SInce 2011, the martech landscape has grown an eye-popping 7,528%, from 150 solutions to over 11,000 ways for technology to support marketing efforts, according to the MarTech Map. Each of these solutions has its own data set and way of demonstrating the value it provides. And thank goodness. The pressure on marketing teams to prove their value and demonstrate a clear return on investment (ROI) continues to intensify. This blog post will delve into the specific challenges marketers face in proving ROI and offer insights into why these difficulties persist.
The Paradox of Plenty
One of the biggest ironies in modern marketing is the paradox of plenty. With an abundance of data, tools, and analytics, one would expect measuring marketing success to be more straightforward. Yet, this wealth of resources has made it more challenging for marketers to demonstrate the value they create.
As we stated in the opening, there is an overwhelming amount of data and tools. The amount of data and the disparate nature of the system makes it difficult for marketers to choose the right data set and consistently apply the data to prove ROI.
Compounding this problem is the number of consumer touchpoints. Customers can start off by seeing an ad on Instagram, visit a corporate website, travel to an in-person store before returning to the website for a purchase. While the promise of ‘attribution tracking’ exists, the reality of measuring these complex customer journeys can be overwhelming.
Even if marketers are able to somehow track these complex customer journeys and integrate the data that resides in multiple systems, two additional issues remain. The first is a dearth of analytics talent on marketing teams. Marketing analysts can be scarce, often one person shared by multiple teams. The second issue is that the marketing data needs to be tied into enterprise data to get an accurate picture of the customer throughout their journey.
The Measurement Dilemma
Marketers also face a measurement dilemma, where traditional metrics might not fully capture the short-term and long-term value of marketing strategies. This issue is compounded by three main challenges.
The first is that marketing metrics often are not directly aligned with key corporate objectives like revenue growth and brand advocacy. The misalignment makes it difficult to demonstrate how marketing contributes to overall business success.
Marketers also face a lack of credibility and understanding. According to the Harvard Business Review, a whopping 80% of CEOs say they don’t trust or are unimpressed by their CMOs! (10% of the same CEOs feel that way about their CFOs and CIOs). This, compounded by CMOs inability to easily distill the data due to the above issues, erodes their credibility in the organization.
The third issue marketers face is balancing short-term metrics with long-term objectives. Let’s go back to the plethora of martech tools generating a large amount of data. Most of those tools easily provide near-real-time data, which is generally what gets exported and dropped into powerpoints. The work of aggregating data and ferreting out meaningful trends to support a longer-team strategic view gets sidetracked in favor of the easier-to-grab data at-hand. .
The Need for a Structured Approach
We will be going into the solutions, specifically how to create a measurement architecture, in a future blog post, but in general, to overcome these challenges, a more structured and aligned approach to measurement is essential.
Marketing executives must work with their peers in finance, sales, and strategy – including the CEO – to align on a meaningful approach to metrics. Too often, the executive team relies on marketing to present meaningful metrics, but are ultimately unsatisfied with the metrics presented. The executive team must come together to understand the complexity and constraints faced by marketers and align on metrics that make sense given those constraints.
BCG also suggests that marketers establish a measurement architecture, or a common framework for decision-making, tailored to different types of marketing decisions. This will help marketers avoid the ‘tyranny of random facts.’ Building out a measurement framework and regularly reporting on the same set of metrics will help build credibility within the organization.
The Role of Leadership and Culture
Lastly, leadership and organizational culture play pivotal roles in successfully demonstrating marketing ROI. Building the right team and fostering a culture that values agile, data-driven decision-making are as important as the tools and metrics themselves. Marketing leaders must champion these changes to ensure that their departments can adapt to the evolving demands of measuring marketing performance.
How Agile Techniques Can Help
Agile techniques in marketing can support the goals of alignment, transparency, and shared accountability. Enterprises that use strategic themes or OKRs can link these together throughout the organization to show a chain of connectedness. The key here is to have cross-functional alignment meetings at different levels of the organization. One of the biggest impediments to teams is to have executives with measurement goals working at cross-purposes to each other. Using Agile techniques of cadence and synchronization provides regular checkpoints for teams to present progress, surface any measurement difficulties, and make adjustments. Lastly, the use of retrospectives can surface where the current measurement architecture can be improved, as well as any other issues impeding marketing measurement.
In summary, demonstrating ROI in marketing is fraught with challenges due to the abundance of data and tools, complex consumer interactions, and the need for alignment with broader business objectives. To navigate these challenges, marketers must adopt a structured, consensus-driven approach, choose and stick to relevant metrics, cultivate a data-centric organizational culture, and consider implementing Agile practices to gain alignment and connectedness to the business. By doing so, they can more effectively demonstrate the value of their efforts and their impact on the business’s bottom line.