The perpetrators of marketing is undergoing a result of pressure to demonstrate accountability of marketing communications activities for its contribution to the company. During this time, the effectiveness of the marketing communication activity seen from the media (eg GRP, CPM, etc.) and consumer attitudes towards marketing communication activities (awareness, associations, images, etc). Measurements have been getting a challenge, especially when associated with an increased company sales.
Gradually, the measurement of marketing communications activities through financial measurements began was introduced. This new measurement has attracted the financial department or the auditor because it increased the ease of decision making by creating a more accurate comparison between tangible and intangible investment.
During this time, they (the finance department) is very difficult to measure the effectiveness of marketing communications activities compared to when they measure the effectiveness of purchasing one unit of production machinery.
They want to know how much increased revenue if it invests a dollar in marketing communications. They began to make a measure of the success of marketing communications activities based on ROI (return on investment) marketing.
The financial part has good reason to make the expenditure as an investment marketing activities, among others:
# Increase the ease of decision-making by adopting a more accurate comparison between physical investment and marketing.
# With the customer and the level of income as an asset in the books of the company will provide risk ratio (debt to equity) and performance ratio (ROI) is more accurate.
# Marketing as an investment capital will be more controllable and reliable in providing returns in the form of cash flow.
# How to arbitrary (20% of sales to marketing activity) failed to give a clear picture of the contribution to the company’s marketing communications activities.
Certainly the view above will change the way we communicate all these years. Such as’ how much money we spend on advertising? ” turned to ‘how much should we invest to all marketing activities? ” ‘Creative approach which is most effective’ to ‘a return of like what we get from these creative approaches?’, ‘How do we allocate between sales promotion and PR? ” become ‘customers who are worthy of our investment and optimal returns between acquisition and retention’.
This view would lead to a conflict between two parties. Marketers find the idea of these calculations is very ridiculous because the objective of marketing communication activity is not sale.
They claim that the success of marketing communications lies in how many people know and think positively towards a product, brand, or company. So for mengapitalisasikan very difficult.
Moreover, the decision to buy one is not only determined by the marketing communications activities, but also influenced by other variables that can not be controlled by the marketers such as word of mouth marketing (word of mouth), competition and pricing relativity.
Different views about the measures of success are quite sharp. Each has a strong foundation so that the necessary prudence in deciding whether to use the measurement of marketing ROI?
In practice, marketers are experiencing many challenges, especially how precise calculation for marketing communications activities. In a study in the U.S. and the UK revealed that 68% of the 175 marketing executives have difficulty in measuring marketing ROI. While only 7% of CFOs are satisfied with the measurement of marketing ROI.
Indeed sharp disagreement needs to be addressed wisely, considering both sides have strong reasons. Difficulties implementing financial measures in marketing activities can not forever have not applied. IBM has developed a measuring instrument called CELM (customer lifetime equity management solutions).
This is very helpful in preparing the marketing budget. So that IBM has the ability to identify the type of contact with the customer and the right type of loyalty program.
However, a wise approach has also been done by Ford. Ford used the term FATHER (return on marketing objectives) to measure advertising effectiveness. This way of approach to customer behavior.
The result is that each increase of one point changes the equivalent of U.S. $ 100 million in profits per year. In contrast to the Swedish state that use measures of customer satisfaction. In Sweden each point increase in satisfaction with the equivalent of U.S. $ 7.48 million.
Frontier Consulting Group has measured the rate of return on advertising investment FATHER TVC with the concept of a large Bank in Indonesia. The measurement results showed that there were significant differences when we do advertising effectiveness based on objective measurements.
Distinguished in the measurement objective in two ways, as forming the image of advertising and advertising firms as drivers of purchase. Under this objective there are two significant differences to the value of return on marketing objectives.
In measuring return on marketing objectives. combines three data, ie consumer behavior, media expenditure data, and data post-buy analysis.