For decades, marketers have hidden behind the tacit acceptance that “half of the marketing we do is effective, we just don’t know which half.” Show
While John Wanamaker was specifically referring to advertising all those years ago, we know this challenge applies to all the marketing channels we use in in today’s digital, social, and mobile-connected world. Surveys like this one show that measuring marketing ROI is the top concern for marketers and CMOs. That same study found that 71% of advertising campaigns fail to meet expectations. And 96% of digital marketers admitted that their advertising was a waste of money. The pressure from CEOs and boards will only increase, as they demand to see marketing investments produce business results and a measurable return. Marketers need to highlight the value we bring to our organizations and present marketing as a strategic financial asset, with strategic business value that executives can understand in their own terms. Solving the challenge of Marketing ROI does not have to be rocket science. The first step is simply in committing to measuring it. In this article we’ll cover the challenges, considerations, and approaches you can take right now to solve the marketing ROI challenge. Marketing ROI ChallengesMany marketers struggle with marketing ROI due to following reasons:
Overcoming these challenges does not require an MBA in Finance, huge investments in technology, or a whole new team. Solving The Marketing ROI Challenge With “Simple ROI”Can your business answer the question: “what’s the ROI of your Marketing?” Warning! Math ahead: The answer is as simple as measuring revenue generated from marketing activities, less the investment you made to generate that revenue, and divided by the investment. Now I am not a math expert. (In fact, I became an English Literature major in college after taking Finance and Accounting 101 courses.) But even I can see that what’s interesting about this simple calculation, is that investment shows up twice. This means that for the majority of organizations, all you have to do is get more results from the same budget. Or get the same results with less budget. This involves making trade-off calculations. And it means canceling programs that don’t produce a measurable return. How are those banner ads working out for you? What about the sales brochures your team spend a ton of money creating? If you can’t measure the return on marketing activities, simply stop investing in them. 8 Steps To Marketing ROI — Approaches and ConsiderationsSo you’ve committed to measuring and presenting ROI for your marketing activities. How do you get started?
Marketing Investments With Compounding Rates of ReturnThe best way to demonstrate marketing ROI: Stick to programs you can measure. What’s the ROI of logos on a famous golfer’s hat? I have no idea. Digital Content Marketing programs are financial assets with real value that you can prove! Content marketing is about acting like a publisher and sharing your expertise on a digital property you own. If you track the sales and leads from these platforms, you will see a compounding rate of return from marketing, much like your 401K retirement account. See this example: ROI is not a perfect science for marketing. The biggest challenge is committing to measure it in the first place. Then use it in making budget and investment decisions. Because the “investment” part of the equation is so important, just stopping the marketing activities that don’t provide a measurable return is often the easiest way to improve your Marketing ROI. Then invest that “found” money into content marketing and other digital programs you can measure and optimize. Michael Brenner is the CEO of Marketing Insider Group, and co-author of The Content Formula, former Head of Strategy for NewsCred, and former VP of Content Marketing from SAP. Michael is recognized as a Top Business, Content, and Social Media Marketer. Michael is a passionate evangelist for customer-centric marketing that drives real business results. He is also an accomplished Marketing Speaker, and a frequent contributor on leading publications like Forbes, The Economist, The Guardian, and Entrepreneur. @BrennerMichael How do marketers measure return on marketing investments?You take the sales growth from that business or product line, subtract the marketing costs, and then divide by the marketing cost. So, if sales grew by $1,000 and the marketing campaign cost $100, then the simple ROI is 900%. (($1000-$100) / $100) = 900%.
Why is return on investment important in marketing?The importance of marketing ROI
Measuring marketing ROI is essential, as it provides insights into the effectiveness of your marketing. It defines (with real numbers) the success of each campaign and empowers you with data to help you steer your marketing campaigns in a forward direction.
What do you mean by return on marketing investment?Return on marketing investment (ROMI) is a metric used to measure the overall effectiveness of a marketing campaign to help marketers make better decisions about allocating future investments.
What is return on marketing investment Why is it difficult to measure?Measuring marketing return on investment (ROI) is difficult for 3 core reasons: Some marketing campaigns don't directly tie to revenue. No standardized method for determining what's included as a marketing cost. Some payback cycles are too long to count.
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