Only 9% of marketers say their ability to measure the financial returns across all forms of marketing is “a real source of leadership” or “as good as it needs to be,” according to the “2007 Marketing ROI and Measurements Study” from Lenskold Group and Marketing Profs. That proportion actually declined from 2006, when it was 16%.
When asked to describe their expectations regarding company growth in the upcoming year compared with their competitors, 60% of the companies using ROI metrics said they expect somewhat or much greater growth than their competitors, compared with 48% of those not using financial metrics.
Â The study analyzed 759 survey responses from marketing practitioners worldwide and focused on the difference between companies that use profitability metrics and those that use traditional marketing metrics without financial metrics.
Among those measuring ROI, 30% said their CEOs and CFOs are “very confident” that marketing investments are profitable, while just 6% of those not using financial metrics said so. An additional 51% of each group say CEOs and CFOs are “somewhat confident,” bringing the respective totals between the two groups to 81% and 57%.
The majority (55%) of marketers say they could generate 10% or higher profit improvements if better measurements were in place to capture marketing’s contribution to incremental sales. However, the marketing budget for measurements and analysis is below the necessary level according to 76% of marketer.
The success of companies using ROI and other profitability metrics does not come from the use of those metrics alone. Their strength ratings for the following areas (based on the top two ratings on a five-point scale, ranging from very strong to very weak) are significantly higher than those of companies not financial metrics:
In short, companies that use ROI metrics tend to have greater discipline – as a matter of company culture – in managing profitability.