What’s the ROI of Marketing?
Every month, every week, every day managing directors can see their money being spent on Google, Facebook, LinkedIn, Youtube, TV, radio, PR, magazines and many other channels and they are wondering:
- Do we really need to spend all this money?
- What do we get back for it?
- And what’s up with all the jargon? SEO, PPC, CPC, CPM, LOL? Am I being a fool here?
“Marketing is not particularly hard, there’s just lots of it.” — Stephen Pratley
When cash flow gets tough, reducing spending is one of the fastest and easiest actions to take. And marketing budget which is spend on an ongoing basis is an ideal target for a cut with an immediate impact.
However business leaders are savvy, they understand that cutting marketing spend can have fatal consequences in form of a dried up pipeline so they don’t want to act blindly.
Many of them can relate to the following old adage:
“Half the money I spend on advertising is wasted; the trouble is I don’t know which half.” — John Wanamaker (1838–1922)
Imagine you could accurately identify the 50% of advertising that doesn’t work, take its budget and reallocate it to the channels that do perform well. What would be the result?
You could double your sales.
It’s understandable that in the 20th century it was extremely difficult to understand return on investment (ROI) of individual advertising channels (most of which were broadcasting to mass audiences).
Today, not understanding marketing ROI? Unacceptable! Vast majority of today’s marketing channels are traceable (certainly all the digital ones) and the ROI of the channels that can’t be easily tracked can be estimated through sampling and testing.
Marketing, like Sales is no longer just Art, it’s Science too. The reason why many companies still don’t have an accurate visibility into their marketing ROI is either because of:
- The perceived complexity of marketing (it’s too confusing, too hard), or
- The disconnect between sales and marketing data — missing a view that would combine these two sides of the customer journey.
Just like any new initiative, achieving a clear vision of marketing ROI is not easy — defining the rules of marketing attribution specifically for your company and sales process, connecting data together and cleaning it up, clarifying and unifying processes, and defining accountability and responsibility — it’s a lot of work but it’s not that complicated.
And the benefits are certainly worth the effort. Being able to measure end-to-end ROI enables a company to allocate marketing spend to the channels with the highest ROI which could possibly mean increasing sales by 100% or even more. You can check out case studies of our Digital Marketing partner — Fountain to see what’s achievable if you know what to tweak.
But probably even bigger benefit of the transparency is the ability to constantly test new channels and new marketing ideas.
This enables companies to innovate and improve their marketing ROI on an ongoing basis which is particularly important in this fast changing world where yesterday’s cool is today’s rule and tomorrow’s ghoul (maybe I should become a poet).
Customer behaviour constantly evolves and therefore marketing optimisation shouldn’t be a project, it needs to become a habit.
