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An Executive Summary of the 2006 Marketing ROI and Measurements Trend Study (Marketing Profs)

Lenskold Article Series

by Jim Lenskold

An Executive Summary of the 2006 Marketing ROI and Measurements Trend Study (Marketing Profs)

The buzz about marketing profitability measurement in previous years is certainly turning to action in 2006. At this point, companies not pursuing some form of financial measurements are in the minority. There are still 4 in 10 companies that consider themselves “a long way from where they should be” in terms of their ability to measure financial returns and another 4 in 10 that are “somewhat short of where they could be,” so the industry is in the early stages of the marketing profitability measurement journey.

 

Our objective of this study was to take the pulse of the industry. The original study in 2005 showed signs of life and now we see a strengthening heartbeat. The progress overall is inspiring and certainly demonstrates an evolution within the marketing practice.

 

The key findings can be summarized as:

 

  1. Capabilities to measure marketing’s impact on financial returns increases significantly since 2005.
    Marketers that describe their capability to measure financial returns of marketing as “a real source of leadership” or “as good as they need to be” increased from combined totals of 8% in 2005 to just over 16% in 2006. This was matched with a significant drop in the percentage of marketers describing their capability as “a long way from what it should be” (a decrease from 53% to 42%).

  2. Providing budget for marketing measurement and analytics showed slight improvement but continues to be a problem.
    Only 17% of marketers indicate their budget for marketing measurements and analytics is just right. Two out of three (64%) indicate this is slightly or far below the right level. Just 8% believe it is slightly or far above the right level. While it is discouraging to see a gap in the right amount of funding for an investment that can unlock significant profit potential, the glimmer of hope is the improvement over 2005, where 78% had indicated being under-funded.

  3. CEOs and CFOs have increased confidence that marketing investments are profitable, according to marketers surveyed.
    The percentage of marketers indicating their CEOs and CFOs are somewhat or very confident that marketing investments are profitable increased from 62% to 71% over the past year. Of the companies reporting they measure marketing profitability, 31% report that their CEO and CFO are very confident compared to 16% of those that do not measure marketing profitability.

  4. The ability to link brand measures to incremental sales and profits has increased over the past year.
    Marketers reporting their ability to make this brand measure link as “a real source of leadership” or “as good as it needs to be” increased from a combined total of 6% in 2005 to 15% in 2006. Those who considered their position as “a long way from where it should be” dropped from over two-thirds (65%) in 2005 to 42% in 2006.

  5. Marketing organizations that calculate ROI, net present value or other profitability metrics to assess marketing effectiveness report high CEO and CFO confidence and a high perception of accountability.
    There were 26% of the marketers surveyed that indicated their organizations calculate ROI or similar financial metrics for at least some portion of their marketing campaigns. Of this segment, 31% reported that their CEO and CFO were very confident that their marketing investments were profitable while only 16% of the marketers that do not calculate ROI or similar financial metrics indicated a very high level of confidence. In organizations calculating ROI, 28% of non-marketing executives were reported to view marketing as highly accountable, while this was just 15% in organizations not calculating ROI. One reason this group may be better positioned to calculate the ROI of marketing initiatives is that more reported having the right budget level compared to organizations that do not calculate ROI (26% vs. 15%)

  6. The expected profit potential from improved marketing measurement experienced a sharp jump in the “greater than 25%” category.
    When those measuring marketing profitability were asked “If measurements were in place to capture marketing’s contribution to sales, how much profit improvement would you expect?,” the percentage reporting “very high (profit improvements greater than 25%)” increased from 12% in 2005 to 28% in 2006. Another 46% expected increases of 10% to 25% profit improvement. Only 8% believed there was no opportunity for profit improvement.

