Here is a brief excerpt from an article by Reship Bhandari, Marc Singer, and Hiek van der Scheer for the McKinsey Quarterly, published by McKinsey & Company. They suggest what can be learned from companies using marketing analytics to drive superior growth, with so many analytical options at their disposal, that they often become paralyzed, defaulting to just one approach.

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There’s no question that the development of better analytical tools and approaches in recent years has given business leaders significant new decision-making firepower. Yet while advanced analytics provide the ability to increase growth and marketing return on investment (MROI), organizations seem almost paralyzed by the choices on offer. As a result, business leaders tend to rely on just one planning and performance-management approach. They quickly find that even the most advanced single methodology has limits.

The diverse activities and audiences that marketing dollars typically support and the variety of investment time horizons call for a more sophisticated approach. In our experience, the best way for business leaders to improve marketing effectiveness is to integrate MROI options in a way that takes advantage of the best assets of each. The benefits can be enormous: our review of more than 400 diverse client engagements from the past eight years, across industries and regions, found that an integrated analytics approach can free up some 15 to 20 percent of marketing spending. Worldwide, that equates to as much as $200 billion that can be reinvested by companies or drop straight to the bottom line.

Here’s one example. A property-and-casualty insurance company in the United States increased marketing productivity by more than 15 percent each year from 2009 to 2012. The company was able to keep marketing spending flat over this period, even as related spending across the industry grew by 62 percent. As the chief marketing officer put it, “Marketing analytics have allowed us to make every decision we made before, better.”

Anchoring analytics to strategy

A company’s overarching strategy should ground its choice of analytical options. Without a strategy anchor, we find companies often allocate marketing dollars based largely on the previous year’s budget or on what business line or product fared well in recent quarters. Those approaches can devolve into “beauty contests” that reward the coolest proposal or the department that shouts the loudest rather than the area that most needs to grow or defend its current position.

A more useful approach measures proposals based on their strategic return, economic value, and payback window. Evaluating options using such scores provides a consistent lens for comparison, and these measurements can be combined with preconditions such as baseline spending, thresholds for certain media, and prior commitments.

The other prerequisite in shaping an effective MROI portfolio is understanding your target consumers’ buying behavior. That behavior has changed so radically in the past five years that old ways of thinking about the consumer—such as the marketing “funnel”—generally don’t apply. Where the funnel approach prioritized generating as much brand awareness as possible, the consumer decision journey recognizes that the buying process is more dynamic and that consumer behavior is subject to many different moments of influence.1 (A sidebar, “Five questions for maximizing MROI,” highlights additional considerations.)

One home-appliance company, for example, typically spent a large portion of its marketing budget on print, television, and display advertising to get into the consideration set of its target consumers. Yet analysis of the consumer decision journey showed that most people looking for home appliances browsed retailers’ websites—and fewer than 9 percent visited the manufacturer’s own site. When the company shifted spending away from general advertising to distributor website content, it gained 21 percent in e-commerce sales.

The pressure on business leaders to demonstrate return on investment from a diverse portfolio of marketing programs is only increasing. The data to make smarter decisions are available, as are the analytical tools. We believe that taking an integrated analytics approach is the key to uncovering meaningful insights and driving above-market growth for brands.

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Here’s a direct link to the complete article.

For more from McKinsey on the topic of marketing and sales, visit the McKinsey on Marketing & Sales website.

Rishi Bhandari is a senior expert in McKinsey’s Chicago office, Marc Singer is a director in the San Francisco office, and Hiek van der Scheer is a consultant in the Amsterdam office.