Measuring the performance and financial impact of marketing has been (and remains) a major challenge for marketing leaders. In the 2020 Marketing Measurement and Attribution Benchmark Survey by Demand Gen Report, 54% of surveyed marketers said their ability to measure marketing performance and impact needs improvement or is poor/inadequate. The comparable percentage was 58% in the 2019 edition of the survey and 54% in the 2018 survey.
Marketing leaders widely agree about why they need a better process for measuring marketing performance. Seventy-five percent of the respondents in the Demand Gen survey identified the need to show marketing's impact on pipeline and revenue, and 58% cited the need to show ROI from all marketing investments.
Over the past two-plus decades, technological advances have significantly improved our ability to measure some aspects of marketing performance. Today, for example, most forms of digital marketing are highly "trackable." We can know who has opened our emails and who has viewed our content. We can even know how much time was spent with our content.
But, measuring the financial impact of marketing remains particularly difficult because of several inherent characteristics of marketing. A recent article at the Harvard Business Review website captures some of the difficulties:
"Marketing's environment is typically much 'noisier' that the factory floor in terms of unknown, unpredictable, and uncontrollable factors confounding precise measurement. Marketing activities can also be subject to systems effects where the portfolio of marketing tactics work together to create an outcome . . . Marketing actions may also work over multiple time frames . . . Finally, it is often difficult to attribute financial outcomes solely to marketing, because businesses frequently take actions across functions that can drive results."
An Important Perspective from Google
Last year, Google published a white paper that addresses the vital topic of measuring marketing performance. The paper is appropriately titled "Three Grand Challenges" because the authors focus on three of the most gnarly challenges relating to the measurement of marketing effectiveness.
The three "grand challenges" described in the Google paper are:
- "Incrementality: proving cause and effect"
- "Measuring the long term, today"
- "Unified methods: a theory of everything"
- They must be carefully designed to eliminate extraneous factors that could impact the results.
- They can be expensive and difficult to administer.
- They typically can test only one or two activities at a time.