Patent filings Compare current Most product ori- Many valuable innovations
productivity received versus years patents to ented marketers are not subject to patent
previous year previous years filings. Patents per se do not
guarantee commercial or
competitive value

Organizational Number of sugges- Internal com- Collect suggestions Virtually universal Quality of suggestions.
innovation tions annually or pany ‘sugges- and total or divide Executive response to em-
number of sugges- tion box’ total by number of ployee input. Recognition of
tions /employee employees quality. An input measure.
No guarantee of commercial

Innovation # of cost reduc- Internal sug- Capture of cost Virtually universal Capture of source of cost
implementa- tion suggestions gestion and reduction ideas reduction suggestion and
tion from employees cost reduction implemented implementation. Determi-
implemented data within past 12 nation of cost reduction
months realization

Cost reduction $ value of cost Internal sug- Capture of cost Virtually universal Capture of source of cost
innovation reduction sugges- gestion and reduction ideas reduction suggestion and
tions from employ- cost reduction implemented implementation. Determi-
ees implemented data within past 12 nation of cost reduction
months realization

Quality of # of new product/ Consumer Standard ‘definitely Most goods and Use of standard research
innovation service ideas given response to would buy/prob- services categories protocol providing bench-
‘top 2 box’ rating idea in survey ably would buy’ marks. Probably requires
or after trial survey response external third party research
among target audi- intervention. Not a basic
ence responsibility of marketing

Extension of # of custom- Household Collection of pur- Most goods/ Those purchasing may not
consumer ers/consumers panel data, chases dependant services/retail be new to franchise merely
/customer purchasing new customer upon data collec- categories transferred from other prod-
franchise product /service survey, CRM tion method used uct/service or retail location
within year one sales records
after introduction

Speed to Average time Internal mar- Difference between Many product Isolating start date. Ad-
market period from receipt keting records date of receipt of /services/retail ditionally, marketing not in
of patent approval positive legal or categories control of many develop-
or ‘top two box’ marketing notice ment issues
score and introduction of
idea into sales with


Many brand equity models put a premium on the ‘better value’, others more emotional attributes such
brand’s being seen as different by consumers. as ‘makes me feel better about myself’ or ‘makes
It’s no surprise that many participants reported life more enjoyable’. The precise collection of words
metrics aimed at measuring marketing’s success at depended upon the product category but the intent
positioning the brand as ‘different’ from competitors. was to measure ‘difference’.
Difference comes in many ‘flavors’. Some measure

Definition/ Calculation or Verticals where Problems or

Differentiation Calculation Source of data technique appropriate concerns
Special product/ Average rating on Customer survey Ranking on 5 point Virtually universal Care required in
service/ store 5 point scale in an- comparing service scale compared to framing ques-
swer to description or product to benchmark products, tion, selecting
‘This is a special benchmark prod- stores or services respondents and
store, product or ucts and services benchmarks

Unique product/ Average rating on Customer survey Ranking on 5 point Virtually universal Care required in
service/ store 5 point scale in an- comparing service scale compared to framing ques-
swer to description or product to benchmark products, tion, selecting
‘This is a unique benchmark prod- stores or services respondents and
store, product or ucts and services benchmarks

Product/service/ Average rating on Customer survey Ranking on 5 point Virtually universal Care required in
store ranking on 5 point scale in an- comparing service scale compared to framing ques-
‘value’ swer to description or product to benchmark products, tion, selecting
‘This store, product benchmark prod- stores or services respondents and
or service is a good ucts and services benchmarks

Product/service/ Average rating on Customer survey Ranking on 5 point Many retail, ser- Care required in
store ranking on 5 point scale in comparing service scale compared to vice and product framing ques-
‘makes life more answer to descrip- or product to benchmark products, categories tion, selecting
enjoyable’ tion ‘This is store, benchmark prod- stores or services respondents and
product or service ucts and services benchmarks
that makes life more

Product/service/ Average rating on Customer survey Ranking on 5 point Virtually universal Care required in
store ranking 5 point scale in comparing service scale compared to framing ques-
on ‘makes me answer to descrip- or product to benchmark products, tion, selecting
feel good about tion ‘This is store, benchmark prod- stores or services respondents and
myself’ product or service ucts and services benchmarks
that makes me feel
good about myself’

Customer Centricity

At many study participants, marketing owns the B2B. They range from familiar concepts such as
customer and is responsible for keeping the ‘customer loyalty’ to less familiar ones such as
company ‘customer centric’. Not surprisingly, Frederich Reichheld’s ‘net promoter score’ and
the metrics for this important strategic intent of the number of training hours that a B2B company
marketing are many and varied across B2C and invests in its customers.

