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Is There A Connection Between Spending On Measurement Services And Boosting Sales?

Marketers that invest over 10 percent on measurement are 3X more likely to beat their sales targets by 25 percent or more, says Neustar's Julie Fleischer.

An increasing part of CMOs’ job is managing a balancing act: find ways to cut the marketing budget, but keep finding new metrics to prove the strategy is working to drive sales online and offline.

A survey of 800 CMOs by marketing analytics provider Neustar suggests that that the balancing act can be done, albeit within narrow ranges.

The survey suggests that marketers that invest over 10 percent on measurement are 3X more likely to beat their sales targets by 25 percent or more, says Julie Fleischer, VP, Marketing Solutions at Neustar.

Getting The Right Marketing Mix

Granted, a data platform arguing for spending on measurements to drive sales and ROI might seem a bit self-serving. But the numbers are worth considering — and CMOs from brands like Esurance and Subway are convinced.

“The unfortunate and inaccurate title of ‘non-working media’ in many marketing budgets is leading to continuing reductions in these expenditures,” said Tony Pace, former Subway CMO and Marketing Accountability Standards Board Chair.

“That is exactly the wrong outcome as measurement and data expenditures actually make the entire marketing investment more effective and efficient,” Pace added. “Marketers need to start thinking about the data they collect on their marketing efforts as a line item on the balance sheet and use it to fuel further marketing growth. It’s oxymoronic to think you can cut non-working dollars and reallocate it to working-dollars to achieve higher marketing performance.”

“Sophisticated marketing mix and attribution models are increasingly important because they connect the dots across data sources and go deeper into the granular data to find insights about how and where to improve business outcomes,” added Alan Gelman, former Esurance CMO and Credible, CMO. “These tools are becoming essential because the right answer to the growth investment question now involves aggregating information from many parts of the organization, many channels and systems.”

Among the topline findings in the report, which is being released at Neustar Connect: The Future of Marketing Forum on Tuesday morning, include:

  • CMOs saw 5 percent higher levels of performance from their marketing investment.
  • High performing organizations saw 7.5 percent better business growth outcomes versus average performers.
  • CMOs are 50 percent more effective at determining the impact of offline and online media, and emerging media types, device types and non-media factors (e.g. weather, traffic, economy) on marketing performance and growth than their CMO counterparts.
  • 52 percent of high-performing marketer’s adopted people-based targeting to incorporate more data about media, touchpoints and deliver higher levels of transparency, attribution and connection to financial outcomes.
  • CMOs ranked social media as the most effective media investment, rating it as the top driver for brand awareness surpassing digital and traditional advertising and search.

Metrics Glass Is Half-Full

Asked about the 50 percent of CMOs who sat they’re more effective at understanding the interaction of online and offline, as well as the 52 percent of high-performers who are deeply involved in matching disparate forms of data, Julie Fleischer, VP of Marketing Solutions, Neustar, offered a nuanced interpretation of the stats.

“I see this as a glass half-full story,” Fleischer said. “Most marketing organizations have made significant strides toward marketing accountability—that’s the good news. However, most of the work is done by media channel and in isolation.

“Even those who are more sophisticated about multi-channel attribution fail to see the bigger picture of how marketing drives enterprise value,” Fleischer added. “Much work remains to be done to achieve a better understanding of how specific investments across the spectrum in marketing initiatives, including investments in staff and technology, contribute to brand equity, lower the cost of customer acquisition, increase customer lifetime value or enhance perceptions of innovation and growth momentum. Incremental improvement is better than no improvement, but will it be good enough to withstand competition from those who seek exponential improvement?”

Overall, the increases Neustar found represent function of a marketer’s commitment to data-driven, resource allocation and optimization, Fleischer said. However, high performing marketing organizations — those exceeding goals by 25 percent or more — invest more across the board in every aspect of marketing accountability, including marketing mix modeling and increased staff.

“This is the first year of this particular research, so we have no historical data, but our anecdotal insights based on our conversations with over 50 CMOs and thought leaders in the subject tell us that consistent investments in the right direction lead to immediate incremental improvements,”Fleischer said. “The best performing marketers combine investments in people, process and technology to gain the most improvement and treat the initiative as part of a larger change management process.”