Sunday, November 17, 2019

Two Ways to Improve Your ROI Credibility

With the fourth quarter of 2019 well underway, many marketing leaders will have already started planning for 2020. In most cases, the planning process will include an analysis of how well marketing performed in 2019. and many marketing leaders will use return on investment (ROI) as the primary tool for conducting this assessment.

Over the past two-plus decades, ROI has become the "gold standard" for measuring marketing performance and for communicating the performance and value of marketing to senior company leaders. So you would think that, by now, marketing leaders would thoroughly understand what marketing ROI is, and how to calculate it correctly. Unfortunately, however, that is not always the case, as a recent survey conducted by LinkedIn Marketing Solutions makes clear.

The LinkedIn Research

The Long and Short of ROI report is based on a survey of 4,000 B2B and B2C marketing professionals from 19 countries. Survey respondents worked in a wide range of industry sectors, including technology, financial services, professional services, and manufacturing. The survey was conducted in June 2019.

Most of the results presented in the survey report refer to "digital marketers." Unfortunately, the report does not define who "digital marketers" are, nor does it indicate whether all of the survey respondents were "digital marketers." With that caveat in mind, here are the "headline" findings from the LinkedIn study:

  • 70% of digital marketers claim they are currently measuring ROI.
  • 77% of digital marketers measure ROI during the first month of a campaign, even though 55% of those marketers reported having a sales cycle that is at least three months long.
  • When most digital marketers say they are measuring ROI, they are actually measuring a variety of key performance indicators (KPIs), but not true ROI.
  • 63% of digital marketers don't have a high level of confidence in the "ROI" metrics they are currently using.
The LinkedIn survey report argues that marketers should (a) clearly distinguish between KPI-based metrics and ROI, and (b) measure ROI over the length of the sales cycle in order to obtain accurate results.
When You Say ROI . . .Mean ROI
The findings of the LinkedIn survey highlight two of the still all-too-prevalent ways that many marketers are misusing ROI. First, many marketers use "ROI" as a catch-all term to describe a wide variety of benefits produced by marketing activities. But return on investment is a specific financial metric that has a well-established meaning among management and financial professionals.
This means that none of the following constitutes ROI:
  • Increased brand awareness
  • Increased market share
  • Increased customer lifetime value
  • Increased average deal size
  • Improved conversion rates
  • Improved response rates
  • Improved NPS/customer satisfaction scores
For many companies, tracking some or all of these performance measures will be valuable, but they do not constitute marketing ROI. Calling any of these benefits "ROI" reflects a misunderstanding of what ROI is, and if a marketing leader presents one of these kinds of ROI calculations to a CEO or CFO, his or her credibility will be weakened.
Calculate ROI Correctly
The second way that many marketers misuse ROI is to calculate it incorrectly. The basic formula for marketing ROI (MROI) is:

MROI = (Gain from Marketing Investment - Cost of Marketing Investment) / Cost of Marketing Investment

So the basic MROI formula contains only three components:
  1. The financial gain from the marketing investment
  2. The cost of the marketing investment
  3. Time - Although the formula doesn't expressly contain a "time" value, MROI is always measured for a defined period of time.
While the basic MROI formula appears to be quite simple, that simplicity is deceptive. In reality, calculating MROI accurately can become a complex task because every component of the formula presents questions that require thoughtful answers and sound judgment calls.
I've addressed many of these issues in several previous posts, so I won't repeat that material here. However, I've provided links to my ROI-related posts below. If you're involved in calculating MROI, I encourage you to take a look at these posts and carefully consider the issues they discuss.

Image courtesy of Rick B via Flickr CC.

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Sunday, November 10, 2019

A Fresh Look at Millennial B2B Buyers

The role of millennials in B2B buying decisions, and their distinctive attitudes and behaviors as business buyers have become major topics of interest for B2B marketing and sales professionals over the past five years. Since 2014, numerous research studies - including studies by the IBM Institute for Business Value, Google/Millward Brown Digital, Merit, and Heinz Marketing/SnapApp - have focused specifically on this subject.

