·         Twitter users grew from ½ to 7 million over 12 months

·         Working adults are main audience

·         35-49 year olds are 42 percent of users

·         2-17 year olds are 4 percent of users

·         62 percent access it from work

·         About 60 percent of people using Twitter abandon it after a month

·         Compared with Facebook and MySpace, Twitter users are disloyal

So does Twitter provide a stable and reliable long-term promotional mechanism?

A joint working party of Chartered Institute of Management Accounts, the Chartered Institute of Marketing and the Direct Marketing Association has launched Return on Ideas: Better results from finance and marketing working together to improve the working relationship between finance and marketing departments by establishing a set of clear, effective practices that will help both to communicate in a ‘common language’.

Return on Ideas addresses the perennial issue of accurately assessing the financial value that marketing departments add to the bottom line of corporations. While the apparatus of direct marketing makes it the most accountable form of marketing because of its ability to provide a clear outline of return on investment, companies often lack a sufficient blend of marketing and accountancy acumen, either to establish the value of their marketing campaigns or to account to shareholders on the effectiveness of investment in marketing. This is particularly important at a time when the economy is stalling and companies need to make well informed decisions when cutting costs.

Return on Ideas was authored by Dr Robert Shaw, Honorary Professor of Marketing Metrics at Cass Business School. Dr Shaw surveyed more than 100 organisations to understand where marketers succeed and fail in working with their finance business partners to create and demonstrate marketing’s financial worth. Dr Shaw also researched current academic measurement theories that are commonly used by accounting firms, consultants and marketing service firms. The outcome of this candid research led to Dr Shaw’s development of the Infinity Model, a practical framework that can be used by any size of organisation in any market to create greater sustainable value.

The Infinity Model encompasses the following principles:

• The processes that deliver ideas, predictions and demonstrations of value must run smoothly and should be aligned with other corporate processes
• It is also a matter of ensuring that marketing kicks off the business planning cycle and that marketing and financial plans are aligned throughout the financial year
• A well-balanced team has the mix of people needed to imagine, predict and demonstrate value, with a creative tension between ideas and numbers
• Good ideas can come from not only marketing but finance, sales, customer service, production and suppliers
• Marketing people should be allowed the freedom to imagine and create value-adding ideas
• Rigour should be achieved through leadership and motivation, with marketing insisting on rigorous cost-benefit analysis of their own ideas
• Ideas should not be killed off or subjected to prolonged delays just because the data about them is not perfect

Click here to download your free copy of Return on Ideas.

Yet a recent report, Return On Ideas, commissioned by CIM, CIMA and the DMA found too often marketing budgets are wasted through ignorance.  And this just needn’t happen when both parties could spend a day or a week applying the findings of the report.

We set out to define some practical steps that can be taken to strengthen working relationships and get better results. We include checklists and procedures that can be applied practically – even in one day or one week you can achieve significant improvements.

What mistakes do companies typically make?

Affordability is the key to intelligent marketing – it’s the counterbalance to marketing’s aspirations. It’s also where finance should help by telling marketers things they don’t already know about what is and isn’t affordable. While affordability should never destroy marketing’s aspirations and creativity, creative tension between affordability and aspiration is good.

Ignorance about affordability leaves marketers too reliant on aspiration, leading them to make mistakes. The first mistake marketers make is buying “must-have” iconic data on brand awareness, customer satisfaction and loyalty. The second mistake is spending time and money watching PowerPoint presentations of this iconic data. The third and final mistake is the pursuit of aspirational goals that are unaffordable.

Iconic “must-have” status has been conferred on certain data items by conference speakers, books and articles. Marketers also face great pressure to buy from hundreds of data, research and polling firms and, as a result, they collect data a bit like boy scouts collect badges, based on aspirations. Let’s look at the three common “must-have” metrics and the balancing act between aspiration and affordability.

Brand awareness is “Top of the Pops” in marketing. Often it’s low say, for example, 50 percent of the population are brand aware. Aspiration can lead marketers to chase 60 or 70 percent brand awareness. But the affordability test may lead the wise marketer to abandon their aspirations. So what if we’re not famous? Is awareness-raising likely to succeed – at an affordable cost – and will the benefits outweigh the costs?

