Marketing activities may not produce an immediate effect on sales, revenue, or cash flow. However, this does not mean there are no effects or that the effects of a marketing activity cannot be measured.
An advertisement may persuade a consumer that a particular brand is superior to its competitors, but the consumer may not purchase that brand until they have a need for it. A sales call may create interest in the services of a company, but that interest may not translate into a sale until it is time for contract renewal.
It is for this reason that there are many measures of marketing outcomes that can provide insights into the success of marketing activities. These measures are often referred to as intermediate measures because they represent more immediate outcomes that are potentially related to future financial outcomes. Intermediate measures are important because they can provide feedback about the success of marketing activities in advance of actual sales and revenue generation. Such feedback is helpful, of course, only if there is a link between the intermediate outcome and financial results.
The marketing discipline has developed a rich array of measures and metrics. Whole books have been devoted to cataloging and defining marketing measures. Indeed, one book identifies almost 200 metrics in the context of digital media alone. The Marketing Accountability Standards Board maintains a Common Language Marketing Dictionary that provides standard definitions for many measures of marketing outcomes.
Measures and metrics related to the outcomes of marketing activities take numerous forms depending on both what is measured and how the measure is used. The same “number” may be used differently in distinct contexts, so it is important to know not only how a measure is defined but also how it is being used. For example, product awareness, as measured by a survey of consumers, may be descriptive if it refers to the number or percent of consumers who are currently aware of the product or it may be predictive if it refers to an expected future outcome of an advertising campaign.
It is useful to consider the various ways in which measures and metrics can be conceptualized beginning with the difference between measures and metrics. Some common types of intermediate marketing measures can be found in the list below. The list is by no means exhaustive but does serve to illustrate some of the specific measures and metrics used by marketers. Note that these measures and metrics can often be operationalized in multiple ways.
Common Intermediate Marketing Measures And Metrics
Advertising Wearout: The rate of decline in the effectiveness or selling power of an advertisement after exposure to the target audience
All Commodity Volume: The total annual sales volume of retailers that can be aggregated from individual store-level up to larger geographical sets. This measure is a ratio, and so is typically measured as a percentage (or on a scale from 0 to 100). The total dollar sales that go into ACV include the entire store inventory sales, rather than sales for a specific category of products—hence the term “all commodity volume”
Brand Equity: A measure of the value of a brand often operationalized as the incremental revenue that the brand earns over the revenue it would earn if it were sold without the brand name
Brand Awareness: A measure of familiarity frequently obtained by asking questions such as “have you heard of brand X or “what brands come to mind when you think of ‘luxury cars’? The former question is a recognition measure; the latter question is a recall measure
Brand Preference: The percent of those who are aware of a brand and prefer it over your competitors under the assumption of equality in price and availability
Brand Image: A measure of the perception of a brand in the minds of persons. The brand image is a mirror reflection (though perhaps inaccurate) of the brand personality or product being. It is what people believe about a brand—their thoughts, feelings, expectations
Brand Loyalty: A measure of the degree to which a consumer generally buys the same manufacturer-originated product or service repeatedly over time rather than buying from multiple suppliers within the category. The degree to which a consumer consistently purchases the same brand within a product class
Carryover Effect: A measure of the effect of a marketing action beyond a single time period (i.e., a lagged effect). The rate at which the effects of a marketing action diminishes with the passage of time
Clickthrough: A measure of the number of users who clicked on a specific internet advertisement or link
Customer Lifetime Value: The monetary value of a customer relationship, based on the present value of the projected future cash flows from the customer relationship
Customer Equity: Customer equity is the total combined customer lifetime value (CLV) for all of a company’s customers
Customer Satisfaction: A measure of customers’ perceived satisfaction with their experience of a firm’s offerings. It is generally based on survey data and expressed as a rating. It is measured at an individual level, but it is almost always reported at an aggregate level. Customer satisfaction is generally measured on a five-point scale, ranging from “very dissatisfied” to “very satisfied”
