Measuring ROI in the New Integrated Marketing Mix

marketingdashboardOn the Big Fat Marketing Blog, Grant Johnson states in his brief post Marketing Measurement Musings, “…when you do measurable marketing, it’s not about just measuring, it’s about measuring the correct things… Buzz without business is typically just noise.” Grant has a valid point. The purpose of marketing is to drive sales. There is a challenge in measuring and understanding ROI of a campaign in its entirety, as well as the contribution of each tactic. This is especially true as new technologies and marketing channels are discovered and exploited.

Marketing 101: return on marketing investment comes in many forms, arising from your business objectives. But at the end of the day marketing is ultimately about driving sales.

Each channel plays its own role in enabling sales: advertising, product placement and other above-the-line channels for awareness and branding; direct communication such as email marketing and downloads for interest/nurturing/consideration; coupons and pricing discounts for customer activation etc.

This cycle is well understood, and for quite some time, industry groups such as the American Marketing Association have tackled the subject of integrated marketing with measurable ROI as one of their principle areas of interest.

What’s important for marketers to understand in today’s tough economic climate is that the typical marketing cycle is compressing, while the sales cycle is expanding. This forces marketers to innovate how they engage customers more quickly, more deeply and with more precision to move prospects to the point of conversion and beyond.

With the c-suite focusing on sales and viewing marketing ROI from that perspective, the channels that play a less direct role in engaging and converting prospects into customers are ceding turf (i.e. budget) to those that do generate specific customer interactions that directly lead to sales. No channel is disappearing. The mix is simply re-balancing to accommodate marketplace reality.

As you make these adjustments to the integrated marketing mix, proper measurement of the new ROI formula will be the key to maintaining and perhaps even increasing the marketing budget. In short, you need to revisit the data points you deem important, how you capture them, and how you report on that data in order to improve decision-making to increase short-terms sales performance without compromising long-term brand objectives.

Better questions to translate raw data into knowledge

We as marketers often get mired in the complexity of each and every metric, worried about what each number means, its relationship with all the other activities and influencers around us and what we can do to improve the results of our marketing efforts.

All said, we are all just trying to answer one simple question:

“Is my marketing successful or not?”

I’ve recently spent some time developing a measurement program for a CPG client. We’ve reviewed metrics on reach and frequency, examined page views and click-through rates, counted attendees, sweepstakes entries opt-ins, email open rates, and even entertained using semantic technologies to gauge how people are feeling about the brand on the social web.

All of these measurements are certainly important in understanding each campaign tactics’ performance and its contribution to the overall marketing mix, but at the end of the day, it is imperative we draw a correlation between what we did, and how much stuff we sold.

This basic truth has helped us to stay on track, and can help you in adapting your measurement system to the current environment.

Here’s a simple framework:

Success Metrics: Answer the question: “Are our marketing efforts successful or not?”
Example: We want to sell 25% more salad dressing during the summer months. Did your marketing program drive a 25% bump in sales? Yes or no.

Complementary Metrics: Help us understand degrees of success.
Example: We signed on 500 new retailers and increased share of shelf by 10%, positioning us for longer-term growth.

Diagnostic Metrics: Point to factors that help us understand what works, and what doesn’t.
Example: The online sweepstakes got 6 million entries, but only 2.5 million people opted in to learn more about recipes using our salad dressing.

This framework can be applied to print, broadcast, web, OOH, email, face-to-face, even social media.

In addition to this framework, this set of principles can increase your chance for success.

Eight simple principles:

Objectives are king
Benchmarking is critical to understanding what you are trying to achieve, and how you are doing along the way.

Keep it simple
Measure the most important key performance indicators that help you understand success, complementary and diagnostic performance – no more, no less.

Drive continuous improvement
The right measurement in the right place at the right time can help you optimize your program mid-stream, or build benchmarks for longer-term success.

Customize it
No two industries, companies or campaigns are alike. Measurement should be flexible enough to adapt to each situation, but standardized enough for consistent business reporting.

It’s not about the measurement
Focus on the outcome of the program not the outputs of the measurement model. Did you sell more stuff?

Learn and teach
Make sure you track progress and evaluate trends. Use this information to learn and educate your stakeholders on the program and its performance.

Understand resource commitments
Measurement takes time, tools, resources, management and money. Make sure you have the right level of support to ensure success.

Spend wisely
The cost of any measurement program should never outweigh the potential benefits

The key to driving ROI in the new marketing mix is to deploy a successful measurement program. With the right attention to the basics, and a disciplined approach to measurement you can be more precise in your current activity while laying the groundwork for superior performance down the road.

first published on the AMA Boston Blog 4/24/09

Be Sociable, Share!

Leave a Reply