What gets measured gets made Part 2

Brian Jacobs originally wrote a whitepaper for SMLXL on metrics and I am glad to say we are still discussing and working on this thorny topic.
You can read the first part here
and in conversations I have been having with some companies recently, metrics just keep coming up to bite you in the proverbial.
In an article in the Harvard Business Review June 2005, Kevin Clancy and Randy Stone get stuck into metrics.
They say:

… a recent CMO Council survey of senior marketing executives found that more than 80% were dissatisfied with their ability to measure marketing ROI, and fewer than 20% of the respondents said their companies employed meaningful metrics. Just as marketing measurement becomes more exact and accessible, marketing executives are becoming less and less happy. This doesn't make sense unless something else is going on.
Here's the real reason marketers are so gloomy: The effectivness of marketing is disappointing and getting worse.

The authors also outline the uphill struggle that companies face…
Marketing Management Analytics found that in the short term, consumer packaged goods advertising returns only 54 cents in every dollar invested.
A recent ACNielsen BASES and Ernst & Young study put the failure rate of new US consumer products at 95%.
A 2004 Deutsche Bank study of packaged goods brands found that just 18% of television advertising campaigns generated ROI in the short term.
Dominique Hanssen of UCLA Anderson school of Management, believes that doubling advertising expenditures for established products increases sales just 1% to 2%.
That's hardly cause for celebration is it. And a good friend of mine a veteran of the advertising industry believes 95% of the films he sees at Cannes every year are very poor. Having been to that particular event a few times myself I would agree.
Summing up the authors say

Marketers aren't unhappy because they can't measure marketing performance. They're unhappy because they now can - and they don't like what they see. They need to go beyond metrics and take a hard look at why the numbers are so bad: Their marketing strategies are often flawed and their spending is inefficient, with increasing precision, they're measuring the impact of ill-defined targetting, weak positioning, mediocre advertising, pedestrian products and services, give away promotions and poorly allocated spending.

A great deal of marketing is still living in a linear world, which was fine when we also lived in a linear world. But today that is no longer true.
we live in a world of PVR's. TiVo - we become self schedulers, we live in a world of wikipedia and citizen journalists, we live in a world of the mobile device, and we live in a world of peer-to-peer sharing. We live in a world where you can have richness and reach, and, we live in a world where community plays a far bigger role than marketers realise.
Soshana Zuboff said in her book the support economy

People want something that modern organisations can't give them: tangible support in leading the lives they choose. They want to be freed from the time consuming stress, rage, injustice, and personal defeat that accompany so many commercial exchanges.
Despite the centrality of consumption for an advanced economy and the fact that everyone is a consumer, people have come to accept that their consumption experiences will be largely adversarial.

And my other favourite quote is from Tim Ambler of the London Business School who says

The problem with marketing is that it is too often seen as the harvesting of cashflow for the quarterly numbers

I am not sure if the authors are defending current metrics and attempting to point the spotlight away from this issue? I do think there is a pressing need to address both metrics and marketing strategies.
In our book we have attempted to describe this changing world, and offer up constructive ways in which brands must learn to engage their audiences. So they can move beyond the harvesting of cashflows and think more strategically about how they might deploy their marketing budgets.

Bookmark to: