Ask marketing leaders how many clicks their email campaigns generate, how often consumers tweet about the company’s products, or how many viewers have bathed in the glow of its TV advertisements, and they’ll point to spreadsheets stuffed with data. But ask what these tactical results say about the trajectory of the brand and overall business, and they’ll struggle to offer a useful explanation.
Economists long ago surmounted the problem of squaring both the specific and the general by developing two broad camps. Microeconomics handle the realm of the bottom-up, while macroeconomics put nomenclature and numbers on the top-down—the obvious example being GDP (gross domestic product) and its usefulness in gauging the economic health of an entire nation over time.
Marketers today are masters of the “microeconomic” approach, fluently reporting on bottom-up, channel-specific metrics such as sends, opens, clicks, followers, likes, pins and TV gross rating points. But they lack a corresponding “macroeconomic” vocabulary that lets them make sense of the big picture: How is marketing performing and how are our efforts driving business growth?
Marketing leaders don’t want to be tactical. Every noun in marketing is preceded these days by “integrated,” “strategic” or “omni.” And they’re really doing it—modern marketers are master orchestrators, creating integrated cross-channel plans and spectacular omni-channel experiences to entice customers. Yet marketers are trapped in a world of at-hand, tactical metrics that the CEO, CFO and COO couldn’t care less about. Many CMOs have tried (just once) to tout “new followers” or “total clicks” in a board meeting, only to see their peers’ eyes glaze over.
But if tactical metrics don’t matter at the strategic level of the business, what does? Metrics that allow marketers to see the big picture and tell a story of impact with numbers.
Today’s data-driven marketers are doing just that. Similar to GDP, CPI (consumer price index) and other macroeconomic indicators, the new marketing metrics are derived and aggregate measures of overall effectiveness, cost-efficiency and how the health of the business and brand are trending. You may need a dozen tactical metrics to calculate just one of these diagnostic ratios, but once you do, you gain much more than the sum of its parts. You establish a powerful macro-indicator that, in one succinct number, captures rich dimensions of strategic insight.
Let’s cover just a few of the many compelling “macroeconomic” marketing metrics.
Starting at the top of the marketing funnel, the paid-to-earned media ratio asks, How many brand impressions did the company have to buy compared to the impressions that consumers propagated for free via social media? (Think Apple, and its enviably low paid-to-earned media ratio.) To calculate it, you’ll need all your paid media impressions plus customer engagement metrics across all channels—but instead of tracking 57 things, the executive team can track this one measure.
A corollary macro-indicator of spend efficiency is CPE (cost per engagement) and MROI (marketing ROI). CPM (cost per thousand impressions) did the job for the relatively static and one-way marketing tactics of the last decade, but CPE and MROI will likely define the next one.
Moving down the funnel, customer acquisition cost takes the entire cost to obtain customers (marketing’s primary job) over a given time and divides it by the number of customers the company actually acquired, revealing how well the company’s economic engine is working.
Customer lifetime value (a close cousin and another key role for marketing) estimates the average revenue businesses can expect from a single customer for the duration of the relationship. Customer lifetime value minus customer acquisition cost paints a picture of profitability at the most fundamental unit of measure—a customer.
None of these nor the many other “macroeconomic” marketing metrics that succinctly show marketing’s effectiveness and impact on the business will magically sprout from traditional execution tools or teams. There is synthesis and calculation to be done. But as marketing becomes choked with tactical data, none of which matters to strategic leadership, marketers must master a new sort of measurement, which, like good leadership, is focused on the big picture.