en•ovation group

July 7th, 2009

Source: Deliver Magazine (July 2009)

Boy, there’s nothing like a recession to get marketers interested in numbers.

Faced with pitching the chief financial officer for more marketing funds, or finding more efficient ways to spend the paltry millions they already have, marketers are coming up with interesting ways to make do.

One way is to shift spending to lower-cost alternatives (read: digital) where, the logic goes, you’re spending less so any return you get is more. Makes sense, right?

Well, maybe not. Truth is, the best marketing does more than produce good ROI; it maximizes your investment. Think of it this way: It’s great to get a one-time sale from a customer, but much more financially rewarding to get a customer for life who will add value to the bottom line over a longer period of time.

Switching to a lower-cost alternative can bring down the expense side of that ROI number, so it sometimes seems more valuable. But factor in engagement, relevance and pass-along, and you may not be maximizing your return.

But don’t take our word for it. An advertising publication we know of recently ran an article on measuring social media sites’ ROI. It led to this comment from Gregg Ambach of Analytic Partners (who knows a bit more about analytics than we do): “(Digital) is incredibly efficient, because the cost per thousand is low. But it’s just not moving a lot of volume yet.”

And there’s the catch for marketers looking to stretch their marketing dollars. Sometimes, you get what you pay for. Yes, it costs more to send direct mail, but the return it generates ($15.60 per $1 spent) and the engagement it creates with your customers can maximize your investment in a way that’s unique from other channels.

Oh, and for the 20 percent of senior marketers who recently reported on a CMO Council survey that they don’t track their ROI on marketing at all (at all!) - what are you thinking? You can’t market if you can’t measure. (Note to the board: Fire these folks immediately!)

Entry Filed under: Articles of Interest