" I know which half of my advertising was wasted"

The Marketing Effectiveness conundrum

The need for accountability on the issue of effectiveness of marketing and communication has been discussed in many meetings many a time, but the progress has been tardy especially so in India. Now this is probably because we find it quite convenient to say that this is one of the imponderables and really nothing much can be done about this. The general alibi is that not even in the most advanced countries, with their rich databases and research spend are they able to get a handle on this.How did this mind-set come about?Lord Lever-Hume is reported to have famously said “I know half my advertising is wasted, but I do not know which half”. This was probably a fact of life 50 years ago and it struck an immediate chord with the marketing folk, and thereby gave us marketing folk a great way to get out of the uncomfortable questions on effectiveness and accountability. While the impact of advertising was lauded when it led to increased sales or people noticed the campaign, it was not to be quantitatively evaluated by the standard methods as the impact was many dimensional and over time. The advertising agencies supported this stand as research and data driven accountability is seen as making a creative profession accountable to bean-counters, who have no idea of the power of communication and hence this issue was best avoided by all concerned.In India, the other alibi has been the availability of good data. Since the data is limited (and this is self fulfilling) or not good, it is better to go by the gut. Now, one point of view on marketing ideas is as good as the other – so which campaign runs depends on who gets to make the call. Hardly a recipe for producing consistently good stuff.Now let us consider some changes that have come about largely in the last 10 – 15 years that has changed the scenario quite substantially across the world and in India• Tremendous amount of data is captured at different points both within the company and by research and other agencies, making tracking of impact with all its complexity distinctly possible• IT has revolutionized the amount of complexity that can be handled, for e.g., it is possible to distinguish the impact of one media (out of many used) on the sales impact through regression or other statistical methods. These technologies are constantly being improved.• Many of the leading companies are working with the above two inputs and as expected beating those who are still living in the past. The leading practitioners of this new science not only know which half of the advertising budget is wasted, but they also know how to derive the maximum impact from all the other activities, pricing and promotions. They are able to achieve this by collecting and using the important data from the many sources available to them.Are processes on marketing effectiveness very difficult and only for a few companies at the top?Any new practice starts with a few companies and if successful, others have to adapt or be condemned to mediocrity. As marketing becomes the one last differentiator to succeed and with its importance growing over time, Indian companies will need to adapt themselves to a new discipline. The fruits are not “low hanging” but with a little effort and process, rapid strides can be made. This is all the more important for the Indian brands as MNC brands are already using technology, data, research and analytics to create an advantage for themselves.What is it that is required to be done to progress on this issue?• The top management including the heads of functions such as marketing, sales, IT and Finance will have to come together to create a strategy for this. The progress on marketing effectiveness will need to be tracked on a regular basis as cost or sales or any other key project is tracked.• The strategy will need to define in what way predictive modeling and data can be used to improve the top line, bottom line or both• Analytics ability will need to be created in the company to get on the virtuous cycle. Marketing effectiveness is not a one time activity and over time, a team that focuses on this will be the essential. The other teams will also need a change in orientation, as data driven decision making takes centre stage.• Specific budgets need to be allocated. It is however not necessary to break the bank, as value sits not in the software being used, but in the process/knowledge that can be created internally or with a little help at the beginning.Now for the good stuff. Indian companies can pole-vault most of the hurdles as they have some inherent advantages• Indian companies are pretty IT savvy – we simply need to direct that ability better through a strategy.• We do not have to re-invent the wheel – we can take just a few years to come up to the level of western companies ( who have taken over 30 years to reach there) and then take it from there.• India is seeing a mushrooming of small analytic firms, all of whom presently service the western market. Their expertise can be sourced quite easily and cost effectively.• The ROI on this is high given that much wastage can be avoided