Marketing and the Bottom Line - 2nd Edition

By Tim Ambler
Published by FT Press

Book: Marketing & The Bottom Line - 2nd Edition

"As important as marketing metrics are, they distort reality and provide the illusion of control. Cannabis does much the same."

So ends one passage in one of the most thoughtful books ever written on the topic. And a more illustrative passage might not be found.

Tim Ambler started his career as a chartered accountant and then hung up the green eyeshades for the rose-colored glasses of marketing. Presently, he is a senior fellow at London School of Business, where 15 years of study in the boardroom and in the field have helped him hone his vision of the importance of sound marketing metrics to some clear, if controversial, precepts:

Marketing is the lifeblood of growth and the source of most of the organization's cash flow. Continuously measuring the effectiveness of marketing is therefore of paramount importance to executives and shareholders alike.
The simple marketing metrics are simply wrong. Marketing is complex by nature, and many of the most insightful measures are a moving target. One must take great care to choose the most meaningful ways to determine if strategy and execution are succeeding, as it is easy to become misled by seemingly concrete data presented as "facts."
Brand equity (as he defines it in a very financial and strategic context) is "the upstream reservoir of cash flow, earned but not yet released to revenue." If a marketing initiative doesn't have a strictly short-term payback, it is said to be an "investment." If so, there should be a measurable expectation of increase in brand equity. Short-term measures should be indexed to changes in brand equity so short-term gains at the expense of that asset are clearly labeled as such.

Ambler's 5 Stages of Marketing Performance Assessment

Tim Ambler's research finds that most companies pass through these five stages in pursuit of marketing assessment:

Unaware. Marketing is not seen as requiring the formal attention of executives.
Financial. Everything needs to be expressed as money.
Many Measures. Dollars alone are recognized as being limiting. Diverse measures emanate from different groups. Confusion builds.
Market Focus. Metrics are streamlined and standardized to highlight the most important market factors. Still much uncertainty if the "right" things are being measured.
Scientific. Past and current metrics are mathematically analyzed to determine a short list of sensitive and predictive metrics.

Having read the first edition of this book a few years ago, it was encouraging to see how the concepts have held up and been enhanced in the second. The many new examples and mini-case studies are highly relevant on both sides of the Atlantic. Ambler's framework holds up well under the microscope of practical, actionable reality.

If you miss reading this book, you'd best hope your competitor does too.

Read our interview with Tim Ambler, the author of Marketing and the Bottom Line – 2nd Edition.