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Marketing Startegy Meets Wall Street Conference

The last weekend I attended a conference on marketing-finance interface (Marketing Strategy Meets Wall Street II) at Boston University. This is a bi-annual conference that brings together the researchers who are interested in linking marketing to financial value. The main motivation behind it was to develop marketing performance measures that can be interpreted easily by the top management. This way the value of marketing effort is easily communicated within the firm.

Boston University: BU Central

A Few Key Observations

1. Researchers have started using more complex econometric models. Although many papers adopted some straightforward estimation methods from finance, they used them just as a base upon which to construct a more sophisticated model.

2. Abnormal returns as a performance metric have become a huge rage with around 30 (mine including) out of some 40 papers  incorporating them in the analyses. As an aside I think that abnormal returns are noisy and nobody can be sure whether they are really abnormal!

3. Most researcher are trying hard to show that marketing strategies matter on average. But this raises a question - who thinks otherwise? I find it hard to believe, looking at the data, that managers are really cutting down marketing efforts.

4. There was a general lack of concern for reverse causality. Many of the "independent variables" were choice variables as far as the firms are concerned. For example, consider that a firm's decision to adopt a certain marketing strategy is driven by value maximization. In that case, the marketing strategy is determined based on the targeted outcome and therefore can't be treated as a state of nature that is exogenous to the firm.

5. Researchers are expanding the scope to include not only finance but also more marketing theories. I was really impressed to see researchers digging deeper into the consumer behavior theories and linking them them to financial outcomes.

 6. Some folks from finance and accounting also participated in this predominantly marketing conference. This is an encouraging sign for everyone. More openness and cross-disciplinary work should lead to some interesting findings.

7. Social media marketing has made its cut! Nobody knows how to measure the ROI for a social media strategy. But this conference showed that an attempt can be made by looking at the stock prices!

 8. University of Michigan's American Customer Satisfaction Index (ACSI) was a big hit with several papers (mine including) using it as a proxy for customer satisfaction. Some argued that ACSI actually affects investor behavior. This was tough to buy considering that in the earnings calls rarely anyone mentions ACSI. More people talk about JD Power.

I presented my dissertation essay that links firm's capital structure to marketing strategies. It is actually a study of the interdependence of firm's strategies. More about that later. My other paper was presented by my coauthor. This paper focuses on how strategic alliances help technology firms such as Sony win the war for technology standards (Blu-ray vs HD-DVD).


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