Marketing Operations Role in the Measurement of Marketing ROI

Prepared by:

Mayer G. Becker

National Practice Director, Enterprise Marketing

MarketSphere Consulting, LLC

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Marketing Operations Role in the Measurement of Marketing ROI

© 2009 MarketSphere Consulting, LLC

(Parts of this paper were originally published in mROI Insights: The Path to

Marketing Profitability, August 2009 Newsletter, Lenskold Group)

This year for the first time since the annual study began

in 2004, the Lenskold Group’s Marketing ROI and

Measurement Study included questions on marketing

operations. This new information can prove helpful to

marketing leaders who want to create and empower a

marketing operations staff to improve the “business” of

marketing – managing resources, systems, and

processes that make marketing more successful. A

marketing operations department in turn can champion

and facilitate a “measurement mindset” within marketing

that will help the Chief Marketing Officer (CMO) achieve

strategic advantage through marketing ROI-based

decision-making. This article introduces five ways

marketing operations can support and improve

marketing measurement capabilities.

The results of the 2009 Lenskold Group / MarketSphere

Marketing ROI and Measurements Study show that

companies with marketing operations in place are twice

(11% vs. 5%) as likely to be high performing companies,

i.e., companies who report having highly effective and

efficient marketing. Those companies with dedicated

marketing operations, while reporting a broad range of

responsibilities, indicated overwhelming responsibility

for marketing project management (83%) and marketing

governance, i.e., budget and finance (73%). As well,

firms with marketing operations are more likely to have

dedicated marketing analysts, versus firms without

marketing operations (45% vs 17%). These are just a

few indicators of why the presence of a dedicated

marketing operations team improves measurement

capabilities.

From Cost Center to Profit Center – Marketing

In Transition

Marketing operates an underlying “supply chain” of

ideas and content whose purpose is to deliver the right

information through multiple communication channels to

the right target audience at the right time. The supply

chain produces a combination of programs that address

new customer acquisition, sale of products, customer

retention and customer service, or enhancement of the

company’s brand and reputation. Each discipline of

marketing relies on its own tools, insights, strategies

and creative to manage its part of the supply chain,

operating independently to accomplish assigned

objectives. In addition, because marketing is historically

a cost center, transparency into how the marketing

budget is spent is low.

With Sarbanes-Oxley (and similar laws internationally)

and other pressures to increase transparency,

marketing has come under increased scrutiny. The

difficult economic conditions of recent years bring a

renewed focus on spending every dollar wisely, and for

the greatest return. Boards of directors and business

leaders recognize that they must treat marketing

differently, especially because it is one of a company’s

largest expense categories.

As a result, the CMO has the imperative to demonstrate

marketing’s value like any other company investment.

Marketing now has among its mandates the

responsibility for delivering free cash flow from a

combination of increased effectiveness of programs,

and improved efficiency of operations. To accomplish

this, executives must treat marketing as a profit center.

Over sixty-five percent (65%) of firms responding to the

Lenskold Group study said, “…their CEO/CFO’s are

making greater demands than last year to show ROI as

part of securing budgetary resources for marketing

efforts.”

The Move to Improve Operational Efficiency

There is a new focus on marketing operations, or

operational efficiency, according to a study conducted

this year by the CMO Council (www.comcouncil.com),

and sponsored by global software company Alterian.

Sixty percent (60%) of survey respondents said the

transformation of their marketing operations is an

essential area of focus, regardless of company size.

Fifty percent (50%) said they consider “marketing

operational effectiveness” one of the least developed

aspects of their organization. Marketers themselves,

schooled and experienced in their area of specialization

like advertising, direct marketing, promotions or public

relations, realize their shortcomings in trying to master

operational issues while at the same time delivering on

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Marketing Operations Role in the Measurement of Marketing ROI

© 2009 MarketSphere Consulting, LLC

the traditional mandates of marketing – brand, product

and innovation, life cycle revenue management, and

being the voice of the customer.

Adding to the challenge, marketing is much more

complex than ever before and is required to respond in

hours to market conditions, as well as operate 24x7 in a

global market. With the internet now a thriving sales and

communication channel, the business never closes. In

response to pressures both internal and external,

marketing executives are recognizing the need for a

central function to manage resources, systems and

processes. This central function is marketing operations

-- fifty-nine percent (59%) of respondents in the 2009

Lenskold Group / MarketSphere Marketing ROI and

Measurements Study say they have a dedicated

marketing operations team or person.

