CYA (Count Your Assets)

In the October 2004 issue of the Journal of Marketing, Roland Rust and colleagues wrote that:

"Marketers are under pressure to show how marketing investments add to shareholder value…[and] must identify the assets in which they invest and how those assets contribute to profits."

Marketing executives know this all too well. But, in practice, few marketing departments actually define, track, and measure the assets they produce. Often, marketers simply take business value measures like sales and divide it by the sum of all marketing expenditures.

But what about all the other things marketing does and produces? The market studies, media tests, account plans, merchandising materials, brochures, web pages managed, supplier relationships managed? These are marketing’s assets. And while they may not have a direct impact on sales, over time marketing should (and must) correlate the assets they produce to the bottom line.

To help get your arms around the assets that marketing produces, group them into three categories:

• Sales assets. These assets — like banner ads, direct mail pieces, merchandising materials, sales brochures — help produce or facilitate a sale. You know a sales asset when you see one because it touches your end customer or a sales person who’s making a sale.
• Information assets. Information assets — for example, market studies, media test, account plans — are intangible, information-based assets that directly touch end customers, but impact marketing decisions made throughout the firm. The objective of tracking these assets is to demonstrate the influence that marketing has on how the firm invests its marketing dollars.
• Infrastructure assets. These assets don’t directly touch end customers or even marketing’s internal constituents. They’re the assets that let marketing produce information and sales assets — like agency hours managed, research vendors managed, and media suppliers managed.

For each of the assets that your marketing department defines, you should track the hours and dollars spent producing those assets, and the business unit, product, and geographic market they’re intended to support (which is why you’ll need to be judicious in your choice of which assets to measure and track).

Defining and tracking marketing’s assets gives CMOs the ability to show:

1. what marketing produces with the firm’s investment (which LOBs, products, geographies are getting their fair share — or more or less of their fair share — of investment?);
2. spending patterns over time (is the firm investing more or less in one type of asset vs. another over time); and
3. the efficiency with which marketing produces its assets (are unit costs rising or declining over time? are infrastructure asset costs, as a percent of the total, increasing or declining over time?)