Talking or Walking mROI?
Every organization wants a return on their investments. There’s no doubt that capital investments, expansions and headcount increases are all under high financial scrutiny. Why does marketing frequently get off easier?
A survey of 243 CMOs and other marketing executives found that 57% don’t establish their budgets according to ROI measures. Sixty-eight percent of respondents said they base their budget decisions on historical spending levels, while 28% said they go with gut instinct. And 7% said most of or all their spending decisions aren’t based on any metrics at all. (Source: Ad Age)
Really? Though I am a big proponent of utilizing your business instinct, it’s critical to know which of your actions are working and which are not.
Maybe it’s that ROI measurement for marketing has just not matured. The state of the art remains surprisingly primitive, according to the survey, in which half of respondents didn’t include any financial outcome when defining marketing ROI, and 22% use the most basic measure — brand awareness — to gauge marketing ROI without necessarily determining even whether the awareness is positive. (Source: Ad Age)
I’d argue that it’s a case of right-brained vs. left-brained perspectives. Inherently, marketing and creative people are not consumed by statistics, spreadsheets and counting beans. There’s a reason why accountants aren’t creatives and vice versa. But this is no justification for not building a business case and measuring ROI. I believe the metrics and techniques are in place - they simply need to be exercised and continually improved.
So if you don’t measure ROI today, ask yourself:
Does your organization care about mROI? If they do, all the more important you establish metrics. If they don’t, you can sacrifice opportunities to make the case for further funding, resources or expansion of your efforts in the future. Prove your worth, no matter what the scenario.
Do you have the skill sets within your team to measure ROI? If you do, focus a dedicated resource. If not, hire an analytic. Someone that’s focused on measurement and tracking - not new creative. I had a college intern who was studying to become an actuary - a great resource and had ingenious methods for measuring and tracking ROI.
Do you have the discipline to follow through? If things are looking successful with your campaign, are you following through with your ROI measurements or just chalking things up to a “success”? The more you track, the more you can learn from that success. Don’t quit while you’re ahead.
Are you biting off more than you can chew? Select a few activities to measure first, and select true ROI metrics. Brand awareness is a wonderful thing, but all of your marketing activities have some element of brand awareness, don’t they? Set that aside and identify some conversion, sales or other quantifiable metric. Even one measured campaign will be a huge education for future efforts.
mROI is hard to measure, and requires a dedication, followthrough and mindset that many creatives just don’t have. There’s no one right way, nor one right approach. But no mROI is simply a risk that can pay off for the short term, but could be the reason you’re replaced long term.