A recent McKinsey study noted that our traditional marketing models are being challenged and CMOs can foresee a day when they will no longer work. According to the study, the traditional marketing model has crumbled under the weight of a proliferation of media and distribution channels, declining trust in advertising, shortened attention spans, and digital technologies that give users more control over their media time. These trends have simultaneously fragmented both the audiences and the channels needed to reach them. It takes 20 different media programs today to reach the same audience an advertiser could reach with a single commercial shown on the three network channels 20 years ago.

Consequently, marketing expenses are no longer a “spend” – they are investments which must be tracked, measured for performance, and adjusted accordingly. This ROI mindset is directly opposite the mentalities and behaviors that most marketers have carried forward or learned based on the traditional marketing model driven by the golden age of advertising. This model was driven mostly by creativity when the rulers of marketing were the big ad agencies, which specialized in attractiveness and immediacy. Despite misguided attempts, this model did little for the business-to-business arena, which must drive awareness and sales leads with explanation and ROI.

So where does that leave business-to-business marketers who don’t know what to do next? Some reach for tools, about which they know little, to try and understand the different effects of the marketing mix on business results. But these mostly rely on historical data whose predictive ability diminishes quickly in a fast-moving world. Clearly a more rigorous approach to a fragmenting world is needed.

The McKinsey authors note that marketing executives can improve the alignment between marketing and business results by embracing the same investment principles other functions follow. Tracking ROI is the prelude to boosting ROI. By tracking marketing ROI, the marketer can:

1. More precisely target the customers and media vehicles yielding the largest and fastest payoff.
2. Capitalize on a brand’s most distinctive elements with greater success.
3. Improve the alignment between marketing and financial objectives.
4. Improve team morale by reducing anxiety over subjective results.
5. Better communicate marketing results to the CEO, CFO and others.

In short, marketing leaders can align their efforts more closely with business results by applying investment basics to the increasingly complex changes they face.

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	Principal Contact: Mike Harris Direct Telephone: 858-342-7280 Fax: 858-481-8665 Email: mike@the-harris-group.com