A few days ago, Demand Gen Report published the results of new research - conducted in partnership with The Mx Group - that provides a current take on the roles, perspectives, and preferences of millennial business buyers. The B2B Millennial Buyer Survey Report is based on a survey of "close to" 200 millennials - people born between 1981 and 1996 - working for B2B companies.

The Demand Gen survey results provide numerous specific insights about the attitudes and behaviors of millennial B2B buyers, but I suggest there are three key takeaways from this research.

Millennials Take Charge

Many millennials have risen to leadership positions and are now exercising significant authority in B2B purchase decisions. Fifty-six percent of the respondents in the Demand Gen survey held director-level positions or above, and another 42% held managerial positions. Twenty-one percent of the respondents were vice presidents or held C-suite positions.

Forty-four percent of the survey respondents indicated they are a primary decision maker at their company for purchases valued at $10,000 or more. Another one-third of the respondents reported being a key influencer and/or recommender.

Other research has confirmed the growing responsibility and authority of millennial B2B buyers. For example, in a 2015 survey of 1,469 employed millennials by Merit, 73% of the respondents said they were involved in B2B buying decisions, and approximately one-third (34%) of the respondents reported being the sole decision maker for their department

A Preference for Peer/Colleague/User Content

The millennial buyers surveyed by Demand Gen expressed a strong preference for learning about products or services from peers, colleagues, and other users. When the survey participants were asked what types of content were most helpful in their buying decisions, the top choice was user reviews (61% of respondents), and case studies came in third (34% of respondents).

When the survey participants were asked what resources they usually depend on when researching business purchase decisions, the top choice was review sites (49% of respondents).

The desire to learn from peers also influences how millennial buyers use social media. When asked what role social media plays in their process for researching potential purchases, a majority of the survey respondents said they browse existing discussions to learn more about their topic of interest (63%) or ask for suggestions and recommendations from other users (55%).

On this issue, it's clear that millennial B2B buyers aren't significantly different from other business buyers. Recent research has shown that buyers of all generations are now relying more on information from peers, colleagues, users, and other independent third parties. For example, in a 2019 survey of 712 business technology buyers by TrustRadius, participants were asked to rate the trustworthiness of fifteen sources of information used in buying decisions. Four of the seven most trusted sources involved independent third parties (peers, friends, or colleagues, users, analysts, and communities or forums).

The Challenges Haven't Changed (Much)

The Demand Gen survey also revealed that millennial B2B buyers face many of the same challenges that all business buyers confront. More than half (52%) of the survey respondents said there are too many people involved in buying decisions at their company, and nearly half (49%) complained that their buying group is often indecisive and misaligned.

The next three most frequently identified challenges were:
  • Difficulty getting budget allocated (39% of respondents)
  • Lack of trust from senior management/not taken seriously (38%)
  • Difficulty proving clear potential of ROI (28%)
While a lack of senior management trust may be a slightly bigger challenge for younger buyers, it's likely that B2B buyers of all generations would say they're affected by the challenges identified in this survey.

Image courtesy of Jeff Djevdet ( via Flicker CC.

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Sunday, November 3, 2019

Two Observations on the New CMI/MarketingProfs Content Marketing Survey

A few days ago, the Content Marketing Institute and MarketingProfs published the findings of their latest content marketing survey. The B2B Content Marketing 2020:  Benchmarks, Budgets, and Trends - North America report is based on 679 survey responses from content marketers and marketing executives with B2B companies in North America. All respondents were with companies that have been using content marketing for at least one year.

The annual CMI/MarketingProfs survey has become one of the most popular and widely-cited research studies in the content marketing world. The latest survey has already triggered several articles and blog posts, and I'm sure many more are now being written.

In many ways, the findings from the latest survey echo those in previous versions of the study. For example, they tell us that having a documented content marketing strategy is vital for success, and that top-performing content marketers prioritize the information needs of their audience over their company's promotional messages.

In this post, I'll focus on how some of the attributes of top-performing content marketers have changed since last year's survey, and I'll argue the latest survey shows that most small and mid-size companies should be outsourcing more of their content marketing activities.

Notable Changes in the Attributes of Top Performers

CMI and MarketingProfs provide survey data for both "most successful" and "least successful" content marketers. The survey defines "most successful" marketers as those respondents who characterized their company's content marketing effort as extremely successful or very successful at achieving the company's desired results. "Least successful" marketers are those respondents who described their content marketing program as minimally successful or not at all successful.

