You gotta be accountable

Do you want the bad news, or the worse news?

Do you want the bad news, or the worse news?

Strategy‘s latest survey of marketers (see p. 44) shows that ROI is a secondary issue: one-quarter see it as the industry’s biggest issue after the economy, and one in eight say it’s the biggest job stressor after work/family balance. Last year, one-third mentioned ROI and accountability as the biggest issues facing the industry, and ROI kept one in five awake at night. That’s bad news, because it’s a big problem, yet not enough marketers are worried and it seems to be fading in importance.

A 2007 poll sponsored by Financial Executives International showed that 93% of CFOs are dissatisfied with their company’s ability to measure marketing ROI. ‘Marketing needs to stop fostering ‘rock star’ behaviour and focus on

rock-steady results,’ says the report. ‘Marketing accountability falls short of the expectations of the C-suite, and most financial executives can’t get visibility into how well marketing is driving sales.’

Yet in 2007, one-third of CMOs said they were satisfied with their ability to measure marketing ROI. That’s a major disconnect with the CFOs. And remember, the guy with the gold makes the rules.

Wal-Mart and BMW have figured out how to put a long-term value on their customers, and are able to direct their marketing investment more effectively. PepsiCo also assessed the value of customers. Since Diet Pepsi drives its brand equity, Diet is where the marketing dollars are going.

But 55% of senior marketing executives lack a quantitative understanding of brand value, according to a recent survey by the Association of National Advertisers (ANA) and Interbrand. Furthermore, because the brand’s impact on corporate value is not clearly quantified, it’s not being incorporated in decision-making: 64% of senior marketing executives say that brands do not influence decisions at their organizations.

A survey published last May by recruiters Spencer Stuart shows the number one attribute of a successful CMO is an ability to influence the bottom line: ‘It wasn’t so long ago that many marketers were touting ad recall or brand awareness as their major goals. It reflects the pressure that marketers are under today to be more accountable for business results and more closely linked with the full business.’

Is it any wonder that the average tenure of the CMO has been slipping – less than two years at last count – or that marketers have lost influence with CEOs?

The secret of long-lasting CMOs is accountability. The folks who volunteer to be measured keep their jobs.

And it’s better to volunteer now than wait for the CFO to come looking for you. If you wait, you’re in danger of becoming the whipping boy. By grasping the nettle now, you can ensure that the right metrics are delivered the right way to the C-suite, that long-term and leading indicators are included, that the scorecard includes a balance of ‘soft’ perceptual metrics and hard dollars and that you’re held accountable only in your sphere of influence (and for effectiveness, not just efficiency).

You’ll need to know something about accounting, and you’ll likely have a fight on your hands: traditional accounting doesn’t consider brand value, and you need to ensure that it’s done right. Realistic marketing metrics will likely not pass the GAAP standards accountants use, but that’s true of many management measures. Deceptively ‘obvious’ numbers like revenue and profit need to be handled right. And ROI isn’t always the best metric; but don’t get sucked into shareholder return.

Your biggest problem will be that most CFOs don’t really ‘get’ marketing and how it works. According to one seasoned chartered accountant who’s been CFO at major corporations, most CFOs think the product ‘pulls’ (i.e., sells itself), and marketing is simply support for the sales guys (who ‘push’). James Gregory, CEO of consultancy CoreBrand, says, ‘The CFO is viewed as the person who wants to cut the marketing budget, and marketing often fails to explain the return on investment for communications. The result is a wall between the two departments.’

Things are changing. We’ve presented PR and event metrics to PR classes at Seneca and Ryerson, and the younger generation is astonished that their elders weren’t held accountable. This attitude will work in their favour as they hit the job market.

Reviewing what I just wrote, maybe our strategy survey is actually good news… after all, your career is at stake, and some of you are aware of your problem. The alarm is ringing. Any volunteers?

Gray Hammond directs the metrics practice at Brandwright, an alliance of experts focused on marketing profitably. He’s worked in advertising, consulting, research and theatre. Compulsively analytical yet sociable, he loves finding and sharing good ideas (as well as bad jokes). You can reach him at Gray.Hammond@Brandwright.biz.