“Marketing is more important than marketers say it is, but not for the reasons they give us.”
Dr. Ramesh Rao believes in the ROI of marketing, but don’t ask him to acknowledge its value based on industry assumptions or gross sales figures. As a professor of finance at the McCombs School, Rao demands proof that marketing boosts a company’s financial performance. The kind of proof that will convince shareholders, boost market value, and provide direct guidance on levels of marketing investment. Absent that analysis, he claims, marketers are doomed to lose accountability and a place at the table when corporate strategy is being formed.
Rao’s research on marketing accountability was featured in EXCHANGE magazine in 2008. In the article Marketing ROI written by Sandie Taylor he says, “You have to go beyond brand equity and find tangible outcomes. Marketers don’t have a consensus definition of customer equity and brand equity. If they want to argue these concepts are important they must articulate a mechanism by which they can add value. Otherwise it’s all stories. For example, marketers claim that customer equity and brand equity create ‘marketing assets’ and lower the firm’s working capital, but they have provided virtually no justification for this claim. Marketing is more important than marketers say it is, but not for the reasons they give us.”
Learning that a second phase of his research on the topic was nearing completion, I asked for an update on his framework for measuring the value of marketing.