The survey report compares most successful to least successful content marketers across several attributes and practices, and as might be expected, there are substantial differences between the two groups. It's also useful to look at how the most successful marketers have evolved over the past year.

The following table depicts how the most successful marketers rated several attributes of their content marketing program in both the latest survey and in last year's survey:

This table shows that in the latest survey, higher percentages of the most successful content marketers reported that their organization's content marketing is sophisticated and/or mature, that they have a documented content marketing strategy, and that they have successfully used content marketing to build loyalty with customers, nurture subscribers, audiences, or leads, and generate revenue.

Somewhat surprisingly, the share of the most successful marketers who said they measure content marketing ROI fell by five percentage points. This could be interpreted as a step backward, but I don't believe that's wholly accurate. I would argue that the change is more likely due to the recognition by sophisticated content marketers that the primary focus of marketing measurement should not be on content marketing per se. Here's my view on this topic.

Small and Mid-Size Companies Underutilize Outsourcing

In this year's survey, half of all respondents said they outsource at least one content marketing activity. However, the use of outsourcing varies greatly depending on company size, as the following chart shows:

Only 37% of respondents from small companies (1-99 employees) said they outsource any content marketing activity, compared to 56% of respondents from mid-size companies (100-999 employees), and 71% of respondents from large companies (1,000+ employees).

These findings suggest that many small and mid-size companies are outsourcing less than they should to optimize their content marketing program. Other findings from the survey show that 44% of small company respondents have no employees working full time on content marketing, and another 29% have only one full time content marketer. More surprising, just over half (53%) of survey respondents from mid-size companies reported having no or only one full time employee dedicated to content marketing.

As the use of content marketing has continued to grow, the competition for buyer attention and mindshare has become more intense. One effect of this heightened competition is that a significant amount of high-quality content has become a prerequisite for content marketing success.

The survey data suggests that many small and mid-size companies aren't committing enough internal resources to create and sustain an effective content marketing program. Under these circumstances, outsourcing some aspects of content marketing - particularly content development - can be a smart and cost-effective way to close the gap.

Top image source:  Content Marketing Institute/MarketingProfs

Sunday, October 27, 2019

New Insights on the State of Marketing Technology

A recent survey by WARC and BDO (with interviews by the University of Bristol) provides more evidence that the role of technology in marketing is continuing to grow. Martech:  2020 and Beyond is based on a survey of more than 750 brands and agencies located in North America, the U.K., Europe, and APAC. The survey was fielded in June and July 2019.

The explosive proliferation of marketing technologies has been widely discussed and well documented. The inaugural (2011) edition of Scott Brinker's marketing technology landscape graphic included about 150 companies. The 2019 version of the graphic includes 7,040 technology solutions.

Market Size and Growth

WARC and BDO estimate that total spending on marketing technology in North America and the U.K. will reach $65.9 billion this year, up from $52.4 billion in 2018. This equates to a year-over-year growth rate of 25.8%. WARC and BDO had previously estimated that 2017 spending in these two markets was $34.3 billion. So, in North America and the U.K., the market for marketing technology has nearly doubled over the past two years.

The WARC/BDO study found that marketers' commitment to technology is still growing. On average companies in North America and the U.K. will spend 26% of their total marketing budget in 2019 on technology tools and services, compared to 23% of the budget in 2018. While spending on technology seems to have leveled off in the U.K., it's still growing robustly in North America, as the following table shows:

A slight majority (53%) of the global survey respondents expect their spending on marketing technology to remain stable over the 12 months following the survey. However, of those respondents who believe their technology spending will increase, 51% expect the growth to be more than 10%. Growth expectations among North American respondents were more temperate. Only 35% of those respondents expect spending increases of more than 10%.

Need and Utilization

Fifty-five percent of the global survey respondents said they have all the marketing technology tools they need, but the findings regarding technology utilization were decidedly mixed, as the following table shows:

As the table indicates, only 24% of the respondents reported that they have all the tools they need and fully utilize them, while 41% acknowledged that they aren't fully utilizing the technology tools they have.