  7. Those marketing organizations that launch new marketing campaigns using market tests over intuition are even stronger in confidence from the CEO and CFO and are reported to have greater accountability.
    One segment from our analysis that stood out was the set of respondents defined as those marketers that answered the question “Which best describes your organization’s typical approach to launching new marketing campaigns?” with the response “campaigns are first market tested to a small segment of the target audience for a quantitative assessment.” Just 14% selected this response and they showed incredibly high performance on our assessment questions compared to the balance of the participants that selected “campaigns are rushed to market based on the limited intuition of a few people” (38%), “campaigns are assessed against a large team’s intuitive knowledge” (30%) or “campaign creative / concepts are tested in qualitative research” (13%).Even more so than the segment of respondents calculating ROI, this segment of “market-testers” showed stronger results in all different areas including greater effectiveness at measuring financial returns, higher incidence of calculation of financial metrics, higher use of marketing methodologies, greater CEO and CFO confidence and better perceptions of being highly accountable. They were also more likely to indicate their marketing measurement and analytics budget was “just right.” Running market tests as part of new campaign launches is not what drives increased adoption of financial measures or even greater credibility with executives. It is however, a good indicator of a marketing culture that values disciplined measurements, ROI analysis, and financial accountability.

In our opinion, the positive momentum identified in this study is likely to continue. Why? Because corporations need sources of profitable growth and improving measurements helps unlock additional profit potential.

 

Improvements in data access, analytics, measurements, and financial assessments must continue to be important to move past the noted barriers to measuring marketing profitability. As companies work to make marketing profitability measurement a guide to their growth, they can benefit from the discipline of:

1. Developing better projections of marketing’s financial contribution
2. Creating tighter integration across marketing programs and even with the sales organization
3. Taking a greater role in maximizing customer value
4. Seeking to measure and understand marketing’s impact at a deeper level

Companies that share their marketing ROI success stories at industry events or in articles almost always state that they still have further to go. It’s not because their work is incomplete but because the success they have already achieved makes it clear that additional progress will lead to additional benefits. Look closely at these trends in financial measurements for marketing and, regardless of where you are at on your marketing ROI journey, consider what progress you can make in this and future years.

Access the full report: 2006 Marketing ROI & Measurement Study.

© Lenskold Group Inc. & MarketingProfs, LLC.

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Archived Research

2011 Marketing ROI & Measurements Study

Lenskold Article Series

by Jim Lenskold

2011 Marketing ROI & Measurements Study

In this research archive, we focused on social media measurements as part of broader marketing ROI measurements.

 

  • How do marketers rate in their capabilities to measure social media outcomes?
  • What is driving the high and low prioritization of social media measurements?
  • How has the use of marketing ROI to assess general marketing trended over the past 5 years?
  • How are marketing ROI metric users showing better capabilities for social media measurements?

Here is a graph of a key finding:

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Archived Research

2012 B2B Lead Generation Study – Automation Supplement

Lenskold Article Series

by Jim Lenskold

2012 B2B Lead Generation Study – Automation Supplement

This research archive is a supplement to the 2012 research study that digs deeper into the role of marketing automation in supporting marketing ROI measurements.

 

  • How do companies with marketing automation integrated with CRM systems compare to those with no marketing automation and those with automation that is not integrated in terms of growth, revenue and other key outcomes?
  • What practices and capabilities are adopted to support marketing automation?
  • What key metrics are used with the support of marketing automation to manage marketing effectiveness?

Research Highlight:

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Archived Research

2012 B2B Lead Generation Marketing ROI Study

Lenskold Article Series

by Jim Lenskold

2012 B2B Lead Generation Marketing ROI Study

This research archive examines how marketing ROI and measurement practices align to revenue contribution and lead generation key metrics.

 

  • What practices and key competencies differentiate the best practice group of Highly Effective & Efficient marketers?
 
  • What capabilities are most critical to help marketing automation generate an increase in key lead generation outcomes?
 
  • What can marketers do to influence Total Marketing Revenue Contribution as an outcome?

The full report includes detailed findings and recommendations.  Highlights from the findings include:

 

  • Marketing automation users that also use ROI metrics to assess effectiveness are much more likely to realize an increase in Total Marketing Revenue Contribution from their automation.
 
  • The best practice group of “highly effective and efficient” marketers are more likely to attain a strategic level of marketing support from their automation, with CMO support and Sales team integration.
 
  • Highly effective and efficient organizations have strengths in key capabilities that support high performance marketing.
 
  • Lead generation marketing effectiveness increases with marketing automation.

Here is a sample of the results in this report:

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Archived Research

2013 Lead Generation Marketing Effectiveness Study

Lenskold Article Series

by Jim Lenskold

2013 Lead Generation Marketing Effectiveness Study

A Lenskold Group Report Sponsored by:

Research Report

The focus of the 2013 Lead Generation Marketing Effectiveness Study was on content marketing and how processes, practices, marketing automation and measurements influence marketing performance. Insights are derived through a comparison of marketers with “highly effective and efficient” marketing organizations (the top 13%) to all other marketers. The research was conducted with 3233 B2B lead generation marketers who generate leads for a sales organization or external channel partner, recruited with the support of Demand Gen Report and Pedowitz Group.

