Evaluating Marketing Performance
| Site: | Saylor Academy |
| Course: | BUS615: International Marketing |
| Book: | Evaluating Marketing Performance |
| Printed by: | Guest user |
| Date: | Thursday, 3 April 2025, 7:03 AM |
Description
Measuring an advertising campaign's success can be challenging, especially when some elements are intangible, such as brand awareness, sales potential, or consumer knowledge. However, marketing evaluation is an essential part of any campaign and should be measurable and applicable to all marketing roles and departments. Companies can use specific metrics to determine how well the campaign is reaching its goals, if any changes are needed in the marketing mix, and whether the offerings meet customers' needs. This section explores metrics and how companies use them to devise more effective strategies.
The Importance of Evaluating Marketing Performance
Evaluating marketing performance guides future marketing initiatives and helps a company achieve its goals.
Learning Objectives
Review the importance of performance evaluation from a marketing perspective
Key Takeaways
Key Points
- Ideally, marketing performance measurement should be a logical extension of the planning and budgeting exercise that happens before a company's fiscal year.
- Marketing performance metrics or key performance indicators (KPIs) are useful not only for marketing professionals but also for non-marketing executives.
- Determining what areas of the marketing mix to modify, as well as whether company goods, services, and ideas meet customer and stakeholder needs, are some of the primary reasons why companies evaluate the marketing performance.
Key Terms
- bottom line: The final balance; the amount of money or profit left after everything has been tallied.
- key performance indicators: considered industry jargon for a type of performance measurement, KPIs are commonly used by an organization to evaluate its success or the success of a particular activity in which it is engaged.
- return on investment: Return on investment (ROI) is one way of considering profits in relation to capital invested.
Why Evaluate the Performance of Marketing
The intangible benefits of marketing – improving and enhancing brand awareness; educating customers and prospects about product benefits; and strengthening stakeholder relationships – make measuring its financial impact a perplexing and challenging process. Ideally, marketing performance measurement should be a logical extension of the planning and budgeting exercise that happens before a company's fiscal year. The goals that are set should be both measurable and applicable to every marketing role within an organization. Companies employ various methodologies to measure marketing performance and ensure they meet those performance goals.
Importance of Marketing Performance Metrics
Marketing performance metrics or key performance indicators (KPIs) are useful not only for marketing professionals, but also for non-marketing executives. From the chief executive officer to the vice president of sales, the senior management team needs marketing KPIs to gauge how marketing activities and spending impact the company's bottom line. This is particularly important since companies are prone to reduce marketing budgets during economic downturns, downsizing, and mergers.
As marketers face more and more pressure to show a return on investment (ROI) on their activities, marketing performance metrics help measure the degree to which marketing spending contributes to profits. It also highlights how marketing contributes to, and complements, initiatives in other areas of the organization, such as sales and customer service.
Other reasons why companies evaluate marketing performance include:
- Monitoring marketing's progress towards its annual goals
- Determining what areas of the marketing mix – product, price, place, and promotion – need modification or improvement to increase some aspect of performance
- Assessing whether company goods, services, and ideas meet customer and stakeholder needs
Establishing marketing performance metrics is integral to helping brands satisfy customers, establishing a clear company image, being proactive in the market, and fully incorporating marketing into the company's overall business strategy.
Source: Lumen Learning, https://courses.lumenlearning.com/boundless-marketing/chapter/evaluating-marketing-performance/
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 License.
Methods for Evaluating Marketing Performance
KPIs, ROMI, and Accountable Marketing are all metrics that are used to track marketing performance.
Learning Objectives
Illustrate the purpose and characteristics of marketing performance evaluation method.
Key Takeaways
Key Points
- When evaluating marketing performance, companies should measure marketing outcomes from the consumers' points of view, include all marketing activities, measure across a continuous time period, and meet statistical and technical criteria required of all measurement systems.
- To accurately measure the effectiveness of marketing activities, KPIs must be integrated within the business and management of the company.
- To ensure meaningful comparisons among activities, companies should employ a common scale, and measurement error must be quantified so that managers can react to changes in conditions.
Key Terms
- Advertising Research Foundation: The ARF is an association where practitioners from every avenue of advertising - agency, academia, marketer, media, and research - gather to exchange ideas and research strategies.
- return on investment: Return on investment (ROI) is one way of considering profits in relation to capital invested.
- key performance indicators: considered industry jargon for a type of performance measurement, KPIs are commonly used by an organization to evaluate its success or the success of a particular activity in which it is engaged.
Evaluating Marketing Performance
Organizations use various methods to evaluate marketing key performance indicators (KPIs) or metrics. Marketing Performance Measurement, Marketing Performance Management, Marketing Return on Investment (ROI), Return on Marketing Investment (ROMI), and Accountable Marketing are all metrics that companies use to connect marketing performance to the financial performance of the organization.
Marketing Performance: Using an established methodology to evaluate marketing effectiveness helps companies measure performance and assess business needs.
In order for marketing KPIs to be integrated within the business and management of the enterprise, and ensure consistency and reliability across the marketing mix, they must meet these minimum requirements:
- Measure marketing outcomes from the consumers’ points of view
- Include all marketing activities
- Be repeated over time
- Meet statistical and technical criteria required of all measurement systems
Consistency is Key
Marketing materials can be designed to inform, portray products and services attractively, and influence purchasing behavior. The methods for evaluating the performance of, and responses to, these materials range from simple calculations measuring return on investment, to tallying the number of visits to a website. Since marketing campaigns are typically integrated across all channels (e.g., print, email, and social media), these channels are measured together to understand the overall effect on target markets.
To ensure meaningful comparisons among activities, brands, markets, and time periods, organizations may employ a common scale to analyze performance metrics. Using different measurements to evaluate different communications activities, competitors, and markets does not allow direct comparison and results in lost synergies. Companies using formalized methodologies continually gather and monitor marketing data to understand where the marketing plan is strong and where it needs improvement. Long-term observation also brings true insight about unanticipated changes and "red flags" in the data.
All measurement systems should take into account accuracy, repeatability, reproducibility, bias, data shifts, and data drifts. Measurement error must be quantified so that managers can react to changes in conditions, but not to changes due to measurement variation. Independent organizations such as the Advertising Research Foundation evaluate the validity of commonly used measurement systems to produce standards and best practices for evaluating marketing and advertising data.