Customer Definition/ Calculation or Verticals where Problems or

Centricity Calculation Source of data technique appropriate concerns
Customer or % of customer/ Household panel Value of company Most goods/ Difficult calculation
consumer loyalty consumer needs data, customer product/ services services/retail in many verticals
in category be- survey, CRM divided by total cus- categories because of data
ing satisfied by sales records tomer purchases voids
product, service or from all competitors
retail outlet offering similar prod-
ucts and services

# of products # of companies Company sales Capture the number Many B2B ver- Distribution
purchased multi-product line records or sur- of company products ticals through third par-
purchased by vey of end users purchased by each ties may compli-
average customer/ of third party customer. Compute cate data capture
consumer distributors the average

Rating as vendor Customer ranking Customer survey Ranking on 5 point Many B2B com- Often more influ-
by customers of company as permitting scale in response to panies enced by product
vendor or supplier comparison to question: How do or service level
many customer you rank company X than by marketing
suppliers as supplier?’ per se

Training of Average hours of Internal training Capture number of Those where Training some-
customer training provided records hours from com- company and times self adminis-
personnel to customer’s pany and customer customer success tered by employee,
employees records. Convert depends upon difficult to capture
to Hrs/customer knowledgeable
employee customer employ-

Customer ranking Customer ranking Survey of cus- Ranking of company Many B2B ver- Often more influ-
of products and of company’s prod- tomer personnel products /services ticals enced by product
services ucts or services familiar with on 5 point scale or service level
products permitting compari- than by marketing
son to competitor’s per se

Net Promoter Difference Customer survey Calculation devel- Most goods/ Requires adher-
score ( Riechheld between strong oped by Riechheld. services/retail ence to disciplined
concept) ‘promoters’ of See article in bibliog- categories survey methodol-
company and raphy ogy developed by
detractors Riechheld

Customer Definition/ Calculation or Verticals where Problems or
Centricity Calculation Source of data technique appropriate concerns
Key Characteristics Customer ranking Customer survey Ranking on five point Most goods/ Requires knowl-
ranking of company on key scale of selected at- services/retail edge of important
performance at- tributes important to categories attributes, careful
tributes of product customers choice of respon-
or service dents, framing of

Customer profit on The $ profit Customer re- Can be simple Company’s prod- Requires collabo-
company products realized by client cords or custom- capture of cus- ucts are resold ration of customer.
on company’s ized study tomer resale data or to third party or May require
products sophisticated activity consumers sophisticated data
based costing study collection and cost
in complex supply accounting ap-
chain industries proach (ABC). May
not be marketing

Marketing Efficiency

If marketing accountability means anything, it mention should go to the sophisticated attempt

means spending the marketing budget efficiently. to capture the change in lifetime value of the
Therefore it’s no surprise that participants reported company’s customer franchise divided by the
a broad range of marketing efficiency metrics. Many total marketing expenditure for the year. This is a
of these metrics were generated by sophisticated particularly artful attempt to reward advertising for
market mix modeling but some were simpler such attracting a customer that generates revenue for a
as the focus on controlling ‘nonworking’ $’s as a lifetime.
percent of the total advertising budget. Special

Marketing Definition/ Calculation or Verticals where

Efficiency Calculation Source of data technique appropriate Problems or concerns
∆ LCV/ annual LCV Current yr Syndicated Compute the aggre- Valuable across Requires sophisticated
marketing cost –LCV yr last yr / panel data, gate lifetime value many verticals, calculation regarding
marketing $’s cur- company sales of customers in B2B and B2C customer loyalty decay
rent year records and franchise, subtract curve. LCV not univer-
marketing bud- last year’s value. sally appropriate
get data Divide the differ-
ence by annual
marketing costs

Non working $’s Non-working $’s as Internal budget Capture all ad ex- All categories Requires accounting
control % of total market- records penses not directly convention identifying
ing or ad $’s touching consum- ‘non-working’ dollars
ers (department
overhead, com-
mercial production
costs, research,
website develop-
ment, etc) divide
by total marketing
or ad costs

