Are Standardized Marketing Metrics Too Hard to Measure?

A growing movement in the market for more standardized marketing metrics.

As part of a recent sales and marketing support project for a portfolio company, I needed to get some baseline data on marketing spend and marketing mix at mid sized companies across the industries. As marketing spend is tied to revenue, marketing spend is often benchmarked as a percentage of sales. However, outside of the well-known Schonfield & Associates, Inc’s Advertising ratios report, which gives estimates for the ratio of advertising spend to sales for top US companies, there is no other reliable source of such data. This dearth of this data actually reflects 2 issues with marketing metrics and measurements:

It is very hard to measure meaningful, insightful marketing metrics

While “raw” metrics such as web traffic, number of leads generated or click-through are measured accurately, they do not reflect marketing’s contribution to the bottom line or the growth thereof. The measurements of hard-nosed, ROI proof metrics such as (true) cost per lead, cost per new acquired customer, campaign-specific return on investment are beset with inaccuracies due to lead source attribution errors, lead database duplication and a lack of closed-loop marketing to help monitor the full lifecycle of the lead from lead capture to conversion.

Many marketers still think of marketing management as more art than science

While they do heed marketing metrics, they are not looking at the data closely enough and rigorously enough. For example, when I looked for the data point of “what is the typical percentage of marketing to sales” for a manufacturing company, I find that most marketers refer to a range such as “2 to 10 percent”. 2% and 10% differ by a factor of 5 — it is just not a good enough estimate to benchmark on.

When compared to other business functions such as Finance or Operations, Marketing departments clearly lack standardized measurements and this is hampering CMOs in many ways. Without universally understood measurements and widely accepted benchmarks, CMOs have to build very complex ROI models to convince their management teams of the efficacy of new marketing investments, especially investments into marketing automation technology or social media marketing. The lack of accuracy also leads to lost opportunities for optimizing the marketing mix, especially crucial today when the marketing mix includes a bewildering number of disparate media channels including social media, inbound marketing, influence marketing.

CMOs across the industries are recognizing this need and, hopefully, new technologies and a more scientific approach will help make this possible. At OpenView, not only are we looking out for vendors that provide this analytical functionality to help our expansion stage software companies optimize the marketing, we are also looking in this space to find a potential investment. This is a huge pain point, and any company solving it will be providing a huge value to marketing organizations across the industries, and thus enjoy a large untapped market for expansion.

Tien-Anh Nguyen
Tien-Anh Nguyen
Chief Business Officer at UserTesting

Tien Anh joined UserTesting in 2015 after extensive financial and strategic experiences at OpenView, where he was an investor and advisor to a global portfolio of fast-growing enterprise SaaS companies. Until 2021, he led the Finance, IT, and Business Intelligence team as CFO of UserTesting. He currently leads initiatives for long term growth investments as Chief Business Officer at UserTesting.
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