For B2B companies, content marketing doesn’t pay off, nor does shared media produce business impact (except maybe in a crisis). Most marketing departments spend money long after the point of diminishing returns. These are just a few of the shocking findings that Mark Stouse presented at the recent Summit on the Future of Communications Measurement.
When Stouse, CEO and Founder of Proof, spoke at the Summit a year ago, data was just beginning to emerge from his customers. That data was showing communication’s affect on business in a whole new way, one that accounts for the delay between when marketing or communications happens and when that investment has an impact. Proof, a business impact analytics software solution, takes communications, marketing, HR, and other functional data and correlates it to sales and ultimately to financial performance. Proof shows the business impact of the most common communications tactics—even when causes and their effects are many months apart from each other.
This year Stouse brought a year’s worth of his customer’s data to the Summit. His learnings are compelling. While his data yielded many conclusions that fall into the “Holy cow, I wouldn’t have expected that!” category, I’ve ranked them below based on my personal reaction. (I encourage you to see his full presentation here.) Again, all these conclusions are based on customer results from Proof’s analysis of data:
- B2B content marketing is very costly and very often ineffective in its business impact.
- Many of the marketing departments in the sample appear to be spending at levels above the point of diminishing returns.
- Due to the ramifications of the extended time lag to impact, an investment in B2B marketing is ~30 times riskier than the same investment in B2B sales.
- In B2B, performance of shared channels has little correlation to business performance. The only exception appears to be in a crisis.
- In B2C, paid and owned channels, together with “review channels,” generate revenue and shorten sales cycles. However, earned and shared channels deliver greatest impact on upsell and total share of wallet.
- Decision risk is the most determinant factor in the decision to buy. When risks are perceived as low, people tend to care more about other factors, e.g., alignment on social values. Marketing risk in short-cycle businesses is overall much less risky than for B2B because of the rapid feedback loop.
- In B2B, earned channel performance impacts mid- and late-stage portions of the buying process, while paid and owned dominate the early stage. Earned channels have much higher correlation to deal size and deal velocity than paid and owned.
- Inelastic supply or demand can skew expected norms around marketing or communications impact, e.g., United Airlines negative news coverage did not affect company financial performance.
And, even though Stouse sells a technology platform, he doesn’t see technology as the whole answer. “Technology solutions are outstripping human capability and organizational capacity,” he told the Summit. “Data analytics solutions fail in many companies because they are predicated on the idea that the problem can be solved with more process and technology. The people are the most important part, even when you have a lot of artificial intelligence and automation embedded in the overall approach.”
As with all the other Summit speakers, he identified the ability to show incremental value as key. In terms of priorities, he also sees emphasis being placed on analytics that are “good enough,” if not perfect.
He sees six big trends in the world of communications and marketing:
- CMOs are losing their jobs at a record pace: average tenure is 18-22 months.
- Organizations are changing agencies at a record pace: average tenure is 26 months. And the profitability of agencies is declining even faster (see “Murder by Bad Metrics: PR Agencies Must Adapt or Die”).
- Concerns about waste, fraud, and efficiency/economy are converging.
- It’s all about managing opportunity cost.
- C-suites don’t care about volumetric data dashboards. They want cause-and-effect scoreboards.
- Amidst all this change, consistently excellent alignment with business metrics is the best way to maintain momentum.
Because of these trends, as well as the data he sees daily, he sees the market shifting in a major way. Specifically:
- Businesses and boards are holding marketing and communications to account for performance impact like never before.
- Their big issue is risk, and they need to better manage for opportunity cost, waste, and fraud.
- Not showing business value and risk management is now a liability, especially if you are subject to Sarbanes Oxley (SOX) regulations.
- Get used to more oversight from procurement.
- Measurement is also now part of performance management, so you can expect HR involvement. After being almost ignored for years, change management efforts and employee communications will see tremendous increases in instrumentation and analytics.
- Like we’ve seen in IT, HR, and other parts of the business, data and analytics in marketing and communications are becoming democratized. Expect a movement away from centralized data and analytics.
- Agencies should expect to see more pay-for-performance, and the rise of “business first” marketing and communications services by management consultancies will continue to challenge the “creative first” agency model. ∞
