Today measurement and analytics are as much a part of marketing as creative and strategy. Online channels deliver a wealth of quantitative information that can be used for ongoing optimization. In fact, the tactical execution of marketing measurement is now starting to elevate channel decisions, customer insights, and budget allocation to a tangible and justifiable conversation. We call this discipline Marketing Performance Management. In this blog post, we will explore the concept of Marketing Performance Management (MPM) in more detail and outline a maturity framework for organizations looking for a better way to leverage analytics and measurement in ongoing marketing execution.

In a 2007 survey of 250 Fortune 1000 firms conducted by Kellogg School of Management, 75% of respondents reported marketing was essential to their business. It stands to reason that optimizing the marketing process would therefore be a top concern for organizations. Yet, 61% of respondents indicated they did not have a defined and documented process to screen, evaluate, and prioritize marketing campaigns. The question is, why? Why is MPM such a challenging discipline to embrace?

Defining MPM

You can find a lot of definitions of MPM. In my opinion, two sources do a reasonably good job articulating the breadth of MPM and the business value derived from its use.

  1. Gartner defines Marketing performance management (MPM) as the following: “Marketing performance management (MPM) encompasses the technologies and services for solutions that support marketing’s ability to gain access to insights, analyze data, make predictions, and optimize marketing programs, campaigns and resources. At the foundational level, MPM includes a data repository, BI tools and analytical workbenches. At the strategic level, MPM provides role-based access to information and KPIs through dashboards, visualization, point-and-click analysis, modeling, simulation and optimization.”
  2. Kellog School of Management defines Marketing Performance Management as “The combination of tools, processes, and methods used to develop, monitor, measure, and control marketing campaigns and programs to increase the return on both individual and aggregate marketing investments. Marketing campaigns are defined to include all direct and indirect organizational marketing endeavors such as promotions, advertising, analyst relations, customer relationship management initiatives, etc.”

The State of MPMMarketing Performance Management The Art of Marketing Performance Management

MPM can be engrained in all facets of marketing execution both before and after a campaign is executed. For example, MPM could be used to define which campaigns are most profitable, control group strategy, real-time monitoring of results, or as a basis for testing which campaigns are most successful. These days, marketers recognize the value of making marketing more transparent to the organization. Marketers certainly need to learn to speak the language of finance. There’s job security in being able to justify campaign spend and demonstrate a return on investments. The reality is, there are aspects of marketing that are difficult to measure and likely always will be. However, the research from Kellogg School of Management found marketers “…are also struggling to optimize marketing management in their organizations. Although, the benefits of MPM are evident there is a significant gap in the MPM process in most organizations.” Here are the stats that support this finding:

  • 73% do not use score cards rating each campaign relative to key business objectives prior to a funding decision
  • Only 47% report that marketing campaign selection is guided by forecasts of campaign ROI and Customer-Life Time Value (CLTV)
  • 43% indicate that they do not actively track and monitor realized benefits (vs. targets) after completion of marketing campaigns
  • 34% do not use insights gained from analysis of data from past campaigns to guide innovations in future marketing campaigns

Why isn’t MPM More Prevalent?

From a tactical standpoint, MPM is largely made possible through centralized and aggregated customer data and technologies that help analyze and deliver communications. But, technology is an enabler to the processes and strategic application of MPM. The findings suggest many marketers are still foreign to a disciplined metric-driven approach to marketing. According to the Kellogg study:

People challenges with MPM:

  • 63% said that senior managers primarily make funding decisions for individual marketing campaigns based on their gut feel and intuition
  • 48% do not solicit a cross-functional senior executive input to allocate their marketing campaign funds
  • 47% said that overall their marketing staff does not have sufficient working knowledge of financial concepts such as ROI, NPV, and CLTV

Technology challenges with MPM:

  • 57% of respondents do not use a centralized marketing database to track and analyze their marketing campaigns
  • 70% do not use an 360 marketing view of the customer to track customer interactions with the firm and with marketing campaigns

How do you start the MPM journey?

In the next blog post, we will explore three simple steps to embracing MPM in your organization including: structuring your MPM project, defining the outcome, and driving internal support.

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