‘Please sir, may I have some more’…….money for my marketing budget

Published by Kelly West – Student ID:  500122265


During recessions marketing budgets top the list for dollars to be cut from their budgets. Is this fair? Money has to be saved from somewhere for organisational survival right? Well this now avid ‘expert’ marketing blogger (self-proclaimed) argues that marketing is just as critical as any other organisational department such as Human Resources, Finance or IT. To be balanced though I also argue that like any other organisation departments, the marketing budget and spend must be justified and the effectiveness measured. In the Marketing Department metrics can be used to just this.

This blog discusses the following:

  • The importance of marketing metrics,
  • The different types of marketing metrics and,
  • Marketing metrics strengths and weaknesses


Why are marketing metrics important?

Let us start with the basics, what are metrics?  Metrics are defined as a wide range of tools that managers can use to evaluate performance (Investopedia, 2007). As described by Sharp (2013, p. 81), ‘marketing metrics let managers know how the brand and business is performing.’ If my argument above that marketing is just as critical as any other organizational department then marketing managers need a way to justify organizational spend on marketing and at the risk of putting it simply, this is why marketing metrics are so important.

If we think about it there are many other reasons for why marketing metrics are important, as metrics allow for the measurement of performance, there are many other benefits that managers could realize from using marketing metrics.  As stated by Iacobucci (2014), ‘you can’t manage what you don’t measure.’ Some other benefits managers could realize from using marketing metrics include:

  • The ability to track performance and identify areas of improvement,
  • Make measurements to allow managers to make marketing decisions and,
  • Assist in reporting of performance to key stakeholders

Now that we have discussed and all understand why marketing metrics are important, let’s focus next on the type of marketing metrics.


What are the different types of marketing metrics?

Many people, including myself before I really understood this topic, saw financial metrics (the measurement if financial performance) as the only metric that mattered. Amber & Roberts (2008) challenged my view and question if a single financial indicator, also known as a ‘silver metric’, can provide an adequate report on performance.

Sharp (2013) identify various types of marketing metrics that could be used, these include:

  • Financial,
  • Customer Profile Metrics,
  • Behavioral Metrics and,
  • Memory Metrics

Financial metrics include:

  • Profit Margins,
  • Return on Investment (ROI) = Returns – Investment/ Investment (Burrows, 2014),
  • Profit Contributions and,
  • Customer Life Time Value

Customer profile metrics include:

  • Customer demographics/ descriptors of customers
    • Gender
    • Age
    • Income

Behavioral metrics include:

  • Sales,
  • Market Share and,
  • Purchase Frequency

Memory metrics include:

  • Brand Awareness,
  • Attitudes,
  • Brand Image Associations and,
  • Net Promoter Scores

The conceptual model as show in figure 1 below is identified by Mintz and Currim (2013), this model supports Amber and Roberts (2013) view that managers should not just focus on financial metrics.

Capture 1.JPG


What are the strengths and weaknesses of marketing metrics?

Many of the positives of using marketing metrics have been discussed above such the ability for managers to have data to assist in their decision making, enabling reporting to key stakeholders and justifying increases in marketing budgets.

There are also some limitations with marketing metrics and it is important that these are recognized by all of you budding marketing gurus so you will be able to be aware of them and implement strategies to counteract the limitations.

A major potential limitation of metrics is if only one type of metric is used, such as financial. Whilst financial metrics are important they must be used in conjunction with other metrics such as customer profile or behavioral. Another limitation of metrics is the quality and integrity of the data used, as the saying goes, rubbish in = rubbish out. It is critical that the data used for metrics is quality and the interpretation is unbiased and the metrics speak for themselves.


Australian business are predicted to spend in excess of $13.5 billion in 2016 alone. With businesses investing this sort of money in marketing it is easy to see why marketing metrics are so important as they assist managers evaluate, justify if you will, this necessary spend! If managers use marketing metrics effectively they may even be able to justify increases in marketing budgets and no longer have to beg like Oliver Twist for more  $$!

Student ID:  500122265


Clark, B. and Ambler, T., 2011, ‘Managing the marketing metrics portfolio’,   Marketing Management, 20 (3), p. 16-21.

Burrows, D., 2014, ‘Too many metrics: The perils of training marketers to calculate ROI’  

Iacobucci, D., 2014, Marketing Management (MM4). Mason: South-Western, Cengage Learning.

http://www.investopedia.com/terms/m/metrics.asp [Accessed 3 October 2016].

Sharp, B., 2013, ‘Marketing Metrics Marketing: Theory, Evidence, Practice’, Oxford University Press, Melbourne, Australia.

http://www.smh.com.au/business/media-and-marketing/australian-advertising-market-to-hit-135-billion-in-2016-20151220-glrs3i.html [Accessed 2 October 2016].


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