The Role of Marketing Operations – Best

Practice Approach

Because marketing operations is an emerging

discipline, many CMO’s struggle with how best to define

its mission. The best practice developed by

MarketSphere promotes a Center of Excellence led by

an operations executive, preferably with PMP (Project

Management Professional) or relevant operations

management experience. As well, the head of marketing

operations serves as chief of staff to the CMO,

managing a staff of professionals who own and operate

the department’s processes and project management,

oversee its finances and governance, and provide

shared services (i.e., creative, production, agency

management, procurement, traffic) and technology

support to the rest of the marketing organization.

In the MarketSphere model, marketing operations

should manage the “business of marketing,” which

allows marketers to concentrate more fully on their

respective functional areas. This alleviates the project

management and financial reporting burdens from

marketers, for example, leaving the brand team the time

and resources to develop programs that enhance the

brand and drive market awareness.

Promoting Marketing Measurement and ROI

Analysis

With responsibility for financial governance, marketing

operations is the logical entity to champion and facilitate

a “measurement mindset” within the marketing

department, in five important ways.

1) Ensure alignment of the marketing budget, and

marketing activities, to corporate and departmental

objectives. Marketing operations works with the

leadership team during the budgeting process and

aligns budgets with measureable objectives. Its planning

and oversight ensure that the marketing investment

portfolio supports only those measurable objectives

(with slight exceptions where may be a strategic reason

to fund other programs, such as research into new

communication channels.) Then, throughout the

financial year, marketing operations monitors alignment

and performance in cooperation with finance.

2) Provide the tools for measuring and reporting

marketing performance. Marketing operations

provides the automation and technology infrastructure to

support the department. Key to gathering data for mROI

calculations is a marketing resources management

(MRM) application for connecting budgeted and actual

spending with activities, tasks and related objectives.

Another important tool is a business intelligence and

reporting platform that collects data from many sources,

including the general ledger and the procure-to-pay

application, and delivers information through

dashboards and reports, alerts, drill-downs and “what if”

analysis.

3) Establish the framework for measuring marketing

performance and calculating ROI. A marketing

organization must first decide what it wants to measure.

Marketing operations leads development of key

performance indicators (KPI’s) from the collective

customer, financial and operational data as a first step

in creating a framework. As an organization evolves to

more fact-based decision-making, additional layers of

analysis, including marketing ROI (mROI) analysis of

each program will become the standard. Marketing

operations manages the mechanics of measurement,

performs the mROI calculations, and publishes them

along with other relevant metrics and KPI’s.

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Marketing Operations Role in the Measurement of Marketing ROI

© 2009 MarketSphere Consulting, LLC

4) Translate between the languages of marketing

and finance. The languages of the two departments are

fundamentally different, with marketing accustomed to

talking about the long-term value of a customer, or the

cost of acquiring a new customer. Finance, on the other

hand, has a shorter-term focus on line-item budget

performance and quarterly results. Marketing operations

interprets marketing metrics in a language familiar to

finance and operates a “marketing dashboard” to

facilitate translation between budgets, marketing

activities, and accomplishments.

5) Create the environment for a “measurement

mindset.” Acceptance for fact-based mROI analysis will

not just “happen.” Marketing operations, in its financial

governance role, should construct and maintain an

environment that allows marketing leaders to better use

marketing metrics and analysis. Over time and in

tandem with the deployment of a technology

infrastructure, training and change management, the

marketing organization will adopt a “measurement

mindset” and use mROI as a key measure to guide

decision-making.

Summary

Marketing is more complex than ever, and under

increasing pressure to be more transparent and

demonstrate the value it contributes to the organization.

Companies are creating marketing operations teams to

focus sharply on achieving operational efficiencies, “to

do more with the same, or less.” Combining

responsibility for project management, systems

infrastructure, and financial governance, marketing

operations is the logical entity to create the framework,

tools, training and environment that facilitates

measuring and reporting the value received from the

investment a company makes in its marketing.

About the Author

Mayer G. Becker

National Practice Director, Enterprise

Marketing

Mayer G. Becker has over 25 years

of marketing experience, including

executive roles with United Airlines,

Tribune Company, Computer Associates, ITT Corp. and

ADP. He is a member of the American Marketing

Association Chicago Chapter, Direct Marketing

Association and the Marketing Executives Networking

Group. Mayer has been featured by the AMA, Aquent,

Henry Stewart, and others in numerous presentations

and seminars. He is an acknowledge thought leader in

the field of marketing operations. He can be reached at

mayer.becker@marketsphere.com.

For more information on the Center of Excellence visit

www.marketsphere.com/improvingmarketing.