How Visionary Marketers Are Building Their Brands: Marketing ROI

February 22, 2010

Where are the leading-edge ideas in marketing? Over the last 12 months, we've gone on the road to find out. In addition to learning from our clients, we've been spending time with visionary marketers at leadership forums in places like London, Las Vegas, Moscow, Mumbai, Miami and even midtown Manhattan. From our wide-ranging travels, we've been able to discern several key trends that matter to marketers in every industry and every corner of the world. Each installment of this ongoing series will highlight one trend and its implications for you. We look forward to your commentary.

Marketing ROI: many definitions, little consensus

What we’re hearing:
There are no silver bullets when it comes to measuring marketing ROI. Leading-edge marketers are still seeking new (and not so new) techniques for justifying their brand-building investments.

Brand valuation: is it still relevant?
Brand valuation – the process of ascribing a dollar value to a brand - seems to be losing its luster as a technique for measuring performance. Marilyn Mersereau, SVP Marketing at Cisco, asked a group of about 100 brand marketers whether they were aware of the Interbrand/Business Week brand valuation study. Not surprisingly, nearly every hand in the room went up. When she asked whether anyone was actually using brand valuation in their organizations, the audience collectively shrugged. She went on to express her befuddlement with the methodology behind brand valuation, and no one in the audience was able to explain it either.

Going back to basics
Anne Greer from 3M offered the key criteria her organization uses to measure brand performance: the brand’s influence on driving selection, satisfaction and loyalty. These tried and true metrics can be measured with a high degree of accuracy and are easily understood by non-marketing executives.

Measuring the ROI of brand experience
Jon Picoult at Watermark Consulting believes that companies who deliver a positive customer experience actually have a higher stock market valuation than their less-consumer friendly peers. See his statistics here.

ROI isn’t always just a number
Jeffrey Hazlett, CMO at Eastman Kodak, cautioned against an overreliance on subjecting every brand-building activity to an ROI test. When his CFO asked about the ROI on his attendance at the People's Choice Awards, he countered with another definition of ROI: “What's our Risk Of being Ignored?" Because Hollywood is a major revenue source for Kodak, he argued, having a presence at this industry event might not be measurable today, but will help build Kodak’s reputation with this important customer segment longer term.

Implications for you
Rather than suggest a new process or methodology, we think marketers could improve their ability to measure brand performance with a few simple steps:

  1. Reorient all brand research towards two goals: measuring how well the brand is doing against an agreed-to strategy (brand health) and how well the brand performs against external factors (brand performance).

  2. Build bridges between marketing and finance: Each function has a language all its own, and finding a common way to communicate is critical. So why not make the first move and ask your CFO to explain free cash flow to you over lunch?

  3. Reserve a budget for experimentation: It’ll never be more than 5-10% of the total, but every marketing budget needs to include a little mad money. Don’t apologize if some of your experiments go wrong, but make sure to capture the learnings and make adjustments.

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