Look to More Than Just ROI to Measure Marketing Campaigns Efficacy, Says Kellogg Profs

• Feb 11th, 2008
• Posted by Spring Creek Group
• Posted in Uncategorized

A good article and interesting read here on AdAge by two Kellogg profs (full disclosure: alma mater of two Spring Creek Group Principals…). The short version is that ROI is a great metric to measure performance marketing (CPC campaigns, for example) on the Web, but it falls short of appropriately measuring the brand equity investments of longer term, more broad reach marketing and brand campaigns.

If you are driving online sales, then evaluating campaign effectiveness and gauging appropriate levels of future spend through ROI metrics can be quite powerful.  However, many companies and organizations make marketing investments across numerous channels which are difficult or impossible to fully tie back to ecommerce or that-quarter sales (including PR and social media marketing investments, which are notoriously difficult to tie together with relevant sales information to accurately measure ROI… and which frankly may not be appropriate to try to evaluate using ROI since these investments are principally about creating brand awareness, not instant sales leads).

Multi-channel marketing effectiveness is about creating a mutually-reinforcing ecosystem of brand coverage, in the channels and in front of the consumers who matter most to your brand and business. Some of those investments are made to drive sales in the short-term: search engine marketing, direct mail, email marketing, tele-sales, etc.  However, some marketing investments are made to create pervasive brand awareness, future sales interest, word-of-mouth referrals and leads, in short “brand equity”: social media marketing, PR, most display advertising, radio, billboard and local market, much of the print advertising, even most television ads.

Savvy CMO’s and marketing budget management leads should work to correlate business growth with overall – and individual, where possible – marketing investments over time. But not every dollar spent on activities classified as “marketing” will be able to be tied back and evaluated according to ROI — consumer psychology, data sources, and the multi-channel mechanics of consumer purchasing and decision-making are just too complicated in today’s markets. And wholesale businesses, who have retail or distribution partners which sit in between their products and the end-consumer, face even more significant information access and sales latency issues. (Just ask anyone who distributes their products through Wal-Mart… even with one of the most holistic, integrated operating and sales tracking systems in place among retailers today, I’m sure there are marketing leads for those products who can’t perfectly measure the ROI of their brand marketing efforts even with access to Sir Sam’s uber-system.)

A good read and good reminder that even though the Web has enabled a new kind of ROI-based “performance marketing” opportunity (most prominently embodied in CPC search advertising), not every successfully-spent marketing dollar can ultimately be tied back to a grand ROI number in a giant spreadsheet.  Targeting potential customers based on proxies for “intent to purchase” across numerous, mutually-reinforcing channels, will always be a little bit of “science” and a little bit of “art”.

Anyway, they say it better than we do… read on.