Among respondents from North American companies:

  • Only 15% said they have all the technology tools they need and are fully utilizing them.
  • 57% said they don't have all the technology tools they need.
  • 45% said they aren't fully utilizing the technology tools they have.
Current Uses
In terms of how companies are using marketing technologies, more than half of the survey respondents reported using a technology tool to support each of the following marketing disciplines or activities:
  • Email (79% of respondents)
  • Social media (77%)
  • Content marketing and management (68%)
  • Customer relationship management (65%)
  • Analytics, measurement and insights (65%)
  • Mobile (60%)
  • Data management (60%)
  • Advertising technology (58%)
  • Commerce, lead generation and sales (53%)
Key Takeaways
The WARC/BDO survey provides two important takeaways for marketers. First, the marketing technology space is extremely dynamic. The number of technology solutions available to marketers is still increasing, although the pace of development may be slowing slightly. And second, it's likely that most marketers will always be challenged to keep up with the rapid pace of technological innovation.
Top image source:  WARC/BDO

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Sunday, October 20, 2019

Three Key Takeaways from Gartner's New CMO Spend Survey

Gartner has just published the results of its 2019-2020 CMO Spend Survey. The research report is based on survey responses from 342 marketing executives in North America and the U.K. at companies with $500 million to $5 billion or more in annual revenue.

The Gartner study produced several valuable data points, but I want to focus on three takeaways that I found particularly interesting.

Marketing Budget Growth

Gartner's survey indicates that marketing budgets will come in at 10.5% of company revenue in 2019, down from 11.2% in 2018. This agrees closely with the August 2019 edition of The CMO Survey, which found that current marketing budgets represent 9.8% of firm revenues.

However, most of the Gartner survey respondents were optimistic that their marketing budgets will increase in 2020, as the following table shows:

Gartner observed that this CMO optimism exists despite widespread concerns about a global economic slowdown among many economists and financial industry pundits. In fact, when survey participants were asked how the overall economic environment would likely affect their company's performance over the next 18-24 months, 86% of respondents indicated they believe the future impacts will be positive.

The above table also shows that marketing executives with B2B manufacturing companies are significantly less optimistic about future budget growth than other marketing leaders. In my view, this is likely due to the economic slowdown in manufacturing that is already occurring, and to the uncertainty surrounding Brexit in the U.K.

Martech Spending Falls

Gartner's study found that spending on marketing technology represents 26% of the total marketing budget in 2019, down from 29% in 2018. However, Gartner does not believe that this year-over-year decline indicates that marketing leaders are reducing their long-term commitment to technology.

In the research report, Gartner observed that spending on marketing technology has varied considerably over the years and that part of this variability is due to normal investment cycles. The report also referred to other Gartner research, which had found that some marketers are struggling to implement and fully utilize new technology tools.

I generally agree with Gartner's thinking on this issue. The explosive proliferation of marketing technologies is well documented. And with most technology tools, it takes time to assimilate a new technology and begin to fully utilize it. So, it's not surprising that technology spending is volatile, and we shouldn't read too much into a one-year decline.

The Rise of Marketing Operations

The third interesting takeaway from the Gartner CMO Spend Survey relates to the growing importance of marketing operations. The Gartner survey asked participants what capabilities they consider most vital for the execution of their marketing strategy over the next 18 months. The following table shows the percentage of respondents who included each capability in their top three choices:

As the table shows, 30% of survey respondents included marketing operations as a top three capability. Survey respondents also estimated they they are currently spending 12.6% of their marketing budget on marketing operations. Other research by Gartner (the 2019 Marketing Organization Survey) found that two-thirds of marketing organizations now have a discrete marketing operations function.

Gartner argues that the growing complexity of marketing and a shift toward a more decentralized marketing organizational structure are driving the need for a marketing operations function that is focused on creating excellence in planning and execution across the entire marketing organization. Gartner also observed that the scope of the marketing operations function is growing, and now includes diverse responsibilities such as technology management, talent management, budgeting, and supplier management.

Top image source:  Gartner, Inc.

