Marketing Payback
October 2, 2014

How to better measure your Marketing Payback

By Paul Laughlin

Back in 2005, when this was published, I was in the right job at the right time, so as to get a free copy. However, having since read and valued this important work, I would now happily of bought copies for myself and my team.

Professor Robert Shaw was one of the early gurus of applying analytics to marketing. In this text, he steps the reader through how to both make your marketing profitable and prove that ROI to the rest of your business (especially Finance).

In fact, this usefully comprehensive and practical guide is equally relevant to a Marketing, Finance of Customer Insight audience. However, in my experience, Customer Insight (or Database Marketing) are best placed to bridge the gap between these two disciplines.

What you can find within Marketing Payback

The book itself is divided into 3 main sections. Part 1 covers “Is Marketing profitable?”, Part 2 “Solutions to common problems” and Part 3 “Financial Planning and Control”.

Part 1) Is Marketing Profitable?

The first of those sections really builds the case as to why this topic matters and frankly why you’ll want to read the rest of this book. It critically assesses the immaturity of much current marketing measurement and how the culture of some marketing departments mitigates against a more mature and accountable approach. Despite being written nearly a decade ago now, I sometimes feel like nothing has changed, as I fear some marketing departments have been lured by the glitter of digital/social/mobile channels.

Thus many have not carried across the kind of discipline which became the norm for direct mail effectiveness measurement. Shaw was also ahead of most thinkers in this area by highlighting both the importance of a basket of researched & analytical metrics and the need to consider behavioural psychology biases, in your own decision making and consumer thinking.

Part 2) Solutions to Common Problems

Part 2 then focusses the reader on some of the key tools used in implementing a comprehensive framework of measurement, across the full range of marketing investments. Topics covered here include: allocating budgets to above and below the line media mixes based on optimising payback; measuring integrated campaigns; the role of price and promotions; and the more advanced stage of customer equity management.

Shaw and David Merrick consider the role of brand spend (both brand changes and using a portfolio of brands to best advantage), plus more straightforward targeted direct marketing (with the complexity of integrated comms). Finally, they help you assess the adequacy of your Marketing MI, another topic I find is too often ignored in favour of reporting from Finance or Sales.

Part 3) Financial Planning & Control

The final part of this book may seem to be more focussed at Finance professionals. It is true that there is sound advice here on planning, budgeting, accounting, and tools to use in Excel. However, this section is also beneficial for both Marketing and Customer Insight professionals to understand. From a customer insight perspective, it helps to highlight key data that needs to be captured, and once again the translation role that CI can play in meeting the needs of both Finance and Marketing (e.g. when developing evidence-based marketing plans and budget allocations).

Finance business partners will also find useful checklists of elements needed, from Marketing or Customer Insight, in order to reach sound assumptions and the forecasts they require.

Throughout this, now classic text, Shaw and Merrick offer practical solutions in the form of suggested processes, templates and even a few equations for key ratios. I heartily recommend this book, hopeful that Customer Insight leaders will once again ensure a focus on Marketing Payback, not just adding more channel/media complexity without first understanding profitability. As Kotler says on the cover, “A landmark book…”.

What have you learnt about Marketing Payback?

Have you benefited from applying this expertise? If so, we’d love to hear your comments. Please share in the comment box below or on social media. How are you achieving more advanced marketing measurement?