Recall or Respondent recall Syndicated re- Divide recall by All categories Short term measure.
persuasion per $ (or persuasion) search provider cost of producing Higher production
of ad production divided by the total and internal cost campaign, index values may ‘wear well’
cast of production records versus past cam-
paigns e.g. recall of
15/$300k = 5 recall
points per $100K

Return on Return per dollar Time series data Isolation of incre- Any vertical or Requires time series
advertising invested in specific analytics mental revenue expenditure input data, usually
investment period by specific and associated meeting specific requires experienced
media investment costs using market conditions pri- third party analysis,
mix or multi variate marily availability specific conditions.
analysis of time series Not applicable to
data many B2B expendi-

Marketing Definition/ Calculation or Verticals where
Efficiency Calculation Source of data technique appropriate Problems or concerns
Return on Return per dol- Time series data Isolation of incre- Any vertical or Short term focus. Re-
promotional lar invested on analytics mental revenue expenditure quires specific condi-
investment promotional option and associated meeting specific tions, usually requires
(e.g. price reduc- costs using market conditions pri- experienced third
tion, couponing, mix or multi variate marily availability party analysis. Not ap-
etc) analysis of time series plicable to many B2B
data expenditures

Customer value Calculate lifetime Internal Identify direct costs Many verticals Requires rigorous
versus acquisition value of customer. marketing and associated with where direct to accounting controls
cost Divide by acquisi- customer data customer enroll- consumer mar- and sophisticated cal-
tion cost ment. Calculate keting makes culation of customer
lifetime value of calculation both worth. Decay curve or
customers similarly important and loyalty level is key
acquired. Divide relevant
value by acquisition

Reduce sales cycle Identify historic Internal sales Review sales Any vertical Marketing does not
time time required to records records from CRM where marketing control all elements
close sale on new files to identify closely supports of sales cycle. Metric
account or new sales cycle for new sales with pros- requires accounting
product/service. client or new prod- pect focused conventions and policy
Measure change uct /service efforts agreement
over time

Trial Generation

In many companies, trial generation is perceived measuring trial generation. These metrics were
as one of marketing’s most important strategic often complemented by those calculating the cost
responsibilities. Therefore, metrics about trial per new trier, the cost of a new customer, etc.
generation appeared on many of the dashboards These metrics were especially important in verticals
which study participants forwarded for our perusal. such as consumer financial services and Telco
These trial metrics came in many forms but the where gaining new customers absorbs virtually all
three shown below capture the common ways of marketing funds not focused on equity building.

Definition/ Calculation or Verticals where

Trial Generation Calculation Source of data technique appropriate Problems or concerns
Extension of # of custom- Household panel Collection of pur- Most goods/ Those purchasing may
consumer / ers/consumers data, customer chases dependant services/retail not be new to franchise
customer franchise purchasing new survey, CRM upon data collec- categories merely transferred from
product /service sales records tion method used other product/service or
within year one retail location
after introduction

New accounts # of new accounts CRM sales Capture of new Most B2b New account activity
added in past records or dis- accounts from verticals rarely the sole responsi-
period tributor records sales or distributor bility of marketing

Trial of new # or % of targets Internal sales Capture of cus- Many retail and May require adjustment
location/branch visiting or purchas- records from tomer data from B2b verticals for cannibalization of
ing from new retail location new location existing location. May
outlet or service require identification
branch of target consumers to
compute % penetration

Lead Generation

In many B2B companies, lead generation for the serious about isolating the effectiveness and
company’s sales force is the primary responsibility efficiency of lead generation often must create
of the marketing function. This seemingly simple rigorous test and control areas or panels. Even this
concept presented study participants with many innocent approach often created problems when a
problems ranging from separating leads among specific sales region realized it was functioning as a
overlapping marketing efforts to associating a lead ‘control’ market and thereby being deprived of effort
with efforts which occurred well before it actually directed into the test area.
showed up in the hopper. Companies who are

Definition/ Calculation or Verticals where

Lead Generation Calculation Source of data technique appropriate Problems or concerns
Number of sales # of sales leads Company con- Capture of leads Most goods/ Requires means of
leads generated generated by cam- tact center in response to out- services/retail identifying campaign
paign in period bound or inbound categories generating lead

