Improving marketing accountability…and then ROI

Improving marketing accountability…and then ROI

A media agency point of view.

B&T Magazine
Posted by B&T Magazine

Return on investment (ROI) is a very simple formula designed by accountants to measure the bottom-line; the result of some action, relative to the effort put in.  If the output is greater than the input, then the ROI is positive and everyone is happy.

The trick with any formula is the variables you put into it.  If the action is something simple, like buying and selling shares, then the variables are simple – buy price and sell price.  Buy low, sell high and you get a positive ROI.  

But if the action is more intricate like marketing and media investment, determining both the correct output to measure against, and the inputs that impact on that output, can be much more difficult, and much more interesting.

There’s a lot of focus on ROI in our industry and many client agency relationships live and die by it.  However, the stages required to get to the bottom-line are so intricate that we prefer to use Marketing Accountability; a much clearer way to measure.  Whilst more complex than traditional ROI measurement, it provides a more realistic view of the impact of a campaign and should be applied across the industry to offer clients a better idea of how their campaigns are performing.

What is Marketing Accountability?

The first stage is to define and unpack the term Marketing Accountability –

Marketing challenges us to “identify, anticipate and satisfy customer requirements profitably”. The two key terms here, are –

1.       “identify” – what are our goals/objectives? We need to identify what Marketing is directly responsible for. This may not always be ‘the bottom line’.

2.       “profitably” – by definition, if we’ve identified the correct objectives, and we can deliver them more efficiently, then the flow on effect to ‘the bottom line’ must be positive.

“Accountability” puts the onus back on us, the practitioners, to be responsible and honourable, to deliver what we say we’re going to deliver and to do “the right thing”. The best way to be confident in what can be delivered is to have systems and processes that provide accurate forecasts under various scenarios.

What do we need to calculate Marketing Accountability?

The second step towards Marketing Accountability is to develop the systems and processes that can help to understand what causes the variability in our desired result.  To do this, we need three things.

1.       The right people. People that have a burning desire to use analytical and marketing strategy skills to truly understand what drives a result.

2.       The right tools & processes. Marketing Accountability is not a one-size fits-all. Multiple tools and processes are required to provide multiple solutions to the multiple objectives set by our clients.

3.       The right technology. Both the hardware and software technologies required to deliver true Marketing Accountability solutions are constantly evolving. Suppliers need to be in a continuous state of research and development.

How do we implement it?

We need to take pride in being able to say that we understand Marketing Accountability. We must spend significant amounts of time and effort with our clients ‘identifying’ the right objectives, and then setting up solutions that deliver ‘the right thing’. To achieve this, the following investments are critical:

1.       The right people. Data analysts, statisticians, marketing strategists

2.       An existing suite of tools that can be applied depending on the client’s requirements. Continued investment in new approaches to marketing accountability, constantly researching and developing new techniques.

3.       Powerful technologies to manage ‘big data’ with the ability to cut, filter and segment media data at many levels of detail to determine effectiveness.

Marketing Accountability is not easy and is an ongoing challenge in our industry. It takes a lot of effort, especially to get started.  But the effort rarely proves to be wasted. 

Simon Ryan, managing director, Carat Melbourne