IPA says marketers fail to measure ROI

A widespread ignorance among marketers about how to calculate the financial payback from ad campaigns has been revealed in new research commissioned by the IPA.

It suggests that less than 20 per cent of marketing activity is measured to show how much contribution it has made to the bottom line.

The findings were revealed this week to coincide with the introduction of a guide, published jointly by the IPA and ISBA, offering tips on how to measure marketing's effects and calculate its contribution to shareholder value.

The guide highlights some common pitfalls, such as the confusion of revenue with profit - a campaign that costs £1 million and generates £10 million of sales has not paid for itself ten times over, it points out.

It also emphasises that net profit is the key performance indicator for marketers, while return on marketing investment is a measure of efficiency and is only of secondary importance.

Hamish Pringle, the IPA director-general, said: "To get marketing's contribution to business growth recognised, it's essential that marketing directors can measure marketing payback correctly."