Cost / sales lead Cost of campaign Marketing cost Determine incre- Most goods/ Requires internal ac-
divided by # of records. Com- mental cost of services/retail counting conventions
sales leads gener- pany contact campaign. Divide categories regarding cost defini-
ated by campaign center by # of leads in tions. Requires iden-
in period response to out- tification of campaign
bound or inbound generating lead

Lead conversion Percentage of Company Determine # of Many B2B Requires internal

ratio leads converted contact center. leads in response categories accounting conven-
into a sale Company sales to outbound or tions regarding what
records inbound inquiry. constitutes a sale.
Divide into number Requires identification
of leads converted of campaign generat-
to sale ing lead


In most companies B2C or B2B, creating awareness departments are held responsible for ‘awareness’,
is one of the primary responsibilities of the a metric that turns out to be almost more trouble
marketing function. As we pointed out in the body than it is worth. In B2B companies, a related metric,
of the report, ‘awareness’ is an ’intermediate’ metric ‘inclusion in a purchase consideration set’, has
which is qualitatively better than an input metric but more to recommend it but also presents problems
much less valuable than an output metric such as in isolating the activity causing a prospective buyer
one that measures a behavior induced by marketing to include a specific company in its group of
e.g. sales. None the less, many marketing prospective suppliers.

Definition/ Calculation or Verticals where

Awareness Calculation Source of data technique appropriate Problems or concerns
Top of mind Unaided and Survey Response by selected All verticals Awareness does not imply
awareness aided awareness of respondents to survey preference. Survey can
company among question regarding be structured to provide
selected respon- awareness of company data beyond awareness.
dent base Choosing respondents
and developing research
protocol are critical

Consideration % mentioning Survey Response by selected All verticals Survey can be structured
Set Inclusion company as within respondents to ques- to provide valuable data
consideration set tion: ‘What brands/ beyond ‘consideration’.
for goods or ser- companies would Choosing respondents
vice purchase you consider for this and developing research
product or service’ protocol are critical

Advertising Copy

Developing effective advertising copy is one of the ‘difference’, etc. One interesting metric emerging
few responsibilities for which the marketing function in service and retail verticals measures the balance
can rightfully claim almost sole ownership internally. between equity focused and price /promotion
As you might expect, metrics for this responsibility advertising in the companies media mix. Although
appear on lots of dashboards. These metrics range technically more of a media metric, we included it
from a focus on ‘persuasion’ and recall to various here under ad copy.
measures of characteristics such as ‘news value’,

Definition/ Calculation or Verticals where

Advertising Copy Calculation Source of data technique appropriate Problems or concerns
Absolute Recall % of respondent Syndicated re- Specific technique All categories Research service should
and index of recall audience recall- search provider varies by third provide norms to permit
ing key message party research indexing versus com-
elements/ index provider. All involve mercials from compa-
versus comparable exposure of com- rable categories
categories mercial to targeted
respondent audi-
ence and query of
points recalled

Absolute persua- % of respondent Syndicated re- Specific technique All categories Research service should
sion and index of audience adjudged search provider and response provide norms to permit
persuasion to be positively metric evaluation indexing versus com-
persuaded by varies by third mercials from compa-
credibility and party research rable categories. A ‘gold
appeal of copy provider. standard’ issue for third
benefit promise party providers

Absolute ‘Different’ % of respondent Syndicated re- Specific technique All categories Research service should
and index of dif- audience judging search provider and response provide norms to permit
ference product /service metric evaluation indexing versus com-
or company to be varies by third mercials from compa-
positively ‘different’ party research rable categories
from competition provider.

Absolute ‘Like- % of respondent Syndicated re- Specific technique All categories Research service should
ability’ and index audience judg- search provider and response provide norms to permit
of ‘likeability’ ing commercial, metric evaluation indexing versus com-
product /service or varies by third mercials from compara-
company to be ‘lik- party research ble categories. Likeabil-
able’ or ‘enjoyable’ provider ity does not necessarily
imply preference

Absolute ‘New % of respondent Syndicated re- Specific technique All categories Research service should
information’ and audience judging search provider and response provide norms to permit
index of ‘news’ commercial pro- metric evaluation indexing versus com-
vides ‘news or new varies by third mercials from compa-
information’ party research rable categories. News
provider itself not necessarily