Customer satisfaction is another aspirational metric. Sat-scores often hover round 6 or 7 out of 10. Consumer behaviour research explains this – most products and services are intrinsically boring and so never achieve 10 out of 10. Aspiration again can make management want to chase 100 percent satisfaction scores. Again the affordability test may lead the wise marketer to abandon their aspirations. So what if all our customers aren’t delighted? Is it feasible and affordable; will the benefits outweigh the costs?

Loyalty is the third iconic metric. It’s never high, customers are naturally promiscuous purchasers and in some markets it’s really low. Aspiration once more leads to macho slogans about “zero defections”. Affordability considerations may refocus intelligent marketers on customer acquisition, and driving down the costs of acquisition, despite retention being the more fashionable idea.

Don’t misunderstand, market research, polls and surveys can sometimes contribute useful information. However, they should always stand alongside financial information about affordability, nor should they support marketing in the same way that a lamp-post supports a drunk.

What is the Return on Ideas report and the “infinity model”?

Getting the right balance between affordability of marketing and aspiration is a frustrating challenge for many finance professionals. To help them, we’ve published an important new report “Return on Ideas”. What we’ve delivered isn’t theoretical or waffle. The report is packed with practical suggestions, checklists and case studies, solidly based on candid research on over 100 organisations, large and small and across industries. When we shared it in draft with a sample of CIMA members they gave it their unanimous thumbs up.

Click to download the full 40 page Return on Ideas report

The need for this guidance paper came from joint discussions between the Chartered Institute of Management Accountants (CIMA), the Chartered Institute of Marketing (CIM) and the Direct Marketing Association (DMA). It emerged that members of all three professional bodies were concerned about the value contributed by marketing and what constitutes sound evidence about its value. Pivotal to this, they also recognised the need to drive productive teamwork between finance and marketing working together.

Finance and marketing sometimes have disjointed working relationships. They often ask different questions and they answer them in different languages. Questions that finance ask focus too much on budgets and too little on performance; and marketing focus too much on brand awareness and image and too little on sales and profit performance. Everyone retreats into their own technical jargon, each bewildering the other and wasting lots of time pursuing irrelevant questions. Ultimately any attempt at finance-marketing dialogue gets derailed.

The Infinity Model

The essence of this candid research has led to the creation of the “infinity model” – an innovative framework designed to put the finance-marketing dialogue back on the rails. Full of practical self-help exercises, questions, checklists and illustrative case study examples, the report is prescriptive about what constitutes good and bad evidence about marketing efficiency and effectiveness, and it enables managers to decide for themselves what is feasible. The model can be tailored to the needs of all types and sizes of organisation.

What we found is the best organisations have a positive creative tension between financial rigour and the marketing imagination. More specifically this involves:

• harnessing the marketing imagination to create value adding ideas
• predicting how much financial value these ideas will contribute
• delivering and demonstrating that value really was created
• establishing learning that will improve future ideas, predictions and results.

This creative tension is found in all their working practices, and these are things that any other organisation can and should copy. Managers can assess their adherence to this model by answering the questions listed in the report’s checklists.

Figure: the infinity model of marketing value creation

By adopting this double cycle, the failure rate of marketing ideas and associated waste can be reduced significantly. It can never be totally eliminated because customers are forever changeable and are never completely predictable. Good senior management accept uncertainty and risk as an innate part of marketing. They do not try to force a ‘right every time’ philosophy; instead they manage uncertainty using the best methods available.

What can companies do to put the report into practice?

A lot of progress can be made in just one day, through holding a workshop with finance and marketing. By discussing the questions listed in the report, participants can find out how they can do a better job of making marketing more efficient, effective and value adding. In the process they will start to speak a common language that focuses on performance as well as conformance.

Having a follow-up session with the managing director, or business unit heads, can be helpful too. The report sets out departmental specific questions to be answered by the key players. A common issue that such discussions can resolve occurs when business units hold the marketing purse strings, and they use the marketing department as an internal service function. All too often such expenditure is squandered on vanity projects, whose sole effect is inflation of managerial egos, without sound commercial justification.

Quick wins from these workshops can be put into practice with immediate benefits. A longer term programme of change may be identified too, and the report contains a road map to plan out this more strategic approach.

So what are the benefits?

