Marketing Research ROI: Emerging Trend
Posted by Debra Semans on Tue, Oct 04, 2011 @ 10:58 AM
Calculating the return on investment of marketing research has long been an elusive goal for researchers. None the less, large corporations, such as Coca-Cola, continue to attempt to find a way to justify marketing research in dollar terms, in order to prove its value and to hold researchers accountable for their efforts. Recently, Bob Lederer, editor and Publisher of Research Business Report and other RFL Communications publications, published his thoughts on the results of a conference they held on this very topic. It is a great summary on the latest thinking on marketing research ROI. Thanks to Bob for letting us republish it here, bringin you a wealth of information on this emerging topic:
Signs of Intelligence Life
If you could see what I see in news reports, letters, e-mails and faxes--plus know what I’ve been told over the phone and in face-to-face conversations--here’s what you might think. I’m interested in your comments.
Early this year, I announced RFL’s plan to stage a conference on Return on Investment on Market Research. On July 27-28, we conducted the meeting. What I learned about the subject of ROI on MR during the intervening months is instructive for a great many market researchers.
Months of scattered but continuing reports and press releases, plus conversations with end-user MR departments and MR vendors, showed ROI on MR to be an emerging issue.
For me, ensuring that the ROI on MR Conference would deliver the goods to attendees led to a tremendous learning experience about the subject.
I’ve learned ROI on MR is slowly but steadily rearing its head. Most researchers are blase about the subject, but a few large CPGs have asked their MR departments to prove their ROI worth and a number of MRDs are proactively probing ROI on MR in anticipation of management asking them for it. The stuttering economy gave birth to these contiguous trends, can be expected to breathe stronger life into them and to increase the likelihood that ROI on MR in varied forms become part of every researcher’s life in coming years.
ROI on MR is not on the radar screens of most client and supply-side researchers. The clients say when it is entered on their “to do” list, they will call their core vendors for answers, but we did not find a single traditional vendor ready right now to deal with the problem. Based on present realities, to put it kindly, vendors may be unprepared to efficiently and effectively deal with it when the time comes. This translates into new business opportunity, and in these challenging times what vendor couldn’t benefit from that?
Two organizations from outside the MR supplier community have led in identifying and grappling with ROI on MR in these early stages. Early in 2011, Forrester Research’s three-part study with end-user clients investigated the importance of ROI on MR. It demonstrated widespread anticipation of ROI growing in prominence in the next three years. A.T. Kearney has actually worked with a handful of major clients (notably Colgate, Campbell Soup, among others) to assess the ROI on their MR. Both vendors addressed our conference. (You can purchase most of the conference content from RFL.)
The term ROI on MR suggests a calculation or measurement, but it is not just a quest for an equation or assorted calculations. It is also about process and how the MRD positions and internally sells itself. (Vince Vaccarelli’s story on page 1 is a great example.)
Copernicus Marketing’s website states that ROI is about developing “research tools and approaches that make it easier to connect insights to action.” The hype about ROI on social media is interminable, although few clients are doing it well. Social research will probably accomplish ROI first, then push all of traditional MR to achieve the same goal. (Or, we can aggressively go after it now rather than down the road.)
Companies already on the ROI on MR track perceive it as a C-Suite deliverable. It also represents an opportunity for businesses to gain a competitive marketing edge. A Fournaise Marketing Group study revealed that 77% of CEOs believe their CMOs can not link key metrics (i.e., brand equity) to “results that matter: revenues, profit and market valuation.” A similar proportion of the CEOs say CMOs incorrectly apply ROI: too much about cost-cutting vs. top-line growth.
Failed research industry attempts in the 1990s to address ROI on MR are undercutting serious forays today. A longtime researcher we all know and respect matter-of-factly told me a few months ago that ROI on MR had been studied and been shown to be a waste of time.
More recently, an executive carefully counseled me that ROI on MR has its time and place and should be assigned judiciously. He said it should not be authorized when ROI is expected to be minimal, and that the preponderance of current MR– because it is backward looking–has no ROI. Done properly, ROI on MR’s financial contribution to a company can be a partial response to downward pressure on a MRD budget. It also has a place with pricing research, strategic work, ad testing, sales planning, market segmentation, needs assessment, customer satisfaction, distribution effectiveness and retailer requirements.
Client research departments who bring ROI on MR into their activity base are cautioned not to allow it to become an overriding consideration–insiders say it can stifle creativity– and to beware of any restructuring that encourages placement of the MRD under the aegis of finance.
Check out the ROI Institute (roiinstitute.net). We just discovered it, and it has, apparently, been engrossed in this subject for quite some time.
Have you been asked to measure marketing research ROI? What are you doing about this? Please share!
Bob Lederer
As Editor and Publisher of all four RFL Communications newsletters, Bob Lederer is responsible for planning and directing editorial content. He also controls the company's overall financial management. Prior to founding RFL Communications in 1994, Lederer's unique career spanned publishing, marketing and brand management, giving him a unversal perspective on all types of marketing trends and issues.