Definition/ Calculation or Verticals where
Advertising Copy Calculation Source of data technique appropriate Problems or concerns
Engagement Absolute and Various syn- Varies by external Most verticals, Emerging discipline.
trended measure dicated and provider. Usually B2C and B2B Suppliers should pro-
of extent to which proprietary requires custom- vide norms and valida-
specific media services ized survey tion techniques
alternatives are
engaging and
influencing con-

Equity advertis- The percent of to- Internal adver- Capture total Most verticals, Requires internal policy
ing as % of total tal advertising dol- tising expendi- advertising ex- B2C and B2B agreement or account-
advertising lars devoted solely ture records penditures for all ing conventions to
to equity building channels. Identify isolate equity building
with no short term those expenditures ads
demand enhance- solely focused on
ment elements equity building.
Divide them by the

Margin Enhancement

This ‘strategic intent’ underscores the complexity of of the overall demand creation value stream. In other
the metrics issue because in most companies, the verticals, management views ‘margin enhancement’
marketing function has little or no direct responsibility as a critical indicator of marketing’s ability to position
for ‘margin’. In some verticals, however, the marketing the product as a superior value in the minds of
function does play a roll in managing margin as part consumers.

Margin Definition/ Calculation or Verticals where Problems or

Enhancement Calculation Source of data technique appropriate concerns
Average margin Net margin on Internal records Identify margin All categories Marketing only one
and trended index targeted goods and before corporate factor influencing
services overhead margins

Discount % of sales, units Internal records From third party All categories Marketing only one
avoidance or orders sold at and third party reports or compa- factor influencing
full margin without syndicated reports ny records identify margins and com-
discount. $ sales of products petitive conditions
/ services sold at
full margin. Divide
by total sales. (or
units or orders)

Willingness to pay % of target willing Survey Response to Many verticals and Marketing only one
a premium to pay a premium survey question or product categories factor influenc-
price for product series of questions ing margins and
or service aimed at eliciting attitudes towards
value judgment value
from consumers

$’s per unit sold The revenue Internal company Capture total units Verticals where Marketing only one
realized per unit of records sold (hotel rooms marketing is factor influenc-
product or service rented/ air line responsible for ing margins and
sold miles sold.) Calcu- revenue manage- overall demand
late total revenue ment
for period. Divide
revenue by units

Brand Equity

Brand equity metrics in one form or another appear benchmarks across categories. Other companies
on a high percentage of participant dashboards focus monomaniacally on ‘owning’ one benefit
and rightfully so. This metric captures the most which they measure in the absolute and relative to
important long term responsibility of marketing, competition. Still others develop sophisticated total
the one ‘strategic intent’ for which marketing equity or preference scores by rolling up a battery
ought to demand ownership and accountability. of measures from a ‘brand tracker’. Marketers
Metrics in this group come in a variety of types. should definitely capture brand equity using the
Some utilize external third party brand equity methodology which balances unique category
measures from numerous reputable suppliers with characteristics, cost and competitive issues.
a panoply of interrelated measures and lots of

Definition/ Calculation or Verticals where

Brand Equity Calculation Source of data technique appropriate Problems or concerns
Price premium The price premium Proprietary survey Response to a set of Many verticals Marketing only one
value consumers are methodologies specific queries that and product factor influencing
willing to pay for a isolate the premium as- categories margins and attitudes
brand or service de- sociated with the brand towards value
livered by a specific often using proprietary
brand third party techniques
augmented by conjoint
analytical approach

Attribute/benefit Significant differ- Brand tracker type Research which pro- Many verticals Marketing only one
Ownership ence vs. competi- survey vides quantified delta and product factor influencing
tion in brand’s of brand versus com- categories margins and attitudes
identification with petitive set on specific
attribute deemed emotional or functional
important to the benefit

Willingness to % of target willing Survey Response to survey Many verticals Marketing only one
pay a premium to pay a premium question or series of and product factor influencing
price for product or questions aimed at categories margins and attitudes
service eliciting value judg- towards value
ment from consumers

Definition/ Calculation or Verticals where
Brand Equity Calculation Source of data technique appropriate Problems or concerns
Bonding/ A measure of the Brand equity survey A computed figure Many verticals Consumer/customer
emotional emotional bond based on a battery of and categories attitudes towards
attachment between brand/ responses in several brand/company
company and the proprietary third party influenced by non
customer brand equity models marketing factors (e.g.
usage experience, in-
novation, importance
of functionality

