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Read Professor Moorman’s analysis of key survey results.

Does Pressure to Prove the Value of Marketing Help or Hurt Company Performance?

Two-thirds of all top marketers feel pressure from their CEO or Board to prove the value of marketing according to August 2013 results from The CMO Survey. Of those, 60% describe that pressure as increasing. These numbers are consistent with the fact that most CMOs continue to find proving the value of marketing elusive. Survey results indicate that only 36% of top marketers report being able to prove the value of marketing quantitatively in the short-run and 31% in the long-run. Demonstrations of the value of social media are even more elusive with only 15% able to offer quantitative evidence for the value of social media spending.

A key question that needs to be asked is whether pressure on CMOs to prove the value of marketing helps or hurts company performance. These are reasonably good arguments on both sides. On the positive side, increasing pressure might make marketers work harder. On the negative side, increasing pressure could make marketers focus on strategies that are easily measured or that only provide short-term boosts so that proof is in hand when the CEO or board comes knocking. This means that instead of designing and selecting strategies that are optimal for company goals, strategies are selected to help marketers defend their spending decisions.

To investigate this question, we examined the performance of companies in which the CMO is and is not under pressure to prove the value of marketing. Results indicate that CMOs reporting more pressure from their CEOs and boards to prove the value of marketing have higher financial performance. As shown in Figure 1, CMOs that report pressure experienced a 3.5% improvement in marketing return on investment (MROI) in the past 12 months compared to 1.72% improvement by CMOs that report no pressure to prove the value of marketing. This 100% difference in MROI is mirrored by a 50% improvement in company profits among CMOs that report more pressure to prove the value of marketing (+3.66% in profits) compared to a 2.42% increase in profits for CMOs that do not experience pressure.

Figure 1. How Pressure to Prove the Value of Marketing Affects Company Performance
Pressure - New
These data support the view that pressure to prove the value of marketing improves marketing and company financial performance.

  1. Peter says:

    On question and one thought: Question–is the data statistically significant? The difference between the percent of marketers getting pressure in both buckets doesn’t seem that great. Thought–this suggests that pressure on marketing has a significant impact on firm profits. My guess is that you would find the same results if you asked about pressure on supply chain, finance, sales and every other function. I’m not sure what to do with this.

  2. Christine Moorman says:

    Good question! Yes, the results are strongly statistically significant, not just numerically different. You may be right that this result generalizes to other types of pressures. I do not have data to investigate this question, however. This result shows only that pressure to prove the value of marketing is strongly associated with financial performance. In future work, I hope to able to make stronger claims about this relationship as I build data for The CMO Survey over time. For now, this is a point that should be considered by CEO and boards and utilized if it is fits within the culture of the company.

  3. Paul says:

    It’s great to see stats supporting the fact that asking marketers to track and prove value of their investments actually increases overall company performance. It seems sensible, but many marketers are fighting it for fear of not being able to easily measure, score or prove ROI. When you have to spend a good percentage of your job pulling together data to prove your value, it leaves less time for strategic execution. That’s one of the reasons we’ve (the team at SeeDepth) automated the ability to monitor and score – that is, to easily see a pattern of performance over time – for one key element of marketing: PR. From media to conferences and events, executive speaking placements to product or corporate awards, it’s important to delve deeper to understand the investment, ROI and impact of such – in order to repeat what’s working and pivot from what isn’t.

    Marketers aren’t afraid to prove value, they just need better tools that help them to do so easily – leaving their time open to execute the most valuable of campaigns, programs and strategies.

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