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Maximizing your marketing return on investment (ROI) has never been more important, and with a myriad of new potential digital marketing venues: more puzzling.  Recent soft economic conditions have heightened the focus on ROI across all aspects of business, but even in strong economic times, the marketing function has been a target for internal cost-cutting and therefore always looked for better ways to reach customers at a reduced cost.

What is marketing ROI and why is it hard to measure?

ROI is simply the amount of revenue brought into the business compared to the cost required to generate that revenue.  Period.  Revenue generated by the business, and the costs required are measured by the finance function (in clear “black and white” terms) but who is ultimately responsible for the revenue generation is often an arguable point between sales and marketing functions.  Sales and your channel partners are the last point of contact when converting prospects into customers, and often generate leads on their own.  Consequently, they don’t give credit to the marketing function when those leads become sales.  Marketing departments often struggle with determining how much revenue generation it is clearly responsible for.  It’s only natural that different functions take credit for revenue generation.  Because of this “grey area”, it is incumbent upon the marketing function to implement clear tracking, evaluation, nurturing and monitoring of marketing generated leads that are handed off to sales.  Becoming successful in these areas will help ensure a clear attribution of revenue when the finance function tallies up the numbers.

Marketing Options Today Have Proliferated

The marketing options available today have grown exponentially in the last 10-15 years with no letup in sight.  In addition to the traditional print, direct mail, outdoor and broadcast options that have been a staple of marketing spending for decades; new digital options are vying for an ever increasing percentage of the budget.  Because of lower barriers to entry with online options, the sheer number of new entrants into the digital marketing space can be overwhelming to many.

Email, Pay-Per-Click Search, Mobile ads, Retargeting, Social media targeting, and online sponsorships are all part of the paid advertising menu.  Equally as important is the “owned and earned” media space where marketing departments are responsible for creating and publishing valuable content and social media promotions that hopefully garner prospects’ attention and create “buzz” driving healthy pass-along and share activity.  This “free advertising” on a company’s website, social media properties and even channel partner sites still has costs, namely the content generation and syndication – but can be cost effective, as the engagement opportunity is higher than a straight-forward advertising appeal, which many consumers simply tune out.

This dramatic transition is backed up by recent global CMO research conducted by Accenture.  It reports that the biggest challenge for those responsible for marketing organizations today is addressing the consumer transformation from traditional to online.  Accenture surveyed over 400 senior marketing officers in 10 countries and found that 7 in 10 CMOs expect the marketing function to change fundamentally in the next five years.  The biggest performance gap CMO’s report is their “digital orientation”…the work across the organization to infuse a digital focus that produces relevant, seamless and consistent customer experiences.

Marketing is undergoing one of the most dramatic changes in history.  Many large companies still have their customer data in silos and departments don’t talk to the customer with one voice.  Trying to do that through your channel partners, your dealers, agents, distributors, franchisees – is even more of a challenge, because now you’re mixing the your brand with the local partners’ brand and motives.

For more on this research see our blog.

Trends in Paid Advertising, Owned and Earned Media that Impact ROI

Two years ago Emarketer reported that 66% of Brand marketers were increasing their investment over the prior year in Earned and Owned Media.

eMarketer_owned earned media

Last year research and consulting firm, Borrell, published a research report on 2013 local promotion activity by Small and Medium Businesses (SMB’s).  It revealed that SMB’s have replaced much of their paid advertising investments with investments in promotions using Owned and Earned media.  The economic climate appears to have dramatically changed the way SMB’s attract customers.  Six years ago, SMB’s spent 10% more on advertising than they did on promotions.  Last year they spent 81% more on promotions versus advertising. 81% is a 180 degree shift!  Without costly ad space, postage and printing costs…Promotions, discounts and loyalty programs are all being used as the fuel for this owned and earned media bonanza.  For those brand marketers selling their products and services through channel partners (retailers, dealers, agents, etc.) this is a wakeup call.  Your SMB channel partners are more nimble and flexible when it comes to shifting marketing strategies, spending co-op dollars – and are showing that they are more willing to try free owned and earned media strategies (not governed by traditional co-op policies).

Anyone who has talked to SMB’s in the last decade about local marketing has heard how they dislike the high price of yellow pages and other traditional print media, but felt like they “had no choice” but to pay the piper.  The dramatic shift shown in the Borrell survey results show a pent up demand for more flexibility, accountability and marketing ROI in local marketing.

For more insight into this topic, see https://jgsullivan.wpengine.com/2013/07/23/leverage-owned-and-earned-media-easily-for-your-channel

 Marketing Goals and Responsibilities Have Expanded

smb use of social media_emarketer

We’ve established that marketing itself has changed dramatically, and pressure on marketing departments and the CMO’s that lead them is at a fever pitch.  Advertising and marketing staff were once only responsible for metrics like: brand awareness, brand preference, CPM’s, leads, reach and frequency.  Today they need to add a focus on measuring and growing marketing ROI.

The good news for marketing departments is that the older print based metrics of audience reach, subscriber readership, pass-along readership, and estimated viewers (based upon projections from a test panel) were not that reliable anyway and do not need to be defended anymore.  No longer to marketers have to endure questions from the CFO like “how do we know they actually read that page in the newspaper” and our favorite “how many consumers skipped our commercial to get a snack or run to the restroom?”

While new digital metrics are not perfect, they are certainly closer to reality because they are based on user actions and engagement.  Metrics like: email open rates, click-through-rates, coupons downloaded, shopping cart abandon rates, social media shares, email forwards, and bounce rates on landing pages all help inform savvy marketers on the small behaviors that lead to the larger win: purchase of your product.

Tracking, measuring and nurturing these small behaviors (whether they happen on a channel partner site, or your own) with an updated digital ad-Builder and digital asset management platform until they become that larger win is now the responsibility of the marketing department.  Don’t think of this as “extra responsibility”; think about it as “self-preservation” as those marketing departments which fail here will be replaced or marginalized.

By upgrading the skill sets of your marketing group, while selecting new interactive partners and platforms that enable better tracking of results and outcomes, you can assess the value of each component in your marketing plan. Together with input from staff engaged in day-to-day activities, you’ll have a real-time picture of your marketing ROI – where direct and co-op dollars go, what value they generate, and where to cut back or invest more.


  1. https://www.emarketer.com/Article/SMBs-You-Using-Facebooks-Promoted-Posts/1011255
  2. https://jgsullivan.wpengine.com/2013/05/10/owned-media-is-a-big-hit-with-dealers
  3. https://jgsullivan.wpengine.com/2013/06/05/todays-biggest-challenge-for-cmos
  4. https://www.borrellassociates.com/index.php
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