Measuring marketing productivity


An important task of marketing research is to assess the efficiency and effectiveness of marketing activities Marketers increasingly are being held accountable for their investment and must be able to justify marketing expenditures to senior management. In a recent Accenture survey, 70 percent of marketing executives stated that they did not have a handle on the return on their marketing investments. Another study revealed that 63 percent of senior management said they were dissatisfied with their marketing performance measurement system and wanted marketing to supply prior and posterior estimates of the impact of marketing programs. With marketing costs already high and continuing to rise, senior executives are tired of seeing what they consider to be wasteful marketing—failed new product and lavish ad campaigns, extensive sales calls, and expensive promotions that are unable to move the sales needle.

Marketing research can help address this increased need for accountability. Two complementary approaches to measure marketing productivity are:

1. Marketing metrics to assess marketing effects and
2. Marketing-mix modeling to estimate causal relationships and how marketing activity affects outcomes.

Some developments in the financial tools that can be used to measure key marketing assets are described in “Marketing Insight: Seeing the Big Picture and Getting to the Bottom Line in Marketing.�

Marketing Metrics

Marketers employ a wide variety of measures to assess marketing effects. Marketing metrics is the set of measures that helps firms to quantify, compare, and interpret their marketing performance. Marketing metrics can be used by brand managers to design marketing programs and by senior management to decide on financial allocations. When marketers can estimate the dollar contribution of marketing activities, they are better able to justify the value of marketing investments to senior managements.

Many marketing metrics relate to customer-level concerns such as their attitudes and behavior; others relate to brand-level concerns such as market share, relative price premium, or profitability. Companies can also monitor an extensive set of metrics internal to the company. One important set of measures relates to a firm’s innovativeness. For example, 3M tracks the proportion of sales resulting from its recent innovations. Another key set relates to employees. is a firm renowned for constantly monitoring its marketing activities. Their CEO wants to know average customer contacts per order, average time per contact, the breakdown of e-mail versus telephone contacts, and the total cost to the company of each. The man in charge of Amazon’s customer service and its warehouse and distribution operations looks at about 300 charts a week for his division.

Firms are also employing organizational processes and systems to make sure that the value of all of these different metrics is maximized by the firm. A summary set of relevant internal and external measures can be assembled in a marketing dashboard for synthesis and interpretation. Some companies are also appointing marketing controllers to review budget items and expenses. Increasingly, these controllers are using business intelligence software to create digital versions of marketing dashboards that aggregate data from disparate internal and external sources.


Milwaukee Electric tool is a manufacturer of items ranging from screwdrivers to gaskets and drill bits to heavy industrial machinery. For years, the company has deployed a data platform that let it gather information on its distribution, financials, manufacturing, sales, marketing, payables, receivables, and manufacturing operation. The company needed a way to bring all the data together and match trends. After the company changed to a new software package, Essbase XTD Analytic Server and Customer Focus Suite, its marketing managers could understand the mix of products a specific customer group was ordering and develop programs to promote more sales.