 

The full report includes detailed findings and recommendations.  Highlights from the findings include:

 

  • Top tier marketers show strengths in content marketing practices and take performance further by leveraging high-impact capabilities that marketing automation enables.
 
  • Lead scoring ranks as a primary driver of revenue from content marketing for top tier marketers and those with integrated marketing automation.
 
  • Companies outgrowing competitors have a slight advantage in measurements of incremental revenue and ROI from their content marketing.
    Content marketing measurements are dominated by basic tracking and simple attribution.
 
  • Top tier companies and marketers with integrated marketing automation are more likely to measure all forms of engagement outcomes from content marketing, including sales conversion.

The details on how lead generation marketers are making their content marketing more effective and efficient are both surprising and insightful. Download the complete 2013 Lead Generation Marketing Effectiveness Study now for all the details.

Lenskold Group Overview

For an overview of how Lenskold Group can help your organization adopt the best practices proven to drive highly effective and efficient marketing check our Lead Generation Measurement services. Or contact us and we would be happy to discuss any of your questions on lead generation measurements and ROI.

Charts

Below are several charts and graphs from this study.

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Archived Research

2008 Lead Generation ROI Study

Lenskold Article Series

by Jim Lenskold

2008 Lead Generation ROI Study

This was the first research that branched off to dig into B2B Lead Generation marketing (the general marketing research continued in during this year as well). 


  • Benchmark study for B2B Lead Generation Marketing
  •  

  • What are the most important lead generation objectives to drive high performance?
  •  

  • How is marketing balancing lead quantity vs. lead quality metrics?
  •  

  • How does alignment with the sales organization drive highly effective lead generation marketing performance?

Here is a featured highlight from this study:

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Archived Research

2010 B2B Lead Generation Marketing ROI Study

Lenskold Article Series

by Jim Lenskold

2010 B2B Lead Generation Marketing ROI Study

This research archive offers good insights into using marketing ROI and measurements to guide lead quality and lead nurturing marketing.

 

  • Which types of lead generation marketing programs are most effective at driving high quality leads?
 
  • What are the strengths and shortfalls for current measurement practices for lead generation marketing?
 
  • Where are the best opportunities to improve lead generation ROI and support incremental budget? (Hint: good info for your lead nurturing programs)
Key issues of measuring and improving lead generation marketing effectiveness were explored in the 2010 Lead Generation Marketing ROI Study. The results were drawn from 231 respondents who indicated that they were marketing practitioners in B2B companies (half or more of their revenues generated from business customers), whose marketing group generates leads for a sales organization or channel partners. The full 31 page report includes detailed findings, recommendations and incorporates comparative adoption from 2008 to 2009. This 2010 research study with B2B lead generation marketers explored practices and priorities for using measurements and return on investment (ROI) to improve marketing effectiveness. Several key findings emerged from this research:  
  • Marketers with sufficient insight to estimate the profit potential from an increase in lead generation marketing indicate that there is untapped profit potential. Of those B2B lead generation marketers providing an estimate of the incremental profits from a 10% increase in their budget, 6 in 10 expect a profit increase of greater than 10%. The challenge is that almost half (44%) of the B2B lead generation marketers surveyed lack the insight to estimate the profit potential, responding “don’t know” when asked how much could profits be increased with the additional 10% increase in marketing budget.
  • Highest profit potential lies with nurturing stalled leads, reported by 58% of lead generation marketers. Close to half indicated that all other areas examined also have untapped profit potential. This is very consistent with the results of 2009 where nurturing also topped the list.
  • B2B lead generation marketers using ROI metrics were more likely to anticipate much greater growth than their competitors (22% vs. 10% of all others).
  • Organizations that use marketing ROI metrics reported higher use of lead quality measures based on customer revenue generated from the initial sale (51% vs. 21% of organizations that use only non-financial metrics) and lead quality based on sales conversion rates (63% vs. 34%).
View this webinar for detailed findings, conclusions and recommendations from the 2010 B2B Lead Generation Marketing ROI Study. Here is one of the many findings from this research:

