The self-assured industry

The global economy is buoyant, driven by a combination of consumer spending and business liquidity. This feel-good factor has inevitably filtered through to marketing. According to a recent survey by the Institute of Practitioners in Advertising, marketing budgets are being increased in line with sales and profits and currently outstrip all other sectors, including IT and computing. Interestingly, the same survey shows that 11.5% of businesses now allocate more than 15% of total budgets to online marketing.

What is more, when it comes to the effectiveness of marketing strategies, it appears that the marketing function is becoming increasingly self-assured in the role it plays within the organisation.

This confidence is reflected in the responses to the WebTrends Marketing in the Dark survey, compiled from 200 interviews conducted with persons responsible for internet marketing strategy at companies with over 500 employees and a reliance on online marketing communications or online transactions. It reveals that 89% of respondents believe they have met or exceeded performance expectations for their overall marketing strategy in the past 12 months, with 81% believing the same to be true specifically for online marketing.

According to the survey, this self-belief is no short-term blip, with 43% of respondents “very confident” and 40% “confident” that they will be able to maintain a similar level of performance over the next 12 months.

But how much of this confidence is based on robust marketing performance metrics and an in-depth understanding of the customer, and how much is it merely a consequence of the feel-good factor?

Customer acquisition, customer retention and brand building were the top three necessities, achieving 68%, 58% and 55% respectively. But, perhaps surprisingly, only 24% of organisations consider “performance evaluation” as a major objective for the marketing function over the next year and beyond.

Performance evaluation is vital when constructing a robust marketing strategy. There are three questions that marketing directors need to ask themselves when it comes to measuring the success of a marketing strategy. Is it working? Why is it working? How can I improve it?Given that less than a quarter of organisations are prioritising performance measurement, it would appear that few of the respondents understand – or even measure – why their marketing strategy has been effective over the past 12 months, and how this should evolve over the next 12 months.

In turn, if few organisations are measuring performance, it suggests that the confidence expressed in the marketing function is more likely to be based on strong company performance overall, than specific marketing metrics demonstrating value to the business. In addition, 85% of respondents to the survey consider an effective Web presence to be of “moderate” or “critical” importance in achieving sales and marketing objectives, revealing an awareness of the opportunities that the Web presents. But despite awareness of this opportunity a significant gap between the perception and the reality remains; only 35% build user profiles using web-page registration information (a relatively simple task), while only 24% build user profiles via web-page utilisation.

Further evidence of this growing gap is demonstrated by the fact that less than 40% can modify content as a result of traffic analysis. Moreover just 27% can modify content for e-marketing as a result of user analysis, while only 19% can integrate CRM systems with internet-generated customer data. Alarmingly, this comes from a sample of businesses where over 80% place an importance on internet presence and where all have internet-specific marketing strategies.

The lessons of the past suggest two things: that economic good times are never permanent; and, that when they do turn sour, only those organisations that had the foresight to plan for the future tend to survive.

During times of economic prosperity, organisations do not need to understand why their strategy is being successful, and tend to focus on generating profits.

But if inflationary pressures change the prevailing economic mood, and organisations are forced to ask questions of themselves and their strategy, a marketing department that lacks insight into its performance during the good times, is likely to be left rudderless in leaner, more competitive times.

Though marketing budgets in large businesses ensure that strategic planning and tactical execution are not tackled blindly, there are several dark shadows in the grey areas of analysis and evaluation worthy of enlightenment. Whereas analysis historically was a process of reflection once financial periods came to an end, thorough marketing performance management presents an alternative dynamic process that can inform business decision-making in a flexible capacity.

Most importantly, a neglect of internet analysis denies companies a cost-effective method of improving customer insight and commercial performance. Via the internet, terabytes of meaningful information on customer activity are created by default, but a failure to utilise this data is akin to struggling with a crossword when, with a small investment and appropriate effort, the answers to the puzzle are easily presented.

Nick Sharp, vice-president and general manager EMEA at WebTrends, contributed to this week’s Trends Insight