The Marketing Accountability Imperative is a practical guide on maximizing the effectiveness of marketing investments by Prophet CEO Michael Dunn, along with marketing effectiveness guru Chris Halsall. In it, they attempt to sort through the increasingly complicated marketing world by offering advice on metrics and analytic options in order to ensure your company's marketing strategy will result in long-term, profitable growth. Dunn recently spoke to Consulting about the book's tools, metrics and anecdotes designed to help marketers navigate through this new landscape by proving ROI and communicating their mission and results more effectively with the executives in the corner offices.
Consulting: Tell me a little bit about the book…
Dunn: We have a strong belief system that companies can use a sophisticated and competent approach to strategic marketing and brand strategy issues to deliver and create fundamental business value over time. That's kind of our fundamental premise. I'd say the biggest hurdle we kept running into is a little bit of reluctance and perhaps a little bit of inability for the leaders on the marketing side of this journey to take a more comprehensive approach to the financial accountability and returns these investments are going to drive for the business.
Consulting: How do you make that happen within an organization?
Dunn: I think where a lot of it has fallen down historically is when people throw up their hands and say 'we can't measure this, we don't have the tools, we don't have the data, we don't have the patience to put measurement in place.' Or, people have gotten so metrics-obsessed they think it's all about the metrics. All of a sudden you go from having zero metrics to having thousands of them. You get metrics overload. You drown in it.
And when you start doing some basic statistical analysis against the metrics the market says are relevant, you don't see any relationship between a lot of those metrics and business performance. Measurement is important, it's a starting point, but it's really only a weigh station on the road to better marketing decision-making. Focusing on the measurement without focusing on the decision making and how the measurement is supposed to feed into the strategy process, that feeds into the creative process, that feeds into the execution process that has an analytics plan associated with it and drives strong analytics and learning on the back end. Feeding all of that into a decision making process is really critical.
Consulting: With what's going on in the economy right now, what are the big pressures facing chief marketing officers? Is it pressure to improve ROI? 
Dunn: Yes, I think the pressure has been … increasing. I think this is a long-term trend. More people are writing really big checks to the marketing area, but in this kind of a broader macroclimate you're also getting the typical knee jerk reaction inside companies where they need to cut 15 percent of their operating costs. Where are we going to go? We're going to cut anything that feels discretionary [and that can mean] marketing. In the face of that kind of pressure, CMOs are reacting in a way that's very informed because they have to understand the performance of their various programs and make smart cuts that reflect an appropriate balance of trading off short-term programs for long-term programs.
Consulting: How would a CMO make smart cuts?
Dunn: People who have established or rely on their existing programs have the ability to go back and say, if we cut this below this, here's how it's going to affect sales. So right now, people are trying to come back to their organizations with ROI informed answers to how to direct the spending. The more immediate pressure is clearly the CFO asking for 10 percent now, but saying CMOs should be prepared to give me another 30 percent in a month. Organizations that haven't moved the needle from an ROI perspective are just scrambling to respond.
Consulting: How do you convince the C-level that marketing is not just another expense?
Dunn: Clearly we have not done a good job in helping [executives] understand the value of marketing. It is in this accountability issue where we have the biggest expectation gap between what [the C-level] is looking for, and what the marketing is delivering. I think we're seeing a lot of skeptical executive teams come around to the power of marketing when you help them understand how this is going to drive financial returns over time.
Consulting: You probably have that conversation with clients a lot. …
Dunn: We do. Where we focus is that it's not just about measurement. The whole middle of the book focuses on performance and where to focus if your marketing isn't performing, if your promotional investments are not performing, where could the investments be breaking down in terms of the choices that you've made or decisions that you've made? Did you make mistakes as you think about the strategies?
Is it not the right target with the right kind of benefits? Did you make mistakes or is your marketing investment under performing because of content choices that you've made? It's not just about how to improve your measurement, but how you improve your marketing. I think that is a helpful place to focus this conversation.
Consulting: I've been hearing a lot about analytics lately. How does analytics impact marketing?
Dunn: Analytics can drive measurement but so can experimentation. Everyone thinks its just about rocket science and econometric modeling. That plays a role, but there's also a lot that you can do that can give you directional guidance around the financial performance of tactics, which really doesn't require a lot of complex analytics associated with it. The investments companies have made in IT over the last 15 years create a much more data-rich environment for everybody. So better IT, data capture and customer relationship management… all of those investments give marketers a much richer set of information around which to do both experimentation and analysis.
Consulting: In terms of the consumer in an economy like this, are there things that marketers should be focused on right now?
Dunn: What you're seeing across certain categories in the consumer market right now is that the value curves have shifted for lots of consumers across a whole range of categories. You can see who's winning and who's losing. The retail sector, the auto sector and some of the service sectors are struggling. Clearly there has been a dramatic change in the psychology around value and what constitutes value.
A year ago, I would have been very comfortable paying $60,000 for a new car, right now I might not feel comfortable spending more than $30,000 for a car. How you respond to that depends on where you're sitting. If you've been very focused on building an exclusive brand that stands for certain things, it's not clear that just being Saks Fifth Avenue or Neiman-Marcus and discounting everything 80 percent is really a winning formula going forward. You could dramatically erode your franchise, and then when the economy rebounds, you won't have the ability to go capture the ground you used to have.
Consulting: You mentioned the luxury space. Luxury usually holds up in recessions, but not this time. Why?
Dunn: You see a dramatic shift of this value curve with consumers across the socio-economic spectrum. You've seen it in Europe, the U.S., Japan, and China. Again, you have to be careful: Can you go out there with propositions that address this new value paradigm in the short term without fundamentally eroding your brand?
Companies are coming up with some innovative ways to do that. Hyundai has a proposition in place where if you lose your job within a year after buying the car, you can return it. Those kinds of offers are innovative ways to address the shifting paradigm without fundamentally changing the overall proposition for your brand. I think you'd except to see marketers doing more of that as this continues.
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