Category driver Significant differ- Brand tracker type Research which pro- Many verticals Marketing only one
ownership ence in brand’s survey vides quantified delta and product factor influencing
identification with for brand on attribute/ categories margins and attitudes
attribute proven benefit computed to be towards preference
to drive category primary contributor to
preference preference in category

Purchase Behavior

These metrics and others involving campaign shorter term more tactical efforts. One metric,
response appear on a high percentage of however, stands out for having a longer term more
dashboards especially in verticals where the strategic value and that is the annual value of a
marketing function spends large amounts of money consumer or customer. This is a fundamental metric
to generate an immediate consumer response. In that all marketers should understand and utilize in
these verticals and others, the marketing function marketing planning. In a few verticals, this metric is
spends lots of energy and money on the more of no value (e.g. power generation turbines bought
promotional side of the ledger as opposed to equity every 20 years) but in most categories this is one
building. It should be no surprise that management metric everyone should capture.
wants to know how consumers responded to these

Definition/ Calculation or Verticals where Problems or

Purchase Behavior Calculation Source of data technique appropriate concerns
Frequency of The number of Household panel, Capturing of Many b2C and Marketing function
purchase times a con- loyalty card, purchase behavior B2b verticals and may not control
sumer /customer company sales from various product categories levers most
purchases during records, survey sources valuable in driving
a specific time frequency of visit

Annual purchase Sum of all pur- Household panel, Capturing of Many b2C and Marketing function
value of consumer/ chases in the past loyalty card, purchase behavior B2b verticals and may not control
customer year company sales from various product categories levers most
records sources valuable in annual

Transaction value The average value Household panel, Capturing of Many b2C and Marketing
of an individual loyalty card, purchase behavior B2b verticals and function may not
consumer /cus- company sales from various product categories control levers
tomer purchase records sources most valuable in
transaction transaction value

Marketing Human Resources

This metrics group’s strategic intent is to provide in this regard. Measuring the capability of the
management with an insight on the marketing marketing human resource is difficult because the
department’s capability building. It is meant to ultimate metric is the competitive impact of the
answer the question: ‘Are we building an effective, department’s output. Nonetheless, some companies
competitive marketing capability internally’? are beginning to capture various ‘soft’ and ‘hard’
The subject of capability building is growing in measures to understand the broad subject of
importance across all functions and verticals. marketing human resource ‘capability’.
Marketing is receiving its fair share of scrutiny

Marketing Human Definition/ Calculation or Verticals where Problems or

Resources Calculation Source of data technique appropriate concerns
Learning Ranking of market- Brand tracker Internal survey with All verticals and Should be com-
organization ing department as type survey rank on scale by product categories pared to other
learning organiza- marketing employees functions and
tion by marketing trend

Department Amount and Brand tracker Internal survey of All verticals and Should be com-
Training quality of training type survey training quality with product categories pared to other
for marketing rank on scale by functions and
personnel marketing employ- trend
ees plus capture of
completed training

Attitude toward Ranking of market- Brand tracker Internal survey with All verticals and Should be com-
department ing department for type survey rank on scale by product categories pared to other
‘investing in me’ marketing employees functions and
on question concern- trend
ing perception of
commitment to

Relative respect Ranking of market- Brand tracker Internal survey with All verticals and Should be com-
ing department type survey rank on scale by product categories pared to other
on relative respect marketing employees functions and
within company versus other func- trend
by marketing em- tions.

Turnover barometer Ranking of recent Company per- Capture personnel All verticals and Should be com-
voluntarily de- sonnel records ranking of recent product categories pared to other
parted employees voluntary departures. functions and
Average and trend trend

Training hours Average training Internal com- Capture # of hours Broadly appropri- Does not speak to
hours /training pany records in training classes or ate for virtually all quality of training
courses taken by number of training verticals or its effect on
Marketing staff courses passed. business

Marketing Human Definition/ Calculation or Verticals where Problems or
Resources Calculation Source of data technique appropriate concerns
% of marketing The percentage Internal com- Identify employees Broadly appropri- Must be used as
employees of employees pany records employed > 2 years. ate for virtually all part of battery of
advancing in grade employed > 2 Identify # advanced verticals balanced score-
years who were in grade. Calculate card metrics. Com-
advanced in grade % advancement pared to industry
norms etc

