Marketing Accountability: Practical Challenges and Research Opportunities

Investments in marketing represent an important component of corporate expenditures and off balance sheet, intangible market-based assets comprise an increasing share of a company's market value. Effective marketing calls for justification of marketing investment decisions ex ante, and evaluation of the outcome of such investments ex post. Marketing Accountability as a research theme highlights the importance of making and evaluating marketing investment and expense decisions. In recent years, there has been a renewed emphasis in demonstrating that marketing investments can translate into profitable growth. The challenges we face in marketing measurement today are not limited to improving marketing mix models, to assessing returns to marketing, or to examining the right metrics, but creating the right combination of analytics, research, and business case-based findings to guide both strategy and implementation in more effective and efficient ways. At the same time, the rise of new channels, such as the Internet and mobile communication, and the increasing importance of word-of-mouth and sponsorship, make marketing resource allocation decisions much more complex. CMO's and marketing executives are increasingly under incredible pressure to make every dollar count. Now more than ever, it is imperative to demonstrate the ROI of marketing activity. Ex post evaluation of the outcomes of marketing decisions and programs is just as important as the ex-ante, often normative methods of making such decisions. Research on this area would likely shed light on valuation of important intangible assets such as brand and customer equity, and the return on activities such as advertising, sales force expenditures etc. Such understanding has the potential to enhance the quality and informativeness of financial statements. However, there are many marketing performance assessment and resource allocation issues that need to be sorted out: ? What is the impact of marketing investments on short-term performance metrics (e.g., margins, earnings) versus creation of future value (e.g., growth, valuation ratios such as price-earnings multiples)? ? Do firms sacrifice long-run value creation by cutting back on marketing investments in order to meet earnings targets? ? What is the impact of quality of earnings (e.g., recurring cash flow from repeat customers) on valuation? ? Does the market value "marketing performance metrics such as customer satisfaction or customer/brand loyalty? Do such metrics influence analyst recommendations? ? How does uncertainty of payoff on marketing activities impact resource allocation decisions? Do "de-risking strategies improve P/E multiples? Developing responses to questions above require integration of multidisciplinary perspectives and research collaboration.