Ten of the benefits of this are:

1. Making the marketing budget work harder
2. Holding Agencies rigorously to account for results
3. Eliminating production wastage and its causes
4. Making marketing assets and collateral (images, video, text) work harder
5. Maintaining media effectiveness while reducing costs
6. Getting Agencies to do a better job in less time
7. Avoiding surprises in budget commitments
8. Wasting less time on budgetary bureaucracy
9. Faster marketing approvals with fewer errors
10. Forecasting more accurately

Conclusions

This report is aimed at giving practical help to any organisation that has to market itself. Free to CIMA, CIM and DMA members, grab a copy of the report, read it and run a workshop. We believe this is the way of the future for responsible marketing in the 21st century.

How would you like to focus your creativity more effectively, take the brakes off processes, tighten controls and be more transparent, all while trimming costs?

You’ve performed every creative trick in the book, won awards, the agency worships you but still the CFO and CEO aren’t impressed. They grumble about thriving on chaos, the lack of transparency, the fear that you’ll breach regulatory compliance and the sneaking suspicion the agency is ripping you off. Then they cite the recession as grounds for axing your marketing budgets. Frankly it may be time for you to bite the bullet and embrace the need for marketing logic.

Yet we’d wager your agency will push back; they’ll entreat you that all the necessary logic is already in place; they’ll maintain that what’s needed is magic. Your own team may be unsympathetic towards their work being checked, tested and formalised. So who should you believe, your CFO, your staff or your agency?

To make it easier to answer this question objectively, we’ve developed a simple set of Idea-to-DemandTM Guidelines (I2D) to explore and map your marketing logic, and discover bottlenecks, disconnects, muddle and wastage. Having done this, you must then make sure to choose practical solutions, where logic won’t destroy magic.

Exploring and Mapping your Marketing Logic

The I2D Map (see diagram) presents a path for exploring and mapping your marketing logic. The central concept is to follow the logic by which ideas flow from creative minds and keep following them to see how efficiently they are processed and how effectively they grow and sustain demand. A map is useful because the logic is often foggy; it’s obscured by clouds of waffle, half-truths, hype and humbug.

In the many client investigations conducted using this methodology, 90 percent of management attention is on the “magic”, the ideas end of the process where creatively minded people work in a stimulating environment. Yet 90 percent of the cost is incurred in the “logic” part of the process, where the back room people work, their jobs and lives unacknowledged without the glamour and excitement of “magic”. The logic often suffers from neglect, and when it inevitably breaks down, costs spiral out of control, deadlines get missed and results are disappointing.

With a good map, the logic can be explored, and all the forward and backward steps tracked as different players interact with different ideas and agendas; these steps involve marketers, company lawyers, purchasing personnel, external specialists in media and production, sales people, the company’s supply chain, R&D engineers, management accountants, distributors, dealers and so on. Tracking this logic can reveal bottlenecks, duplication, wastage, logic failures, and candidates for change. Here are some examples.

The Logic of Ideas
How logically are you managing ideas? Do you have enough ideas or too many? With many creative projects in play, it becomes harder to weed out the many mediocre ones that burn up management time and resources, and even more insidious, the really few good projects get starved of resources.

The Logic of Production
How logical is marketing production? Is it over-complex; are all the steps and signatories really essential? Are you paying a realistic price for production supplies and suppliers? Is time and money being wasted? Have you too many suppliers and agencies? Are image and text files getting duplicated and reinvented by people in different locations, departments and business units? All this complexity causes missed deadlines, compliance errors, scrap and re-work, cost over-runs, duplication of work and overspend on duplicated images.

The Logic of Distribution
How logical are your media and channels? Is your media agency working for you, the media owners, or out for themselves? Are they giving enough care and attention to media selection and scheduling? Are channels and intermediaries squandering and misusing your marketing material? Are they telling you one thing and doing something else?

The Logic of Demand
Is marketing connecting logically with demand? Or is marketing just image and window dressing? Are you spending too much attention on consumer attitudes and trade satisfaction and too little on results? Are you making enough effort to analyse and explain demand patterns?

The Logic of ROI
Do your marketing ideas have positive returns? Or is marketing just an act of faith? Are you estimating every penny you get back for every penny you spend?

Adding logic to the magic
By answering these questions, you’ll also generate a list of problems. Which ones should you try to solve, and when and how? You need to find practical solutions with tangible benefits that avoid destroying the creative magic. Here are some examples where logic delivered has tangible benefits.

