Marketing effectiveness can feel like starting a daunting new fitness regime, but businesses that follow a holistic program can unlock big rewards. New research has found that Australian companies with advanced marketing effectiveness capabilities also record strong revenue growth.

What do we mean by marketing effectiveness?

If you believe marketing effectiveness is only about investing in a marketing mix model (MMM) to prove the ROI of your latest campaign, then it’s time for a rethink.

While it’s easy to be seduced by what a trendy new MMM can offer, using it in a vacuum is equivalent to eating fast food and then wondering why you’re not hitting your fitness targets.

In contrast, best-in-class marketing effectiveness is equivalent to eating a balanced diet, exercising regularly, and committing to mindfulness. It’s a holistic approach that drives business-wide growth. What does this look like in practice? Best-in-class programs are built on having advanced capabilities in the following four areas:

1. Define success: A clear vision for, and alignment with the c-suite on, the role that marketing plays in driving business growth and how that should be measured.
2. Data excellence: A robust, agile data strategy backed up by structured processes.
3. Advanced measurement: The ability to deliver actionable insights via a range of analytic techniques which measure the full impact of marketing over the short and long term.
4. Foresight: Data-driven techniques that enable you to plan for multiple potential scenarios that are likely to affect the business in the future.

These capabilities must be underpinned by a strong culture – one in which values, beliefs, and behaviours ensure data-driven decision-making is the norm.

How advanced capabilities can unlock revenue growth

Analysis by Gain Theory, based on a survey conducted by WARC, has found over two-thirds of Australian companies that post strong revenue growth – defined as +5% – also demonstrate advanced marketing effectiveness capabilities.

This is the headline finding from Gain Theory’s report, Unlocking Revenue Growth with Marketing Effectiveness: Insights for Australian Marketers, which contains recommendations for marketers who want to develop advanced capabilities. I’ve picked out three that I think are important: 

1. Create a hierarchy of metrics 
   Effective marketing will only occur when marketers and the c-suite agree on how marketing contributes to business growth and how that should be measured.
   
   “One of the problems we face is that there are too many options with metrics,” says Annabel Archer, Marketing Communications Manager at Mars. “We need to be better at agreeing on the one, two, or three metrics that determine success versus measuring 20-30.”
   
   Developing a clear hierarchy of metrics – one that links the CEO’s priorities (e.g. market share growth) to the bottom of the marketing organisation (e.g. campaign analysis) – helps to achieve this goal.
   
   It requires alignment across the business about the role that marketing plays in driving growth and about the priorities required to deliver it. This will require frank, but ultimately important conversations. Without this foundation, you risk measuring things that don’t drive growth and don’t resonate with other key stakeholders.

2. Incentivise and evaluate employees to use data  
   Best-in-class marketing effectiveness requires data to be used to inform decisions. Alongside data being stuck in siloes, a lack of skills, and a reliance on gut instinct can prevent this from happening.
   
   Training is one obvious way to overcome this, but another way is to incentivise and evaluate employees to use data appropriately.
   
   Our research found that 72% of marketers at companies posting strong revenue growth are evaluated and incentivised based on how well they use data to inform the decisions they make. This compares to just 55% of marketers at companies posting poor/no revenue growth. 
   
   Providing financial rewards, such as bonuses or profit shares, is one way to incentivise people. If you go down this route, it’s essential that they’re measured against meaningful KPIs that demonstrate business impact.
   
   But it’s important to remember that incentives don’t have to involve money. Company-wide recognition – think awards, perks, or praise – is a great way to motivate people who already do a good job of data-informed decision-making to want to do it more. Seeing colleagues winning awards for using data and insights can also motivate others to change behaviour.
   
   However you incentivise and reward employees, it’s important that you continuously evaluate how they use data – e.g. the percentage of goals achieved with data-driven decisions. A structured process that enables you to provide regular, constructive feedback to individual employees can help to ensure such behaviour becomes embedded over the long term.
   
    
3. Improve effectiveness culture through foresight
   A strong effectiveness culture in which data-driven decision-making thrives is a hallmark of successful companies.
   
   “A data-led culture needs to be instilled, supported, and championed at the highest levels of the business because that helps to get buy in from everyone else,” says Roger Dunn, Global Lead for Retail Media and Performance Media at Diageo. “When there's buy in, everyone understands the direction you're going in and can work towards it as a shared goal."
   
   One of the barriers to developing such a culture is a lack of trust – if decision makers don’t trust the data and insights that they’re presented with then recommendations don’t get actioned, morale can decline, and growth suffers.​ 
   
   Our report shows that 72% of marketers working at companies with strong revenue growth say that data, analytics, and insights are trusted by their teams, compared with 59% of those with poor/no growth. 
   
   One way to build trust is to employ foresight techniques, such as scenario planning and war gaming. They provide plans and tactics that can be deployed under a range of credible future scenarios, such as if you decide to increase your prices by 5% or inflation rises by 2%, to ensure overall growth targets are met.
   
   Armed with this information, marketers can demonstrate an understanding of different business drivers and the impact that pulling different levers can have on business KPIs to senior stakeholders. This is a great way to build trust.

Inspiring new evidence

The time and effort required to get your marketing effectiveness program fit and firing is not insignificant, but it is worth it. MMMs are an important component, but to drive business-wide growth you need a more holistic approach.

“Building an analytical model is easier than ever but leveraging the results across the organisation is another skill,” says Nico Neumann, Associate Professor at Melbourne Business School. “It's inspiring to see new evidence that acting on insights pays off for marketers and is directly correlated with revenue growth.”