by: Idris Mootee
On the flight to Asia I was reading a latest study conducted by Aegis Group's Marketing Management Analytics and Financial Executive magazine. 6 in 10 financial executives believe their companies' marketing departments have an inadequate understanding of financial controls, and 7 in 10 said their companies don't use marketing inputs and forecasts in financial guidance to Wall Street or other public disclosures.
The answera to the questionshere are two fold. First, people generally use last year’s budget as a base and use a percentage adjustment. Or some use a percentage of total revenue. They seldom re-examine overall media effectiveness or use ROI for their marketing spend. The research used an online survey of 130 financial executives across a range of industries. More than 80% of respondents were CFOs. On the whole, the data showed that CFOs appear comfortable with how their companies tally up marketing spending: 80% of respondents said their firms have an adequate audit trail for tracking what was spent. And more than four of five firms in the survey had some sort of marketing ROI metrics in place.
The problem is that CFOs don't seem agree the CMOs' claims for ROI in marketing spend. The problem is there are serious challenge to measure marketing effectiveness especially with many old media vehicles losing their effectiveness and new ones unproven. Only one in 10 marketer respondents said they could forecast the effect of a 10% cut in spending. Just 14% of marketing executives said senior management in their companies had confidence in their firms' marketing forecasts. Despite the push for more measurable results, it is hardly the case. In a recessionary climate, advertising is generally less effective and these traditional “shouting loud” and ‘buy me” ads are not working. What influence consumer? Recommendations from friends are what shape consumers’ behavior. That’s why social media will thrive in a economic downturn.
And in times like this, it is the true test of a great CMO who pushes for innovation on all marketing front. It forces people to think hard about “customer value” and look for ways to refine existing product concepts and produce something better or cheaper. This downturn, expect to see smart men and women begin to do battle with their former employers in the marketplace. We will see a generation of frustrated executives, armed with M.B.A.'s and readily transferable skills, take innovative business ideas to the market. By the time the recession is over, thousands of new businesses and new jobs will have been created and the economy will emerge stronger than before. That is because recessions -- despite the pain -- are times of creativity, innovation and entrepreneurship. If you believe in what you can do and dream big, this is the time.
Original Post: http://mootee.typepad.com/innovation_playground/2008/07/what-do-you-do-when-old-media-vehicles-are-losing-effectiveness-and-new-media-vehicles-are-not-proven-and-generally-lack-meas.html