Just as corporate marketing budgets start to loosen after a long belt-tightening, a new study finds that technology marketers are coming up short on measuring marketing performance and its return on investment.

According to a new study commissioned by the Chief Marketing Officer (CMO) Council, more than 80 percent of the respondents do not have formal marketing performance measurement (MPM) systems in place, despite spending as much as 25 percent of their revenue on marketing. In addition, almost 80 percent of the senior marketing executives polled were dissatisfied with their ability to demonstrate their marketing programs' business impact and value.

These are among the key findings of the CMO Council's "Measures+Metrics Audit - Assessing Marketing Value and Impact," an online survey of more than 315 senior marketing executives at global technology companies. The CMO Council is an influential marketing organization of top marketing decision-makers representing nearly 1,000 technology companies with combined annual revenues of $450 billion. These individuals control more than $40 billion in annual marketing expenditures.

The study was conducted in the first quarter of 2004 with the vast majority of respondents (90 percent) being executive officers with a VP title or above. They were predominantly drawn from North American companies. Those surveyed included top technology marketing decision-makers who work across a wide range of technology industry sectors, including computer systems, software, networking, peripherals, components, integration services, communications and the Internet. 

The study found that nearly 90 percent of respondents believe measuring marketing performance is a key priority for today's technology companies - the larger the company, the higher the priority. Growing boardroom pressures on marketing departments to justify and account for their spending, as well as more critical and demanding corporate performance environments, heightens this priority. Also contributing to the lack of marketing performance measurements is a limited awareness of MPM models, best practices and solutions, and a lack of infrastructure in global marketing groups for creating a credible MPM system.

Other key findings from the CMO Council's "Measures+Metrics Audit - Assessing Marketing Value+Impact" study include:

  • Companies that have formal performance measurement systems consistently achieved a higher level of CEO confidence in the marketing function. 
  • Companies using MPM systems tended to outperform the market in terms of sales growth, market share and profitability.
  •  Some 70 percent of respondents report they spend less than two percent of their marketing budget on MPM, but almost 60 percent intend to increase spending in this area within the next two years.
  •  Measurements most frequently reported to management include qualified leads generated, revenue impact, feedback from sales and channel groups, as well as web site traffic and content viewing.
  • The measures rated least frequently as performance indicators were stock price, Wall Street perceptions, share-of-mind and brand equity.
  • Hardest-to-measure activities were results from advertising, sales and marketing collateral and branding.
  • Easiest-to-measure activities were results from direct mail and e-mail campaigns, web site and Internet search engine presence and telemarketing and contact management programs.
  • Topping the list of weaknesses in MPM analytics were performance tracking for individual countries, automated report generation across all functions, information "drill downs" on individual programs, competitive benchmarking, and executive dashboards of key performance indicators. 
  • More than 72 percent of respondents reported spending more than four percent of revenue on marketing and nearly 20 percent allocated over 11 percent of revenue to marketing programs.

"This study confirms that MPM is indeed an imperative for technology marketers," said Jan Soderstrom, CMO Council's Chairman of the Board and most recently senior VP of global marketing and brand management for 3Com Corporation, and earlier, executive VP of marketing for Visa International (1996-1999). "MPM needs to be a top-level priority in organizations in order to truly enhance global marketing campaigns."

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