What’s your brand worth? If you’re Apple or Google (the world’s most valuable brands), it’s worth over $US100 billion – a serious amount of money by any standards.
Of course, determining the precise dollar value of your brand or any other intangible asset, can be difficult. But most businesses would agree that their brand is one of their most valuable assets – if not the most valuable.
Most also understand that building equity in their brand is not something that happens overnight, or by accident - it takes time, money and resources. Unfortunately, when it comes to brand marketing, that’s often where the consensus ends.
The debate over brand valuation methodologies illustrates the problem. It’s hard to measure how much your customers’ emotional attachment to your brand is worth, and exactly how much it influences purchasing decisions. That’s why CFO’s sometimes dismiss it as more of an art than a science.
It’s the same when it comes to measuring the effectiveness of your marketing spend - and targeting that spend to get the best bang for your marketing buck.
Measuring the return on marketing can be quite different from measuring the return on other investments. There’s often not a simple linear relationship as there is between, say, investing in new plant and increased capacity. Outcomes are often less tangible and open to interpretation.
As a result, when key people in the organisation talk about marketing, they’re often not speaking the same language. The result is a fragmented approach that at best fails to maximise brand value, and at worst, can destroy it.
Here’s how different perspectives on value creation can get in the way of an integrated approach:
The Chief Marketing Officer
The CMO’s focus is typically on creativity, innovation and increasing utility for customers. They are comfortable with ambiguity and with
the idea that marketing often delivers less intangible outcomes. They are often frustrated by demands to prove return on investment and justify marketing spend with hard data, and annoyed that many in the organisation just don’t ‘get it’.
The Chief Financial Officer
CFO’s are typically focused on numbers, hard data and tangible results. They are always looking to provide value by measuring and improving return on investment. They’re uncomfortable with ambiguity and ‘soft’ measures, and with the idea that marketing is part of a complex inter- relationship of factors that drive customer behavior. They may not recognise the increasing complexity of the marketing landscape with the emergence of new digital channels. They may not be fully convinced about the contribution of marketing to financial performance and find it
difficult to understand why marketing can’t simply ‘show me the money.'
The Chief Information Officer
Like the CMO, they provide value through innovation. But they are also heavily focused on managing risk and protecting key digital assets such as customer data. They may see marketing as invading their turf, and may be reluctant to give away control to marketing ‘cowboys’ when it comes to ownership of digital channels and access to data.
The Chief Executive Officer
The CEO is focused on bottom line performance / profit and loss. However, they may not always be convinced that the marketing function shares their focus on bottom line business objectives. In a 2012 survey by the Fournaise Marketing Group over 80% of CEO’s surveyed said they felt marketers were too disconnected from the financial realities of their business.
Boards are focused on governance and high level business strategy, but can also get bogged down by compliance due to a tidal wave of new regulations taking precedence. They often do not have a high representation of marketing experience and perhaps as a consequence,
may not always apply the same rigour to marketing issues and customers as a source of shareholder value as they do to financial and other issues. While Board reports always address key financial metrics, they rarely address key marketing metrics.
Allies, not enemies
Each of these stakeholders are focused on achieving the objectives of their function and for the business to create value, it is essential they should. But lack of understanding of each other’s perspectives on creating value can lead to a fragmented, short-term approach. Rather than battling each other for influence and resources, there are significant opportunities to add value to the organisation’s marketing investment and to each other by working with, rather than against, each other. For example:
▶ CMO’s have a significant opportunity to increase their influence and leverage by understanding the needs of CFOs and CEOs for measurement and, learning to speak their language.
▶ CIO’s have an opportunity to work with Marketing to drive digital innovation and create new opportunities for technology to deliver value.
▶ CFO’s, CEO’s and Boards have an opportunity to drive greater bottom line performance, through better understanding and more effective allocation of marketing investment.
A multi-dimensional approach
The rise of digital marketing, where click-throughs and conversions can be tracked and measured, is one way for CMO’s to provide more tangible evidence of value creation and return on marketing campaigns. However, that doesn’t tell the full story. Building a brand has many different dimensions, and not all of them can be easily measured directly.
But rather than putting it in the too-hard basket, CMO’s should look to work with other stakeholders to jointly build a marketing ‘dashboard’ that is linked to overall business objectives. This approach will help them satisfy the needs of the CFO and others and importantly, help to build a better understanding of the contribution of marketing to the business.
An effective dashboard should include both hard and ‘soft’ measures, such as brand recall and preference, advocacy measures (such as
Net Promoter Score), and tracking of key brand attributes against competitors. It should also include shared measures such as customer satisfaction and market share.
This approach will produce a number of benefits. For example, it supports greater integration between functions, demonstrates marketing’s commitment to achieving commercial objectives, and creates a shared language that allows meaningful discussion on key questions such as:
▶ “What would happen if we spent more or less in a particular channel?” or
▶ “are we focusing our marketing spend on activities that drive our key value creation metrics?”
Marketing, of course, is not the only battleground between differing functional perspectives. However, it does present a unique opportunity to create a more integrated approach that moves away from unproductive silo structures, and creates a more effective model for the rest of the organisation.
How BDO can help
BDO has significant experience in working with organisations to help them develop effective ways to measure their marketing investment and value created by marketing. Our Brand Marketing Effectiveness Audit is a structured process which helps create an integrated approach, agreed and relevant marketing metrics and a more strategic approach to optimising your marketing investment, while driving greater collaboration across different functions.
This article was authored by our Brand Marketing effectiveness specialist, Tim Gacsal, Associate at BDO Auckland