Ever wondered what the ROI of ROI is? What I mean by this is the net value derived from initiatives that are aimed at measuring ROI. Is it even worth measuring the ROI of every marketing activity?
Not really.
There are three key questions to ask before embarking on a marketing ROI measurement program:
1. Why is this information needed? What decisions rely on this information?
2. What is the potential value if these decisions are right? What is the potential risk if the decisions are wrong?
3. What is the degree of accuracy needed (or margin of error tolerated) from measurement?
If measuring the return from marketing activities costs more than the net value derived from doing so, then measurement is a failed exercise. If rough indicators or hypotheses will do the trick, then why waste time, money, effort in chasing 100% accuracy?
Always remember that "not everything that can be counted, counts" ! If we live by this principle, we can probably make a more critical and informed choice of which activities to formally measure, and which ones to crack open through intuition and judgement.
In over 20 years and more than 250 projects, I have never had one that has not returned less than 5X its investment. This is a no brainer and a yes. Good marketing plans and strategies have nothing to fear when it comes to measurement.
ReplyDelete1. You obviously need a lot of historical data and it is best to have metrics for all elements of the media and marketing mix. Because the end result is optimizing marketing spending, it affects the fundamental decisions of marketing budgeting and planning.
2.By optimizing marketing spend, clients can attain at lest 5% more revenue for a fixed investment. There is no chance of being wrong, because "better" is never wrong.
3. Error is relative. Your goal is to be better off than you would otherwise be.
I have been doing marketing ROI for over 20 years and 250+ projects. I have never experienced one which did not pay pack at least 5X versus the investment.
ReplyDelete1. If done correctly, with buy-in by senior management, this will impact marketing budgeting and planning. A lot of historical data is obviously needed and for every marketing activity and program.
2. With a fixed marketing budget, marketing spending optimization will yield at least +5% more revenue versus prior budgeting results.
3.Degree of accuracy is not the question. The exercise is designed to enable a business to be better off than the alternative budgeting methods and that is pretty much guaranteed.
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