Is ROI On Life Support?

Measuring Marketing Performance Remains Critical

I thought I would re-focus a bit on measuring marketing effectiveness, perhaps in terms of ROI, a hot topic in 2007. Is it still as important today?

Recently, the CMO Council surveyed 800 + senior marketers to find that it is.

What are the Key Challenges in 2008?

· Quantifying & measuring the value of marketing programs & investments

· Growing customer knowledge, insight and conversations

· Upgrading the efficiency & effectiveness of marketing groups

So, ROI remains important but has it left the hospital’s ICU and learned to stand on its own legs? I suspect that the search is still on for a consistent and believable means by which to measure marketing program performance. I dare say that it is even more troubled by the continued market and channel fragmentation being experienced today. Try to add real comparatives for integrated programs into a single set of results and you begin to understand the colloquial “…like comparing apples and oranges…”

So what is a marketer to do? How do you introduce several disparate channels, programs and media, some of which are just plain hard to get accurate measurements for, and produce believable ROI results? What if the programs have multiple objectives in terms of brand awareness and response? Whew…

Don’t believe me? These same folks stated that important organizational and operational changes they have planned for 2008 include:

· Improving accountability of the marketing organization

· Implementing marketing ROI and/or resource allocation capabilities

Apparently the problem remains unsolved.

But, there’s no need to fear …Lucid is here…

How do you determine if one program reached its desired results AND if it compared better or worse than other investments. It’s really pretty simple. Even without direct sales data.

We have worked with clients to develop a simple model that assigns different values to levels of engagement. In simple terms, someone reading an article (a “suspect”) about your product or service (product) is more engaged than an impression that is served. Similarly, a “prospect” that takes action (clicks through to your site) is more valuable than the reader that chooses not to. This person is now a “qualified prospect,” and likely a good candidate for your next selling message. This model continues in parallel with a standard sales process model with minor variations and may look something like this:

Stage in Sales Process Actions Taken

1. Target Market Impressions Served

2. Suspects Opens / Reads / Views

3. Prospects Trackable Actions (Clicks, Prints, etc.)

4. Qualified Referrals / Wishlist

5. Influencer WOM Blogs, Trials, Reviews.

6. Customer Registration / Purchase

The assignment of values for each is a good exercise, and can be somewhat arbitrary. The important part is to be consistent. Working through this model in post mortem for a program establishes a useful value describing performance. It links input metrics with outputs. Employing a consistent model in the evaluation of the next program defines its performance and so on for each subsequent investment. Comparing the meas

urements reveals when one investment delivered perceivable incremental value over another, in terms that are particularly relevant to the marketing objectives.

Following is a working example:

In the absence of hard sales data to tie back to your programs, this can be a valid means to compare your marketing spend. Think about it.

Digital Media Measurement & Pricing Summit Review

I recently attended a Digital Media Measurement and Pricing conference where speakers discussed the most current and upcoming digital advertising opportunities. I had an expectation to learn more about digital media measurement, especially with regards to measuring ROI, and that's not what was covered. Unfortunately, the one area that was lacking was what got me to the conference in the first place.

The digital media opportunities were well presented, and as expected, attendees would then ask for further information on how to measure the affects of advertising within digital media. Some of the presenters broached the question of what they feel is a reasonable CPM or CPC, as well as different ways to look at the results. And some referenced tools that evaluate brand awareness and how one or multiple ads impact a consumer, yet no one revealed their specific formula for measuring ROI.

Throughout the conference, there was a strong emphasis on building brand equity through digital media, as opposed to direct response, thus taking the focus off ROI. And while I can agree that building brand equity is a natural part of advertising through digital media, there's a need to measure each stage of this process and provide clients with an agreeable formula for measuring ROI -- a justification for the spend.

In conclusion, with so many digital media advertising opportunities available today, and as more become available tomorrow, there's a need to do more. We need to have a consistent way to evaluate ROI. If there's a second conference next year, they should do more to live up to the conference description.

Social Networking

Ever try explaining social networking to your parents?

This might help.