New York: Corporate marketing and PR people need to find better ways to measure the bottom-line impact of their work if they hope to have input on long-term corporate strategic direction, according to a new survey.
Today, "they don't have any great way to measure the value they bring to the organization in terms the CEO or board can understand," said Mike Korotkin, a member of PA Consulting Group's management team. PA Consulting is one of the authors of the Marketing for Shareholder Value survey, unveiled last week at the annual conference, the Marketing Forum.
While marketing and PR people talk about media impressions or even sales generated by their work, that's not enough, he said. They need to translate their efforts into financial terms that show the cost-effectiveness and profitability of what they do.
Korotkin suggested using what he calls economic profits, which is the operating income a marketing or PR project produces, minus the cost of capital involved in doing it. Only 10% of the 271 marketing executives surveyed said they use such a metric today, Korotkin said.
The total shareholder return at companies using such a measurement was 6% higher annually than at those that do not, the survey found.
"It's not just about hits or customers; it's about the profitability of that customer segment. Marketing people need to reach out to the finance side" to create these measurements, he said.
The survey further contends that marketers have little influence over key business decisions. Only 4% reported having significant influence in IR decisions, while only 18% have influence on M&A strategies. Only 25% called marketing a potential breeding ground for CEOs.
The study's conclusion is that "marketers could unlock billions in additional shareholder value if they took a broader view of their responsibilities."
The e-mail survey was done in March by the Marketing Forum, PA Consulting Group, and Dr. Philip Kotler, a professor of international marketing at Northwestern's Kellogg School.