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Results measurement, part two: Return on Investment

November 18, 2011

Dave Anderson

In my last blog, I described the Thud Factor as a method for measuring the results of a marketing communications program. Now we turn away from the least accurate method to what some consider the most relevant: Return on Investment (ROI).

CEOs and CFOs love  measuring for ROI, but it sends chills up the backs of most marketing professionals. Sure, at first glance it makes sense: If you increased your public relations investment by $50,000 in 2011, you should certainly see a return on your investment by at least that much this year in widget sales, right? Or maybe you spent $20,000 to design and place a full-page ad or direct mail piece – the leads should be pouring in immediately, or else it hasn’t demonstrated equivalent value. Unfortunately, promotional campaigns rarely work that way. I see three major reasons for this:

  1. Life may be short, but promotional campaigns shouldn’t be. I can guarantee you that an ad that runs for one time in one magazine will definitely fail – I don’t care how creative the piece is. Same goes for a single press release or single blog post. Now, that doesn’t mean you need to sign your life away to an annual agency contract costing thousands of dollars. Some of my smallest budget campaigns were also the most successful. But these campaigns stayed on message, kept a focused eye on their objectives, and most importantly, trusted in a consistent, long-term effort.
  2. Too many factors are beyond a marketer’s control. Let’s say you’ve achieved your promotional objective to attract thousands of eyeballs to your website, bringing in hundreds of sales leads. The marketer assumes the job is done, but the story doesn’t end there. The rest of the organization has a role to play here too. Does it have a strong, diligent sales force? Is the product/service all it’s cracked up to be? How competent are the customer service and technical support teams? How’s the economic and competitive climate? Is the region and marketplace even right for this product/service? In most scenarios, it’s the marketer’s job to deliver the slow pitch, but it’s the organization that needs to knock it out of the park.
  3. Business success isn’t always about money. Sure, your sales team may have their eyes fixed on that next big contract or meeting this quarter’s sales goals, but businesses need to think in terms of success over the next five or ten years. The value of most marketing communications programs cannot be measured by one-to-one sales dollars, but in the program’s innate ability to increase visibility and enhance perceptions. How is your organization viewed in the marketplace? Is your organization positioned well enough to achieve its future objectives? They will certainly vary and evolve depending upon the organization and its current stage. Are you setting yourself up for acquisition, growth or going public? Do you have the structure in place to retain and grow business from your current customers? Focusing too much on a short-term bump may restrict sustained growth in the future.

I consider the craft of marketing communications to be a soft science. Now, I don’t want that to be misconstrued as a cop-out, or that I don’t stand behind the value of the craft. I’ll say this: I guarantee that any competent marketer can at least double the return of an organization’s marketing communications investment. But that marketer needs the flexibility to develop and use a balanced blend of efficient tactics, the commitment to drive a consistent campaign over an extended period of time, and active participation and support of the organization’s management team.

In my next blog, I’ll describe the Advertising Value Equivalency, its benefits, and its limitations.

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