For many of us across the country whose fingers and toes are still thawing after the latest arctic blast, the thought of walking out to the backyard in August wearing flip-flops to check on that juicy steak sizzling on the grill cannot come soon enough.
Summer also represents a time when most marketers begin charting the course for the year ahead by building their marketing plans. The beginning of the planning cycle should be the pinnacle of the marketer’s year―the chance to step back from the daily grind, reflect on successes and challenges, and build out the next brilliant plan.

But the reality is that today’s modern marketer is concerned first and foremost with ensuring that the plan answers a simpler question―can I justify my marketing investment? This is unsurprising. The scrutiny on marketing budgets and today’s focus on accountability, measurement, and analytics are here to stay.

Inadequate vs. Incomprehensible

The problem is that the metrics and tools that many marketers use to report on their effectiveness are either inadequate or incomprehensible.

Let’s begin with the inadequate. Most marketers perform research that captures brand-led metrics such as changes in perceptions, awareness, satisfaction, and net promoter scores; measures that are useful but don’t translate directly to a number that the CFO or CEO can relate to. Reporting that your million-dollar brand investment was a success purely because it increased brand equity―a nebulous term even for most marketers―is a surefire way to draw a raised eyebrow or two.

Frustrated by a lack of understanding of marketing’s impact, organizations have flocked to conferences where big data analytics is held up as the answer to the question of marketing effectiveness. In 2014, North America alone will host more than 50 conferences related to marketing measurement! The explosion of big data has spawned the growth of hundreds of companies who say they can paint a precise picture of the contribution your Facebook advertising investment had on you buying that Wendy’s Baconator®, which of course had nothing to do with being over-served at the local watering hole that evening.

Next is incomprehensible. The problem is that the analysis is performed by incredibly intelligent data specialists who tend to make recommendations based purely on data outputs, ignoring the more nuanced aspects of consumer behavior. Presentations displaying curves that show that TV and digital spend contributed 8.2 percent to sales of diapers may look good on a CFO’s desk, but they diminish the role of the marketer who had little input in the analysis, and who will struggle to make sense of it as planning commences for the year ahead.

The big data gravy train is already in danger of veering off its tracks. This recent Forbes1 article is one of a growing set of literature that makes grim reading for anyone who thought that the advent of big data was the holy grail for marketing measurement.

The biggest challenge for marketers with any of the existing measures―whether inadequate or incomprehensible―is that for them to be useful for next year’s marketing plan, they rely on the flawed premise that the past will be an accurate predictor of the future.

Some marketers are gravitating to an emerging simulation technique that allows them to take their existing brand insights and other data to build forward-looking views of the markets in which they operate. The beauty of simulation―imagine SimCity with real consumers in a virtual world―is that it allows marketers to build not just one marketing plan, but many. We regularly hear stories of CFOs frustrated by marketers who submit plans that say they will increase next years’ sales by precisely 3.7 percent. Finance leaders understand that the future is uncertain and are used to analyzing forecasts as ranges with associated risk profiles and explicit assumptions.

Marketers should present plans that do three things:

  1. They should be formulated based on the analysis of multiple scenarios
  2. They should use explicit assumptions about the inputs that result in financial forecasts
  3. They should be presented with both an upside and downside risk

The result is not only a more thoughtfully complete view of the market but also an improved relationship between disciplines across the enterprise. Cisco’s marketing and finance leads have developed such a close working relationship that if there is some unused budget from other departments at the end of a quarter the CFO will touch base with the CMO to ask if extra investment will drive more sales. Often, marketing will dispense with the extra funds after the simulation failed to produce results that would have justified the investment.

This is great news for marketers who need to re-establish trust with other functional leaders. Simulation allows marketing to escape the dreaded cycle of having to go cap-in-hand to finance to beg for budget. Instead, it allows marketers to create plans that address investment decisions in a way that finance leaders understand while still capturing the behavioral aspects related to how consumers make decisions.

Gabriel Cohen is Monigle’s Chief Marketing Officer. In the middle of his first winter in Denver, he is dreaming of hot temps, wearing flip-flops, and eating a juicy steak, fresh off the grill.

If you would like to see a demonstration of how to use simulation to build your marketing plan, connect with us at Monigle.com or call 303.388.9358 and ask for Gabriel Cohen.

1 Satell, G., 2014, “Why Most Marketers Will Fail in the Era of Big Data,” Forbes Magazine, https://onforb.es/1g5ONol.

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Gabriel Cohen
February 14, 2014 By Gabriel Cohen