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Sunday, October 13, 2019

Where Marketers are Missing the Mark with Customers

The New York chapter of the American Marketing Association has just published a research report that should be required reading for marketers. The Techlash is Here report addresses several aspects of marketing in the world's two largest economies - the United States and China. While the findings about China are interesting, this post will focus on the U.S. results.

The U.S. part of the research consisted of two quantitative surveys and several interviews with marketing leaders. One survey included 502 marketing executives - about 200 from agencies and approximately 300 from brand owners. The second survey polled 508 U.S. consumers. The consumer sample was matched to population data through weighting.

This research revealed two significant disconnects between U.S. consumers and U.S. marketers, one pertaining to social media, and one relating to the appetite for, and concerns about, new marketing technologies and practices.

The Social Media Marketing Bubble

According to Investopedia, a bubble is "created by a surge in asset prices unwarranted by the fundamentals of the asset and driven by exuberant market behavior." The AMA New York surveys suggest that a different kind of bubble may exist in the social media marketing space.

In the consumer survey, respondents said they expect their use of social media to decline over the next three years. The net change (the proportion of respondents expecting to spend more time on social media minus the proportion who expect to spend less time) was -6%. The survey also found that Facebook use is likely to show no net growth over the next three years, while the use of Twitter, Snapchat, and LinkedIn will decline over that period.

U.S. marketers, on the other hand, plan to substantially increase spending on social media advertising over the next three years. In the marketer survey, social media generated the strongest indication of increased spending (net 68%), followed by web display ads (net 51%) and email (net 47%).

Other research has found a similar exuberance for social media among marketers. In the August 2019 edition of The CMO Survey, respondents said they expect spending on social media to increase from 11.9% of their current marketing budget to 22.5% of the budget in five years.

The Techlash is Here report describes the emerging social media marketing bubble (my term, not theirs) as follows:

"American marketers are overindexing on many social media now and plan to increase spending even as consumer use flatlines or falls off. Currently, the share of ad spend devoted to social media in America . . . is 150% of the proportion of consumer media time they receive."

The Technology Disconnect

The AMA New York surveys also investigated the attitudes of U.S. marketers and consumers about nine specific marketing/advertising technologies and techniques. In this research, between two-fifths and three-fifths of U.S. marketers said they plan to increase their use of every one of those nine innovations, as the following table shows:

A striking disconnect between marketers and consumers becomes apparent when we look at the results of the consumer survey. As the table below shows, none of the nine technologies or techniques is viewed favorably by a majority of U.S. consumers. Four of the nine did receive a favorable plurality by survey respondents, but five of the nine technologies and techniques are viewed unfavorably by a plurality of U.S. consumers.

Once again, the survey report describes the current situation in compelling terms:

"American marketers overrate the perceived positives of marketing innovations:  most expect that U.S. consumers will consistently welcome them . . . On average, nearly four out of five (78%) expect American consumers will agree with each benefit claim we tested. The proportion of marketers who say consumers will agree substantially exceeds that of consumers who do on every one of them - by an average of 27 points."

The Takeaway

The AMA New York research should serve as a wake-up call for marketers. It highlights the risks inherent in getting caught up in the hype that inevitably surrounds new marketing channels, techniques, and technologies. While this research dealt with important disconnects between marketers and consumers, many of the study findings will apply to B2B marketers and business buyers.

Marketers' exuberance for new technologies and techniques is often attributed to the fear-of-missing-out or the shiny object syndrome. This view is overly harsh, but it does contain some truth. FOMO can actually be a positive thing when it motivates us to experiment and test new tactics and tools. But if it isn't tightly controlled, FOMO can also result in bad - or at least ineffective - marketing investments.

The findings of the AMA New York research regarding personalization are particularly noteworthy. As I have previously written, marketers are facing a true conundrum regarding when and how much personalization should be used. In fact, I would argue that the personalization-privacy paradox will be an "elephant-in-the-room" issue for marketers in 2020. I'll have more to say about that in a future post.

Top image courtesy of Artura Pardavila III via Flickr CC.

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Sunday, October 6, 2019

When "Prove You Know Me" Personalization is Essential

A few months ago, I published a post arguing that marketers who want to improve the effectiveness of personalized marketing should focus primarily on making personalization pragmatically useful to recipients. This argument was based on the results of several research studies, including a 2018 survey by Gartner/CEB that polled more than 2,500 consumers in North America, Europe, and Asia-Pacific.

