Relationship to Financial Metrics
How does it meet the MMAP Characteristics of an Ideal Metric?
For each numbered characteristic: first line identifies characteristic (bold type) and second line describes how (not bold).
1. Relevant…addresses and informs specific pending action
2. Predictive…accurately predicts outcome of pending action
3. Objective…not subject to personal interpretation
4. Calibrated…means the same across conditions and cultures
5. Reliable…dependable and stable over time
6. Sensitive…identifies meaningful differences in outcomes
7. Simple…uncomplicated meaning and implications clear
8. Causal…course of action leads to learning/improvement for decision making in competitive context
9. Transparent…subject to independent audit
10. Quality Assured…formal/ongoing process to assure 1-9 above
How Does It Meet Overall Guidelines for Measures of Marketing Productivity?
For each numbered characteristic: first line identifies characteristic (bold type) and second line describes how (not bold). Measures of return on marketing investment should:
A. Provide a specific link to financial performance, no measure or measurement system is complete without one.
B. Reflect the standard financial concepts of return, risk, the time value of money and the cost of capital.
C. Provide information for guiding future decisions by predicting future economic outcomes as well as provide retrospective evidence of the impact of marketing actions.
D. Recognize both the immediate, short-term effects of marketing actions and longer-term outcomes, as well as the fact that short and long term effects need not be directionally consistent.
E. Recognize the difference between total return on investment and return on marginal return on investment.
F. Recognize that different products and markets produce different rates of return.
G. Distinguish between measures of outcome and measures of effort.
H. Provide information that is meaningful and comparable across products, markets, and firms.
I. Clearly identify the purpose, form and scope of measurement.
J. Be documented in sufficient detail to allow a knowledgeable user to understand their utility and make comparisons among alternative measures.
K. Be assessed relative to generally accepted standards of measurement development and validation.
L. Be recognized as a necessary investment for assuring sound decision-making, accountability, continuous improvement, and transparency for all stakeholders.