Day-after Recall: A method of testing the performance of an ad or a commercial whereby members of the audience are surveyed one day after their exposure to the ad or commercial in a media vehicle to discover how many of the audience members remember (unaided and aided) encountering that specific ad or commercial
Distribution Coverage: A measure of the availability of products sold through retailers—usually as a percentage of all potential outlets—and reveal a brand’s percentage of market access
Frequency: The average number of exposures received by the portion of the defined population that was “reached” (i.e., received at least one exposure to the advertising or campaign) being assessed during a given time period
Gross Rating Points (GRP): Measures the size of an audience (or total amount of exposures) reached by a specific media vehicle or schedule during a specific period of time. It is expressed in terms of the rating of a specific media vehicle (if only one is being used) or the sum of all the ratings of the vehicles included in a media schedule. It includes any audience duplication and is equal to the reach of a media schedule multiplied by the average frequency of the schedule. Target Rating Points: express the same concept, but with regard to a more narrowly defined target audience
Impression: A measure of how many times an advertisement is viewed. Also called exposures and opportunities-to-see (OTS), all refer to the same metric: an estimate of the audience for a media “insertion” (one ad) or campaign. In an Internet context an impression is a single display of online content to a user’s web-enabled device. Thus, it is the number of times the ad is displayed, whether it is clicked on or not. Theoretically, an impression is generated each time an advertisement is viewed and the number of impressions achieved is a function of an ad’s reach (the number of people seeing it) multiplied by its frequency (number of times they see it). Note that impressions do not account for the quality of the viewings, or even whether the consumer actually “sees” the ad: an opportunity to view the ad, a glimpse or a detailed viewing all count as one impression
Intention: An attitudinal measure of customers’ stated willingness or plan to behave in a certain way. A common operationalization is purchase intention, the stated plan to purchase a specific product or service at some point in the future
Inventory Velocity or Inventory Turnover: A measure of the time period starting with receipt of raw materials or purchased inventory and ending with the sale of the finished goods to the customer (the period over which a business has ownership of inventory). It is measured by dividing the cost of goods sold by the average inventory on hand
Leads To Closing Ratio: A measure of the number of sales made divided by responses to a given marketing activity
Market Share: The percentage of a market (defined in terms of either units or revenue) accounted for by a specific entity
Media Mentions: Number of product or service mentions or appearances per medium per month and whether those mentions were positive or negative
Price Sensitivity: A measure of the degree to which demand for a given product is affected by a change in its price
Rating Point: A rating point is defined as the reach of a media vehicle as a percentage of a defined population (for example, a television show with a rating of 2 reaches 2% of the population)
Reach: Also called net reach, this measure is the number or percentage of individuals in a defined population who receive at least one exposure to an advertisement. The number of different persons or households exposed to a particular advertising media vehicle or a media schedule during a specified period of time. It is also called cumulative audience, cumulative reach, net audience, net reach, net unduplicated audience, or unduplicated audience. Reach is often presented as a percentage of the total number of persons in a specified audience or target market
Recall (aided and unaided): The percentage of people who remember a given ad or commercial in a survey situation when asked generically and specifically about what they recall
Referrals By Customer/Per Customer: Number of customers willing to refer new customers and number of referrals by each customer
Sales Per Customer: Number of sales made by a given customer in a given time frame
Sales By Channel: Number of sales made through a specific distribution channel in a given time frame
Willingness To Recommend: The percentage of customers who indicate that they would recommend a brand to friends
Definitions are adapted from the Common Language Marketing Dictionary, Marketing Accountability Standards Board. You can go through the list and connect the effects of these intermediate measures and metrics with eventual financial outcomes.
Ad recall, for example, usually predicts a higher likelihood of product selection at the point of sale. Thus, increases in ad recall suggest that revenue will increase. It’s not an exact science. However, knowing nonfinancial measures and metrics and comparing them to earlier periods and to those of competitors can tell you a lot about how your business is doing—or is going to do—in dollars.
Contributed to Branding Strategy Insider by: David Stewart, President’s Professor of Marketing and Business Law, Loyola Marymount University, Author, Financial Dimensions Of Marketing Decisions.
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