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rio resources White Papers

CMO Guide to Marketing ROI

Lenskold Article Series

by Jim Lenskold

CMO Guide to Marketing ROI

Marketing ROI and measurement analysis may be daunting subjects for many. Why, where, when and how marketing is driving financial contribution are valid questions. But, managing marketing profitability is top of mind for every Chief Marketing Officer. Most CMOs understand that a reliable and practical ROI process provides unique opportunity to catapult profit potential, improve efficiencies and effectiveness, and build credibility for the entire marketing team. And clearly the greatest path to increased effectiveness and delivering the greatest return is evident with marketing ROI measurements, financial analysis, and decision support.


The CMO Guide to Marketing ROI is a compelling 16-page editorial that breaks down the critical steps needed to establish a marketing ROI framework. It simplifies complex business issues and offers a practical, pro-active approach to create the culture and capabilities for managing and improving marketing ROI.


The white paper features compelling content, a case study with Kodak, and a practical quick-tip checklist. It also summarizes the marketing ROI framework with an easy to follow flow chart. The paper identifies the big wins with ROI analysis, measurements and applying insights to strategic decisions.

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rio resources White Papers

CMO Guide to High-Performance Integrated Marketing

Lenskold Article Series

by Jim Lenskold

CMO Guide to High-Performance Integrated Marketing

As integration across the complex mix of multi-channel marketing improves, the increase in marketing effectiveness and efficiency greatly improve ROI. After all, the collective impact of those multiply contacts is needed to drive customer purchase decisions. However, the significant benefits from tightly integrated marketing require addressing the operational and culture challenges inherent in organizations that plan and execute marketing in silos.

 

The CMO Guide to High Performance Integrated Marketing is the third white paper in our Marketing Profitability Management series. You’ll learn how integration advances through three levels, starting with basic “cohesive” marketing, progressing to a “cumulative” level of integration and ultimately achieving “customer relationship integration.” This paper outlines how to improve integration through targeting, messaging, marketing mix, and engagement at each of these three levels. The 5-step process helps to address strategic development, operational issues such as aggregating data, and processes that help overcome the cultural barriers.

 

As with the other white papers in this series, we outline the priorities for CMOs to achieve success and include a “quick tips” checklist for easy reference.

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rio resources Article Library

The Brand-Value Connection

Lenskold Article Series

by Jim Lenskold

The Brand-Value Connection

The image that your target audience has of your brand will have a significant influence over your sales and marketing effectiveness. Investments specifically to establish brand image can have a variety of objectives including brand awareness, emotional bonding, differentiation, and preference. In some industries brand marketing can serve as a lead driver of sales while in others its role is primarily to support salesforce initiatives.

 

As with all marketing investments, it is essential to understand and plan where the financial return from increased sales is expected for each investment. Are there certain target segments or regions that should experience increased sales? What is the timing for the impact in terms of short-term and long-term sales? Long-term brand equity is critical but it is dangerous to avoid an ROI analysis of brand investments based on the assumption that some small impact is occurring over a long period of time. The goal is to establish a framework where insight into the value of branding investments can guide the type and level of brand marketing.

 

Making the connection between branding initiatives and the incremental profits generated requires effective identification of the underlying drivers where the brand can influence customer behavior. The correlation between these key brand attributes and the value created is done through a combination of market research and modeling.

 

Modeling is a significant initiative that requires quality historical data. Companies with existing data should determine how modeling and marketing analytics can better guide brand investment decisions. Companies that lack historical data or the support to begin a modeling initiative at this time may want to at least lay the groundwork by preparing for future analysis. Put the processes and systems in place to capture detailed information on branding expenses, customer behavior objectives, target audience reach, contact timing, media channels, media mix and integration, pre and post marketing sales data, and attribute measures (if collected). You can gain additional benefits by also setting aside a control group that receives no contact, if that is feasible.

 

Even where detailed measurements and analysis are not possible, there is significant benefit that is gained by projecting the impact of branding activities on customer behavior completely through the sales cycle. This can eliminates gaps such as awareness advertising that lacks a subsequent call to action contact or brand differentiating marketing that reaches the wrong target audience or brand investments that far exceed the potential returns that might be generated. The marketing ROI process provides financial intelligence that can and should be used to shape strategic and tactical marketing decisions.