Rethinking Ideas
• Share ideas and encourage collaboration
Use modern information systems to share ideas and encourage collaboration. Innovative ideas that are scattered across regions, countries and business units, stored in emails, word documents and spreadsheets, should be shared in a common ideas bank to encourage collaboration.
A $30 billion global technology company with a long history of creating innovative products and services. However their innovative ideas were scattered across regions, countries and business units, stored in emails, word documents and spreadsheets, without any easy way of sharing and collaborating. Because there was no central database, they were missing opportunities to get everyone on the same page and improve the efficacy of our innovation processes. Today they have implemented a system that shares ideas and encourages collaboration. The system has given them the support needed to achieve their ‘One Company Roadmap’.

Rethinking Production
• Simplify and automate production checks and controls
Multiple production checks and controls are useful only when the risks are high. Map out the processes, find out who are signatories and reviewers, check the legal implications of checkpoints, and then robustly cut any checks and controls that are not absolutely essential.
One of the five largest pharmaceutical companies in the world produces many thousands of promotional pieces every year. In the highly regulated and compliance laden industry, maintaining control while improving efficiency is doubly challenging. They are addressing these challenges by implementing a powerful workflow system that integrates the medical, marketing, legal and regulatory and sales departments, tracking work as it zig-zags between departments and tracking signoff and review to ensure tight compliance and rapid turnaround. They have managed to reduce cycle times by 80% and are able to respond faster to competitive and regulatory changes. And by oiling the wheels of marketing production, their creative teams have more time to spend on ideas.

Rethink Distribution
• Monitor and control media selection and buying
Demand much greater transparency from the media buyers and owners: clear media briefs; rolling media plans; reviewing final media buys against planned buys; media invoices and proof. Already it is becoming common practice for media auditors to carry out annual reviews, but companies are also beginning to recognise that bringing the monitoring and control in-house is a more satisfactory solution.
A large entertainment company spends tens of millions on TV advertising. With up to 100 campaigns in parallel, they relied almost entirely on hunch and gut-feel in placing their weekly media purchases. To improve the return on advertising, they built a dynamic demand analyser that analyses all 100 campaigns in parallel and provides guidance on where optimally to place their next media purchases.

Rethink Demand
• Enhance demand forecasting
Early warning systems that gather information from all key points on the distribution chain – media, sales, intermediary and channel activity – can be plugged into forecasting systems to give more accurate forward projections so that the supply chain is synchronised better with the demand chain.
One of the world’s largest cosmetics companies, employing more than 50,000 workers in Europe and the Americas lacked a single demand planning system and process. Forecasting was conducted manually using Excel spreadsheets and it was a time consuming process. The manual process didn’t have the ability to shift its key metrics quickly, a capability that is critical in the beauty industry. What they needed was a demand forecasting tool that could support process standardization and produce a systematic input for the supply chain. So, they replaced their “spreadsheet city” with a state of the art demand forecasting tool. It captures key forecasting inputs from the sales teams, from marketing planners, pricing teams and sales promotions planners, and enables them to deliver robust forecasts in the fast moving beauty industry.

Return on Ideas
• Making ROI routine
All significant marketing activities should be evaluated, rigorously and independently of the agency concerned; don’t take the easy option of letting the agency mark their own homework. A large consumer products firm has introduced a standard evaluation template; at planning time, the brief is accompanied an evaluation plan; budget is set aside to pay for the evaluation; post-launch and 6 months later they evaluate the projects, learning which worked effectively and which didn’t and why. This learning has not only pleasing the CFO, even the creatives like it.

Conclusions
In the majority of cases we’ve worked on, there was an overwhelming case for adding logic to the magic of marketing. By following the I2D Map, marketing organisations explored the practical opportunities to deliver more, to focus their creativity more effectively, take the brakes off their processes, tighten controls, be more transparent, all whilst shaving 10 percent off costs and smooth things with their CFO. None of them reported that magic suffered, most reported that creative people were happier working in the new more logical environment.

This is an abridged preview of an article by Robert Shaw and Philip Kotler appearing in the AMA Journal Marketing Management.

Concludes it’s pretty much a waste of time and money.  The Journal of Digital, Direct and Database marketing comments “don’t just read it – frame it”.