JCL Blog

On the Origin of Marketing Initiatives by Budget Allocation

Marketing is getting better at measuring itself.  The switch from broadcasting messages one to many, to one to one messaging we are often capable now of has made possible granularity we never even dreamed of ten years ago.  At CSG, we have been willing participants in this march and continue to measure everything we can.  We collect dozens of data points on each individual interaction with customers and partners, aggregate the data into campaigns, roll up campaigns into initiatives, and slice and dice and evaluate with the best of them.  However, it is probably a good idea to back away from this mountain of measurement every so often to gain a little bit of perspective. 

We should be asking: What impact does an obsession with measurement have on creativity and new initiatives?  At its root, measuring enables decision making.  The decisions made are usually about budget.  Marketing efforts that turn in good numbers get more budget, and those that do not get killed off.  Every large company marketing department has become an evolutionary machine.  Today’s Darwin would write a book about it and the title would be On the Origin of Marketing Initiatives by Budget Allocation.

In the wrong hands, this trend is more about cost reduction than about innovation.  Lowering costs and increasing efficiency are good things in any part of a business including sales and marketing.  Taking the idea to the extreme however is disastrous.  A company with no marketing would be infinitely efficient – for a quarter or two.  And then dead.  So what can marketing decision makers do to both embrace marketing measurement but avoid the trap of cutting too much?   Here are three ideas:

  1. Big Picture Gut Check:  A regular high level review schedule where marketing decisions are evaluated in the context of the overall good of the brand and the enterprise is critical.  These sessions have to be rigorous, but also free flowing enough to allow the introduction of new ideas.  It would be at these sessions where someone should ask – are the good numbers over here the result of moving revenue measurement from over there – or are they actually good numbers?
  2. Think Like a Portfolio Manager:  Portfolio theory in financial management balances risk and reward by looking at investments both individually and as a diverse pool of performance metrics.  Removing the lowest return investments and doubling down on the highest performing investments will increase the risk profile and may not even improve the results.  Just like in marketing, the past performance of an investment does not guarantee future results. 
  3. KPI Free Zone:  Some CMOs have established KPI Free Zones where experimentation is encouraged and measurement of new initiatives is not tied so dramatically to budget allocation.  This practice reminds me of the Google 20% time – do whatever you want – but be prepared to talk about it at your review.  A healthy competitive culture doesn’t hurt either.

Top performing marketing organizations must use tactics like these to ensure that they are getting the benefit of measuring without going too far and undermining their creative engine.   Clearly our industry has embraced the movement started by Edwards Deming to “expect what you inspect” but we should also be vigilant to ensure that we are not losing in the highly creative part of marketing.