Marketing performance measurement (MPM) is a term used by marketing professionals to describe the analysis and improvement of the efficiency and effectiveness of marketing. This is accomplished by focusing on the alignment of marketing activities, strategies, and metrics with business goals. It involves the creation of a metrics framework to monitor marketing performance and then develop and utilize marketing dashboards to manage marketing performance. MPM focuses on measuring, managing, and analyzing marketing performance to maximize effectiveness and optimize the ROI of marketing.

Three elements play a critical role in managing marketing performance - data, analytics, and metrics:

Data and analytics

One of the core methodologies to measure marketing effectiveness is the collection of appropriate data, which means accuracy and gathering the right kind of data is crucial followed by a thorough analysis to make sense of the collected data. By meticulously analyzing the data, organizations can gather actionable business insights to improve their marketing effectiveness and marketing efficiency, as for instance, driving the marketing ROI and making faster as well as better business decisions.

One common use of these analytics is optimizing marketing spending by using marketing mix modeling (MMM), which is often used to optimize advertising mix and promotional tactics with respect to sales revenue or profit. The techniques were developed by econometricians and were first applied to consumer packaged goods, since manufacturers of those goods had access to good data on sales and marketing support. The concepts and tools of these models date back over 30 years, but in the recent times MMM has found acceptance as a trustworthy marketing tool among the major consumer marketing companies. With the increased usage of the internet, social networking sites, mobile advertising, and text messaging, interest in them is increasing.

Metrics and management

Measurement and metrics enable marketing professionals to justify budgets based on returns and to drive organizational growth and innovation. As a result, marketers use these metrics and performance measurements as a way to prove value and demonstrate the contribution of marketing to the organization.

Popular metrics used in analysis include activity-based metrics that involves numerical counting and reporting. For example, tracking downloads, Web site visitors, attendees at various events are types of activity-based metrics. However, they seldom link marketing to business outcomes. Instead, business outcomes such as market share, customer value, and new product adoption offer a better correlation. MPM focuses on measuring the aggregated effectiveness and efficiency of the marketing organization. Some common categories of these specific metrics include marketing's impact on share of preference, rate of customer acquisition, average order value, rate of new product and service adoptions, growth in customer buying frequency, volume and share of business, net advocacy and loyalty, rate of growth compared to competition and the market, margin, and customer engagement. In addition, MPM is used to measure the monitoring of operational efficiency and external performance.

Operations performance metrics is a term used when organizations manage marketing functions as a business. Organizations committed to implementing MPM may create positions such as marketing operations director and marketing finance director. Program-to-people ratios, awareness-to-demand ratios, the cost vs lead, the cost vs sale, and conversation rates are the typical data collected and analyzed. Operational performance metrics, however, primarily provide the organization with a way to rationalize marketing investments, but do not correlate marketing to business strategy and business performance. MPM focuses tightly on these operating measures to help marketers view how efficiently resources of the organization such as people, facilities, and capital are being used. External performance measures aligned with business outcomes assess things such as the value an organization provides to customers or the performance of an organization relative to its competitors.

By using a top-down approach, marketers develop metrics and specific performance targets known as key performance indicators (KPI). First business decisions are made to define the scope. To create metrics and KPIs, marketeers involved in MPM try to first brainstorm the business outcome that they are trying to impact. This is followed by asking the opposite questions that need to be answered to determine if the questions have an impact on this outcome, and the necessary supporting data required to answer these questions. After determining what data is needed, marketeers need to search for this data, and determine the decisions and actions that must be enforced as a result of this data mining.


Professionals involved in MPM implementation use a dashboard to report marketing performance. The dashboard is where all data and metrics are collated and presented as useful information for the organization. Marketing professionals create these dashboards from metrics and KPIs. Organizations can then use this information to proceed with their marketing. In essence, a dashboard is a multi-layered performance management tool that enables organizations to measure, monitor and manage business activity by using both financial and non-financial measures. The dashboard provides analysis into the progress of the organization toward achieving each defined objective.

A good dashboard consists of three layers:

Level Function Description
Executive level Strategic level Monitors and measures performance against business outcomes and marketing objectives
Operational level Marketing management Tracks performance of core marketing strategies and processes
Tactical level Functions and individuals Analyzes performance at project or activity level as they relate to the first two

An ideal dashboard should show the progress of marketing, help assess productive areas, and help in the decision making, besides providing an indication on the value of marketing.

Source: Wikipedia