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Marketing Effectiveness

Marketing Effectiveness

Harvard Business Review (subscription req’d) published some eye-opening statistics on the effectiveness of 500 various consumer and B2B marketing programs:

 

  • 84% resulted in less market share, not more
  • Most customer acquisition efforts did not break even
  • Fewer than 10% of new products succeeded
  • Most sales promotions were unprofitable
  • Advertising ROI was below 4%
  • Doubling advertising expenditures for established products increased sales just 1% – 2%

Ben McConnell from Church of the customer says that “while the article does not tell us explicitly, chances are many of the 500 programs were designed to goose quarterly results. It’s the siren’s call of immediate customer traffic that steers so many marketers toward one-way advertising programs; as the results show, this usually leads you straight to the rocky shores of poor ROI.”

The stats shown above are also consistent with my posting – Increase in advertising spent does not lead to increase in sales as well as the study done by Deutsche Bank Study where it shows that advertising doesn’t work for mature package goods. The study, released on the eve of the TV buying upfront, examined 23 household, personal-care, food and beverage brands using customized marketing-mix analysis from Information Resources Inc. It found only 18% generated a positive return on investment (ROI) in the short term (a year or less) from TV advertising. Less than half (45%) saw their TV investment pay off long term.

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