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How to make your marketing profitable

How to make your marketing profitable

Want to make your marketing work better? A new report from the IPA entitled ‘Marketing in the era of accountability’ could hold the key.

Authors Les Binet, European Director, DDB Matrix, and Peter Field, Marketing Consultant, is based on the IPA’s data base of 880 case studies and is probably the largest meta-analysis of its kind ever undertaken.

It not only reveals some of the factors that make marketing profitable, but also exposes some common practices and beliefs that lead to waste and inefficiency.

You can purchase the 128-page document from the IPA to read the findings in detail, but the main points follow.


Contrary to received wisdom, focusing on a single campaign objective does not make marketing more effective.

Objectives should be detailed and above all prioritised.

Marketers pay too much attention to intermediate attitudinal measures, and too little to business and behavioural outcomes.

Although brand health (sometimes referred to as ‘brand equity’) is an important stepping-stone to business success, it is not an end in itself.

When marketers do focus on business measures, they focus on the wrong ones: sales rather than market share, and volume rather than value.

Marketers focus on the wrong behavioural outcomes too. Most campaigns aim to increase loyalty, but increasing penetration is far more effective and profitable.


The drive for accountability leads marketers to focus on a narrow range of intermediate key performance indicators (KPIs), particularly awareness and direct responses.

However, there is no single measure that reliably predicts effectiveness, and focusing on individual metrics actually reduces effectiveness.

This raises questions about the reliability of pre-testing. The data suggest that pre-testing may even reduce effectiveness.

A ‘balanced scorecard’ approach to measuring brand health leads to better results. If a single KPI is required, it should be a ‘metric of metrics’.

Get emotional

The need for accountability often makes marketers focus on rational product messages. In fact, emotional campaigns are more powerful, even in ‘rational’ categories.

Of the emotional approaches, the ‘fame’ model turns out to be particularly powerful. Yet marketers tend to neglect fame in favour of more limited goals.

Share of voice

Marketers often focus on absolute levels of spend or advertising-to-sales ratios when setting budgets.

In fact, share of voice is a better KPI. The report outlines a detailed method for setting budgets based on this measure.

TV is not dead!

There is little evidence to support the widespread assumption that TV is becoming lesseffective. In fact, TV effectiveness may be increasing.

On the other hand, the fashion for ‘surround sound’ in media may be less than ideal. Integration is good, but more channels is not always better.

What you should be focusing on

Marketing needs to focus more on profit and less on return on investment (ROI). Much talk of ROI is confused, and some of it leads to poor business decisions.

The use of ROI as a ratio can be dangerous in the marketing context and so a better alternative is proposed here.

Econometrics is much less common than it should be. Used properly, it can improve accountability and effectiveness.

Many of these problems can be traced back to a tension between effectiveness (doing the right thing) and accountability (being seen to do the right thing).

What you need to do

In the post-Enron era, accountability has become a hot topic in all areas of business, including marketing, and quite rightly so.

Measuring the effects of marketing is an important first step towards making it work better. But what is important, and what is easy to measure, are not always the same thing.

A narrow view of accountability often distorts marketing priorities, leading to waste and inefficiency.

Focusing on a small number of intermediate measures, such as awareness levels or direct response rates, can reduce effectiveness and profitability.

In order to be both effective and accountable, marketers need to measure all the right things.

Taking a broader view of the many ways marketing can work, both short term and long term.

And it means adopting a ‘balanced scorecard’ approach to evaluation, based on an appropriately weighted mix of business, behavioural and intermediate data.

If single measures of success or failure are required, then a ‘metric of metrics’ is preferable to a single tracking score or pre-test result.

Econometrics can be a particularly valuable element in this data mix, since it measures the impact of marketing in hard business terms.

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