How Pepsi and Sky cut their KPIs and boosted marketing effectiveness

As proving marketing effectiveness becomes increasingly important, marketers need to be able to pick the metrics that matter to show the impact marketing is having on the business. That is a journey both PepsiCo and Sky have been on over the past three years.

PepsiCo admits it had too many KPIs, leaving the business with a “flood of information” but little insight.

“Three years ago we were in a situation where we had as many KPIs and tracking metrics as there were combinations of brands and countries, which is a lot,” said Nathan Linkon, director of strategic insights for EMEA, speaking at the IPA’s Effectiveness Works conference today (9 October).

“What the business was left with was a flood of information. You could always find an answer to support the position you were trying to push forward if you used the right data but the context wasn’t there and the business wasn’t able to make those decisions based on the most effective information possible.”

That realisation led PepsiCo to reorganise, starting with its culture and internal language. It also made decisions on the metrics that mattered, looking at everything from strategic priorities to tactical output.

What it found was the business had “concentrations of measurement and capability” in areas such as short-term ROI measurement, equity tracking and measurement of content assets. But it also found gaps such as in audience-driven activations.

“We started with a blank sheet of paper and drew out the [decisions we needed to make] compared to [the capability] we had at that moment,” said Linkon. “We said at PepsiCo we are best in class at doing everything somewhere but none of those things everywhere, so we had to mine through that to find the capabilities and the gaps we needed to fill.”

Sky had a similar issue. It used to have huge econometrics, analytics and insight functions comprising more than 900 people and 2,000 KPIs. This had come about because those functions didn’t really communicate to each other and sent their data to executives via different routes.

The company decided to embark on a project with the aim of cutting the number of KPIs down to 12. But Aji Ghose, Sky’s head of research and analytics, admits it didn’t quite reach that target, instead creating a network of 30 KPIs that can work across the various aspects of its business.

“The most important thing about that network is it’s pretty much alive in the sense that it ingests more data. And it starts to understand that for, say, a mobile campaign of £2m these are the KPIs that are really important, or for Sky Cinema these KPIs are more important. Over time this network gets better and better and is helping us have common language,” he said.

Ghose admits the work was difficult, but was part of a “massive” reorganisation that also saw it reduce the number of people in its insights function from 900 to 140. However, that also made it easier to cut KPIs because some of them “organically disappeared”.

But the work also showed many of these KPIs simply weren’t working and were just in the business because “someone liked them”.

When asked which KPIs are most important, PepsiCo’s Linkon said the company has a few metrics that “we really felt are stakes in the ground” and that it measures on a regular basis, although he didn’t go into details.

But for Sky, the major metric is intent to purchase. “Over the last eight years a variety of analysis has shown that is consistently the highest-performing,” adds Ghose.

For brands looking to determine which metrics matter, Jon Webb, managing partner at Gain Theory, said that in the end profitable growth is the only KPI that is important in a business and should therefore be key to marketing effectiveness.

“I have never seen short-term ROI declared to the stock market. It is a great metric for ensuring a media budget is effective but it should ladder up to like-for-like volume share increase, sales growth, brand strength. It only matters because it ladders up into profitability.”