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Marketing ROI

Marketing ROI refers to the specific return on investment seen from marketing campaigns and programs.

Marketers make buying decisions all day long in order to achieve their objectives: bidding for keywords, commissioning content, sponsoring events and even putting logos on Nascar racing machines. But how can marketers be sure that the investments they are making are truly paying off? And how can they make improvements in their investments going forward? In order to understand how their buying decisions impact the organization’s overall growth and revenue objectives they need to understand the ROI.

Calculating the ROI for marketing costs seems like it should be relatively easy, especially with the advanced reporting and tracking tools available to marketers today through web analytics, CRM (Customer Relationship Management) systems and marketing automation solutions. Marketers spend money on marketing programs which bring in leads, some of which eventually turn into sales and revenue, how hard could it be?

Unfortunately, it’s sometimes difficult to ascribe direct revenue to any one program or campaign. Here’s why: Let’s say your organization spends heavily on social media. A specific Tweet brings a prospect to your website (easy to measure via web analytics), who then signs up for your newsletter (easy to measure via a marketing automation system). So far so good.

But what if the prospect doesn’t end up buying anything from your organization for 8 more months? Meanwhile they visit your organization’s website 4 times, click through on 3 marketing newsletter articles, have 1 conversation with a sales person and also attend a webinar. Which of all of these “touches” (measured exposures to your organization’s brand and key selling points) should receive credit for the revenue? Should it be the first touch--the original Tweet? Or should it be the newsletter, which obviously appealed to the prospect who opened each issue and even clicked through on 3 articles? And what about the webinar, which was the LAST touch before the prospect finally became a customer?

In a recent post on Eloqua’s “It’s All About Revenue” blog, Eloqua’s Senior Vice President, Customer Strategy and Success, Paul Teshima, addresses this question. He explains that most marketers measure the ROI of programs via either direct or indirect revenue attribution. With direct, all of the revenue from a sale is attributed to only ONE marketing touch. In the example above, most marketers would credit the LAST touch before the prospect becomes a sales-forecasted opportunity. With indirect, the revenue from the sale is apportioned evenly across ALL of the touches.

Teshima proposes that marketers should stop choosing direct over indirect and instead use both. In his model, marketers compare the programs that were most effective at getting prospects to buy with those that were influential across multiple sales. Finally, he shows how marketing ROI is a key component of a revenue performance management strategy.

Marketing ROI Resources

Dueling Revenue Attributions
Attribution or influence, influence or attribution. I have been in many customer meetings where someone inevitably asks: “What is the right revenue attribution method for campaign ROI?”

Unfortunately, I am pretty sure there is no right answer. Although ROI is a quantitative metric, my experience is that ROI should be one data point to help guide your marketing decisions, but never the only metric to drive them.

Marketing ROI – The Myths and The Reality. Myth #1.
Not enough marketers are measuring ROI. ROI – the term I hate to love. I LOVE it – because it is essential to improving campaign performance. I HATE to love it – because it is hard.

Marketing ROI – The Myths and The Reality. Myth #2.
Myth #2 – Long-term ROI analysis is better/worse than the short-term ROI analysis. Reality Check – Campaign revenue attribution methods will always be flawed no matter which method you adopt. The key is to pick your methods, be consistent, add complexity as you learn from your data analysis.

Marketing ROI – Myth #3.
Myth #3 – The data will provide us with a “perfect path” of events required to convert a customer. Reality Check – The Magical Dashboard DOES NOT Exist.

Marketing ROI – The Myths and The Reality. Myth #4.
And, to conclude our series: Myth #4 – Analyzing campaign and marketing ROI is not worth the effort required. Reality check – any metrics that provide you actionable insight to improve performance is worth it.

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