Turnover A balanced score- Internal com- Identify separated Broadly appropri- Needs to be
card including pany records employees place ate for virtually all placed in perspec-
turnover among within measured verticals tive of vertical and
employees< 2 group, derive %. tracked over time.
years, among Compare over time Rationale behind
employees ranked turnover needed
superior, among
middle manage-
ment tier

Public Relations

The somewhat ephemeral nature of the public it remains challenging to disaggregate the effects
relations function has led to a frenzy of metrics of PR from many other company activities. This
development. Several highly competent industry is especially true because many companies lean
groups have developed approaches worthy of study. hardest upon PR to mitigate the negatives of some
As one of our study participants pointed out, the external untoward event. The felonious attempt to
irony of all these efforts to ‘justify’ public relations is point the ‘finger’ at Wendy’s is a classic example of
that everyone intuitively agrees about the power and the challenges of creating PR metrics. The chart
credibility of an artful PR campaign. Nonetheless, below offers some creative metrics shared with us.

Definition/ Calculation or Verticals where Problems or

Public Relations Calculation Source of data technique appropriate concerns
AVE’s (advertising The conversion of Third party data Capture of impres- Many verticals Difficult to ascertain
value equivalent) non paid media providers sions by media and product quality of mention,
mentions into type and then their categories context, message
the equivalent of conversion into the delivered or affect on
advertising gross equivalent of paid message recipient.
rating points gross rating points A classic ‘input’

Target Stakeholder Attribute ranking Brand tracker Survey research of Many verticals Requires proper
Response among selected type survey targeted stakehold- and product selection of respon-
stakeholders ers on key industry categories dents and survey
(Industry thought and company at- technique
leaders, media, tributes
shareholders, etc)

Critical article The percentage Internal tracking Identify all major Many verticals Requires definitions
response of major industry articles in key pub- and product regarding major
articles espe- lications. Compute categories article and company
cially those with a percent containing response. Does not
critical viewpoint a specific response measure cred-
which contain the from the company ibility or impact of
company’s detailed response only ability
response to respond

Response to # or % of visits on Web tracking ID respondents to Many verticals Does not measure
specific effort website to specific software E-mail campaign to and product effect of message in
communication to specific constitu- categories changing attitudes
targeted constitu- ents with targeted only effectiveness in
ency message. Calculate driving target to web
# targets or % page
responding in sug-
gested manner (e.g.
visits to website)

Definition/ Calculation or Verticals where Problems or
Public Relations Calculation Source of data technique appropriate concerns
Attitude change ∆ in attitudes Web tracking ID respondents to Many verticals Requires careful
among target among test and software E-mail campaign to and product selection of test and
control target audi- specific constitu- categories control groups
ence ents with targeted
message. Measure
attitudes pre and
post among test and

Media impact Index of impact Proprietary mea- Third party syndi- Broadly available Generally do not
indices including # of sures from third cated sources apply for virtually all measure effect or
stories, quality, parties proprietary selection verticals ‘output’ of PR effort
tonality etc and evaluation only ‘inputs’ or ‘inter-
metrics mediate’ metrics or
qualitative measures

Attribute owner- Ranking on mo- Survey research Select target Broadly available PR effort not only
ship among target nadic 5 point scale audience. Identify for virtually all influence on re-
audience of key strategic attribute to measure. verticals spondent rankings.
attribute among Use simple metric Research must
selected target like 5-point monadic focus on attitudes
audience tied more closely to
PR activities

Awareness of ‘good Awareness among Survey research Select target Broadly available Awareness does not
works’ selected respon- audience. Establish for virtually all necessarily translate
dents of compa- unaided and aided verticals into improved at-
ny’s ‘good works’ awareness of com- titudes
pany’s involvement
in specific cause or

Attitudes among Ranking on brand Brand Tracker or Identify activity Broadly appropri- PR effort not only
those aware of tracker among survey to measure. Use ate for virtually all influence on re-
‘good works’ those aware/un- simple metric like verticals spondent rankings.
aware of company 5-point monadic. Research must
‘good works’ Compare aware ver- focus on attitudes
sus unaware respon- tied more closely to
dents to isolate value PR activities
of ‘good works’