The return on expenses related to marketing efforts has traditionally been difficult to quantify. In the past, companies often felt that if revenue was increasing, then marketing efforts were successful, and if revenue was dropping, then the marketing plan needed to be adjusted. Given the competitive environment in which companies have had to operate over the last decade or so, this simplistic approach to measuring the effectiveness of marketing efforts is as obsolete as door-to-door sales representatives who only make cold calls.
Modern CEOs and CFOs want to see data that proves whether marketing efforts are succeeding or failing. They want facts, and they want those facts to be supported. They are not interested in guesses, feelings or projections that are not based on reliable data. They want data-driven marketing rather than marketing that merely reacts to the competition or that relies on intuition. They want a detailed breakdown of marketing costs compared to the benefits the company gains from the expenditures. In short, they want marketers to justify virtually every dollar spent by the marketing department.
More and more, spending on marketing efforts is being scrutinized closely by other C-suite executives. Marketers are being asked to assign real, definitive rates of return on their spending. In a few organizations, the perception of marketing as a “necessary evil” has persisted, and executives see an opportunity to force marketers to justify their existence. More often, the scrutiny results from the knowledge that more data than ever before is being collected; top managers expect marketers to leverage this data to provide them with the information they want.
The problem is that many marketers are not sure what they should be measuring. They might be using metrics that are very meaningful to marketing or sales but are of little use to a CEO. They might be tracking one KPI without tracking a second KPI that is required to give true meaning to the first.
Every organization is different, and the metrics they need to collect vary by organization. However, if you are struggling to determine which metrics might be most useful to your company, you might want to consider using some of the following.
- Share of Voice: This measures the total marketing activity for a product type or sector and compute the percentage that is related to your brand. Your share of voice can indicate your ad ratings, reach and frequency.
- Share of Conversation: Share of voice can tell you how your marketing volume stacks up against your competitor’s volume, but it will not tell you whether the audience is paying attention. Share of conversation tells you whether your efforts are engaging the audience. It measures information such as how many times your brand is mentioned in online conversations, forum posts, tweets and such. It then compares this to how many times your competitors were mentioned.
- Audience Reach: Your reach is a measurement of how far your messages or content is going. It can tell you which geographic regions are receiving your message and in what numbers. (You might compare this to television networks that want to know where their programs have the largest audience.)
- Content Shares: Online content is often shared by the original viewer, especially on social media sites. This metric tells you how many times your content has been shared, the frequency of the shares and who shared it. It can also tell you whether viewers are creating Bitlinks when they share your content. Content shares, clicks and share of voice can all help you determine whether you are engaging your customers although they are far from the only metrics that can provide data about engagement.
- Clicks: This is exactly what it sounds like — how many times visitors click on content you published. This can tell you the specific content that is not performing as expected as well as the content that is exceeding your expectations.
- Demographics: Demographics have always been important to marketers. After all, trying to entice residents of New York City to purchase farm tractors is not likely to meet with overwhelming success, and there are not a lot of 25-year-olds who need denture adhesive. You want to make sure that your marketing efforts are reaching the demographic targets that you have defined as most likely to be interested in your product.