One objective of this study was to identify what types of personalized messages are most effective. Survey participants were asked several questions about the content of personalized messages they had recently received. From the participants' responses, Gartner/CEB identified two types of personalization based on what consumers perceived was the primary intent of the message:

  • "Prove You Know Me" Personalization - Consumers perceived that these types of messages were primarily intended to demonstrate that the company "knows" the recipient. So, for example, they may have explicitly mentioned a previous purchase made by the recipient, or they might have mentioned that the recipient had recently viewed a particular product.
  • "Help Me" Personalization - Consumers perceived that these types of messages were primarily intended to help the recipient in some way. For example, they may have made it easier for the recipient to complete a purchase, or helped the recipient understand how to better use a product.
To measure the comparative effectiveness of these types of persosnalization, Gartner/CEB created a "Commercial Benefit Index" that considered four consumer intent and behavior factors - brand intent, purchase, repurchase, and increase in shopping cart size. When Gartner/CEB analyzed the impact produced by each type of personalization, they found that "Help Me" personalization produced a 16% increase in the CBI, while "Prove You Know Me" personalization resulted in a 4% decline in the CBI.

Where "Prove You Know Me" Personalization Really Helps
As any good lawyer will tell you, "There's an exception to every rule." The evidence is clear that "helpfulness" is the most powerful driver of effective personalization. But there are some points in your relationship with a customer or prospect where demonstrating that you "know" him or her can be critical to advancing the relationship.
One of these points is when you are seeking to have the first person-to-person conversation with a prospect. Many prospects prefer to conduct early-stage research and information gathering on their own, and to avoid conversations with vendor reps until later in their decision-making process. Overcoming this reluctance is difficult, and that's where an injection of "Prove You Know Me" personalization can be highly effective.
To illustrate this point, below is the text of an email message that I recently received from a client development representative at a sales technology company. I received this message after attending one of the company's webinars. I've altered the text to conceal the real names of the company and the rep.

Thanks for attending our webinar with Jones & Company, "The Secret Sauce for a High-Performing Sales Organization."
Hopefully, you enjoyed the webinar - John and Joe had some great insights on . . .
  • The current state and challenges of sales enablement in the age of the modern business buyer
  • Why a buyer-centric sales enablement approach is vital to an organization's revenue growth
  • How the right software can accelerate sales enablement efforts and help win more deals
Would love to get your feedback from the webinar.
Are you available this Friday for a quick 15 minute chat?
Roger Smith"

On the surface, this appears to be a well-constructed email. It's concise and not overly promotional. But it didn't convince me to reply and schedule a telephone conversation. What "Roger" failed to do in this message is show me that he knew some basic things about me and my business, and explain why a telephone conversation could be worthwhile.
If "Roger" had spent two or three minutes scanning through my LinkedIn profile, he would have gained a basic understanding of what I do. My profile also contains links to the 127 articles that I've published at LinkedIn. If "Roger" had spent another two of three minutes scanning through the titles of these articles, he could have obtained a pretty good understanding of my professional interests and focus.
With this information, "Roger" could have easily added a short paragraph to the email that would have made me more inclined to schedule a telephone conversation. That paragraph could have looked something like this:
"I see from your LinkedIn profile that you work with B2B companies to develop marketing strategies and marketing content. I also noticed that you've written several articles about improving marketing and sales productivity. I'd like to get your thoughts about the role that sales enablement technology plays in improving sales productivity.
Are you available this Friday for a brief telephone conversation?"
This approach would have demonstrated that "Roger" had made an effort to "get to know" me and my business, and the proposed topic of the telephone conversation is one that could be useful for both "Roger" and me.
Some readers may be thinking:  "There's no way we can have our business development reps spend this much time on every prospect." That's not what I'm recommending. This approach is reserved for prospects whose engagement with your company suggests that they may be ready to take the relationship to a higher level by beginning to have person-to-person conversations with your reps.

Image courtesy of Marco Verch (trendingtopics) via Flickr CC.