How do you solve a problem like MaROIa? It might feel like the hills are alive with the sound of demands to prove ROI, but Will Green investigates why marketers are still struggling, and how they should approach this perennial problem
The old perception of marketing as an unmeasureable dark art whose benefits could not be quantified by mere numbers seems to be over. In its place, the new imperative is ‘marketing as science’, where any marketer worth their salt will be able quote brilliant ROI figures for past and future campaigns.
While it’s understandable that there should be a desire among marketers to show that investment in their department is having a positive effect on the bottom line, it’s also undoubtedly true that lots of practitioners are still struggling to do this. What’s the problem? Are marketers’ ROI formulas outdated? Are situational differences disrupting the playing field? Are businesses measuring marketing contributions in the right way?
The problems
If marketers are able to demonstrate the return their work is bringing in, the better acknowledged their contribution to business objectives will be and the more likely they will be able to demand more budget to continue reaping and improving on those returns. Marketers want to demonstrate ROI: in many cases, however, this involves demonstrating the intangible value they bring to a business.
We might think that the proliferation of data available for tracking diverse measurements from leads, search ranking, engagement, and so on, has made this job easier. But, as Andrew Martin, president of global digital agency Metia argues, this is not the case: “Many marketers are overwhelmed by the volume of content that must be produced, tracked, optimised and analysed.”
Andrew Davies, CMO and cofounder of Idio, agrees, warning of the tendency to measure for measurement’s sake: “One of the dangers of digital marketing, which is very transparent and measureable, is that we overstate or mis-state the importance of certain metrics. Just because something can be measured doesn’t mean it’s important. When marketing automation is implemented, it usually highlights ‘leads’ as the most measureable output – but that isn’t and shouldn’t be the only metric.”
One of the key problems then is that the desire to measure means marketers can end up being judged on what is most measureable rather than the overall value of their contribution. Threepipe’s cofounder Farhad Koodoruth states: “Many B2B marketers are keen on paid search as it provides a short, linear path to producing a lead, whereas content and social, for example, will have longer lag times and see users interact with more channels before turning into a lead.”
The other issue is that the sheer amount of data available for measurement is a challenge for many firms. Smaller and medium-sized businesses simply do not have the investment or analytics to demonstrate the ROI on marketing investment. As Sophie Morris, strategic marketing consultant at Millharbour Marketing, states: “The difficulty comes with trying to combine offline and online activity and brand influence. It often goes beyond the skill, resource and budget of a marketing team to be able to accurately measure the holistic approach.”
Her reasoning is supported by research from Omobono which found that almost half of respondents (48 per cent) felt they lacked the analytics and reporting skills to measure ROI efficiently and effectively.
Probably the most pressing concern that marketers have with ROI, however, is simply the complexity of the challenge. As Robert Ainger, MD at The Marketing Practice, states: “For complex B2B sales […] it is incredibly difficult to accurately distil the precise value of marketing’s contribution and use this to calculate a meaningful ROI.”
For B2B marketers who work across multiple online and offline channels, through long buying cycles and with a variety of goals in mind, ROI can be too complex to calculate effectively. A social media strategy, for example, may take months or even years to reach maturity: asking a marketer to demonstrate ROI a month after implementation is meaningless.
The solutions
All of these problems seem somewhat intractable. So should marketers simply throw their hands in the air and go back to the days of trying to get away with no ROI measurement? In the modern business environment, this is unlikely to work out well for marketing.
But there are all sorts of ways ROI can be both measureable and useful for strategic thinking that move past the investment-outcome calculation. Making ROI meaningful for marketers comes down to two other hot topics in the B2B world: customer centricity and departmental alignment.
Rather than trying to measure everything and affixing what ends up being a fairly arbitrary ROI figure, marketers need to consider measurements at every stage of the buying cycle. Customers experience a complete journey before making a purchase: marketers should know these stages and be able to track how their content is impacting every phase.
By defining what ‘success’ looks like at each point in the process, marketers can invest in appropriate tools to measure each step demonstrating not just that they are being visible, but are actively connecting and engaging with customers. As Ainger says: “Marketers should agree very clear operational KPIs and targets. By making these unambiguous and agreeing them with key stakeholders in advance, you will make sure that marketing is still held accountable without the need to claim full ownership for every commercial nuance of the programme.”
While applying ROI to single campaigns is unlikely to yield meaningful results, differentiation based on the customer journey can help to measure the ROI of the whole marketing department, helping other departments and marketing itself understand what’s working and what isn’t. From examining data and building customer personas or profiles, marketers can work towards demonstrating how much it costs to secure customers that fit these profiles and move them all the way through the funnel.
This attitude also helps to solve one of the other ROI problems that marketers face, as it moves beyond looking at immediate sales to potential lifetime value of each customer, thus avoiding the situation Sophie Morris describes: “A campaign that generates 100 customers spending £10 each could be given precedence over one that generated 10 customers that go on to have a far greater lifetime value, buying other items regularly and helping to promote your brand for you.”
Focusing on personalised customer data is the key to making ROI a useful tool for marketers as it gives insight into the customer journey over time: it’s widely accepted that customer retention is much cheaper than customer acquisition and so is a hugely important part of the role of marketing, but marketing ROI formulas may not reflect this at all.
The difficulty with such measurement, however, is it requires buy-in from, and intricate cooperation between, various stakeholders including sales, product specialists, board-level executives and so on. As Adam Smith, head of media strategy atDunnhumby, states: “For marketing to demonstrate ROI, it has to be a big commitment from across the business, almost like a philosophy. The only way to do it is have all the data from all departments together. If you only have certain parts of the jigsaw, you won’t get a clear picture.”
Departmental alignment is not always the easiest thing to achieve, but as marketing moves away from the bad old days of ‘measure nothing’, buy-in across the business to a customer-centric long-term ROI approach seems the most effective way for marketers to demonstrate their real value.
