While marketing does not lack measures, it lacks standard marketing metrics explicitly linked to financial performance in predictable ways. The Marketing Metric Audit Protocol (MMAP) is a formal process for connecting marketing activities to the financial performance of the firm.
Cash flow both short-term and over time is the ultimate marketing metric to which all activities of a business enterprise, including marketing, should be causally linked through the validation of intermediate marketing measures. MMAP includes the conceptual linking of marketing activities to intermediate marketing outcome metrics to cash drivers of the business. In addition, the audit examines how each metric meets the 10 validation & causality characteristics of an ideal metric.
Because MMAP identifies both problems and opportunities, the audit often results in a metric’s improvement. MASB Metric Certification has been earned by some of the top marketing measurement firms in the industry. See MMAP Metric Catalog.
10 Characteristics of an Ideal Metric
- Relevant – addresses specific (pending) action
- Predictive – accurately predicts outcome of (pending) action
- Objective – not subject to personal interpretation
- Calibrated – means the same across conditions & cultures
- Reliable – dependable & stable over time
- Sensitive – identifies meaningful differences in outcomes
- Simple – uncomplicated meaning & implications clear
- Causal – course of action leads to improvement
- Transparent – subject to independent audit
- Quality Assured – formal/on-going processes to assure 1-9
The MMAP Process
1: Identify Cash Flow Drivers
There will be at least one source of cash and one business model. In many businesses there is a dominant source and a dominant model.
2: Identify Intermediate Measures of Marketing Outcomes
Distinguish between measures of efficiency, like CPM and cost per lead, and measures of effectiveness, like redemption rate for coupons and market share. Focus first on measures of effectiveness.
3: Identify the Conceptual Links
Every marketing action should have identified outcome marketing metrics. If there is no logical link between a marketing outcome and a cash flow driver, you might question the need for the associated marketing activity.
4: Identify the Causal Links
When there is uncertainty about the causal link between a marketing outcome and one or more cash flow drivers, validation or test is appropriate—especially if the costs of the marketing activity are high (validity and causality audit).
The MMAP Metric Catalog is a collection of reports profiling each metric that has undergone a MMAP assessment. These reports provide vendors and users of marketing performance metrics with:
- a systematic way of thinking about specific metrics
- criteria for assessing their usefulness (i.e. predictive validity and sensitivity)
- their relationships between one another
- their relationships to measures of financial performance
Practices & Processes Underlying the Development & Management of an “Ideal Metric” – Measuring and Improving the Return from TV Advertising (An Example)
Metric Catalog Project Updates (MASB Members Only)