Investing in measuring marketing effectiveness can boost sales by 5%-20%, says author

Tags: DemandROMI Guy Powell investments
Written by Kathleen Tan
Tuesday, 25 August 2009 11:07

INVESTMENTS in measuring the effectiveness of companies’ marketing efforts can result in 5% to 20% more sales, says Guy Powell, founder of marketing returns-on-investment (ROI) training and consulting firm DemandROMI.

Powell, who authored the book Marketing Calculator which highlights the importance of measuring marketing effectiveness, said if finance departments could invest money in managing cash, marketers should also invest in managing their marketing expenditure.

“ If you have a TV or radio ad, and you don’t know if it’s working, take a piece of the budget being spent to determine if it’s working, adjust your marketing strategy to what’s working, and it could deliver 10% more revenue,” he said in an interview last month.Measurement of marketing effectiveness also allows marketers to defend their marketing budgets in the event of an economic downturn, when marketing spend is the first to be slashed.

Powell: Marketers should invest in managing their marketing expenditure. Photo by Kenny Yap“If the marketer could show the CEO that marketing was delivering RM4 for every ringgit invested during a downturn, the CEO would look at marketing a whole lot differently if he were considering cutting it.

Otherwise, it’s seen as an expense, as opposed to a critical investment with direct revenue,” he said.Marketers need to learn how to communicate with the rest of the company about their successes and how well marketing met corporate objectives, he added. “As a marketer, when I speak to the consumer, I would talk about what appeals to them.

Likewise with the C-suite — they want to see ROI and numbers on how effective marketing campaigns were. CEOs don’t want to hear about how beautiful an ad was, they want to know that the ad delivered 45,000 cases of Coca-Cola, for example,” he said.

Measuring marketing effectiveness is a long-term process and could potentially be complex with the amount of data tracking handled over the years. Powell suggested that marketers tread one step at a time.

“It’s one bite at a time. First, get the data in place and track simple things. Understand what your metrics are, then track the complex things, such as understanding how consumers and businesses make decisions,” he said.This article appeared on the Media & Marketing page, The Edge Financial Daily, August 25, 2009.