“Measurement is what makes marketing a science and not a superstition.” - Forbes
For some businesses, marketing’s value is under appreciated. They see the cost of advertising as too high for tactics that may or may not be effective. These companies ask questions like “How do I know this will work for my company?” “How am I going to make-back the money I spend on marketing efforts?” and “How do I know that marketing will engage my target audience?”
All of these doubts can be put to rest with measurement. ROI doesn’t have to be a mystery if it is tracked, interpreted and reported effectively. This newsletter will look at the benefits of measuring ROI and how businesses use it to hone in on effective tactics and get the most out of the marketing spend.
5 reasons to measure the ROI of your next marketing campaign
- Evaluate and refine tactics. Measurement starts before your campaign launch, by establishing goals and metrics to track awareness and conversions. By setting goals, you’ll have something to compare to measurements at the conclusion of your campaign. This type of measurement answers the question “Am I doing better now than I was before I started marketing?” Additionally, it helps the marketing team learn where they can improve for similar campaigns in the future. If there are holes in some areas, measurement can help you fill them in for next time and adjust tactics appropriately.
- Prioritize efforts based on performance. Nothing hurts like a cut to the budget, but it doesn’t have to be so painful if you’re measuring ROI throughout the life of your campaign. Keep your campaign on track by sticking with the tactics that are providing the highest ROI and eliminating those driving minimal results. It’s important to keep in mind that the most expensive channels aren’t always the most effective. In fact, in many cases it’s the opposite. If this is true for your campaign, eliminating tactics for the sake of budget will be a no-brainer.
- Determine which tactics should be given more attention or funding. If you’ve got a particular tactic or channel that’s driving the bulk of positive results, it makes sense to put more time and money into it for next time. If you’re trying to target a new demographic, you might find tactics that work for your typical audience prove less effective for your new one. By tracking their engagement, you can figure out what works best to hit your target.
- Take a proactive approach to marketing efforts. If a campaign or a component of a campaign is going off-course after the first few months, measurement helps you adjust the sails. The only way to know if something isn’t working is by tracking and measuring progress. Just because things are off to a shaky start, doesn’t mean all marketing dollars are lost. Make an adjustment and get back on course.
- To prove ROI of marketing efforts. This is the proof that marketing spend, media decisions and planning were all worth it. These are the numbers you need to defend the budget and keep internal alignment on marketing decisions.
Building a Campaign Around Analytics
Marketing and advertising campaigns exist to solve a problem by setting a measurable goal and working to achieve it. To determine if these goals are being met, certain forms of measurement need to be implemented. There are three types of measurement that assist measuring ROI.
Benchmarking is a way to compare campaign results to the current or past conditions for a particular company or the industry as a whole. There are three types benchmarking: a benchmark study, competitive data benchmarking and industry standards.
A benchmark study is a record of current trends to be compared to tactical goals before and after a campaign. A benchmark study can help set realistic goals, determine whether a campaign has met those goals and inform future planning.
Competitive benchmarking compares your business’ performance to your competitors. This allows you to see how your business is performing within the marketplace and can help set goals to keep pace with other companies of similar scope. It can also help keep a realistic scope and put results into perspective. Keep in mind that this type of data is sometimes outdated, so while it’s good for long-term planning, it’s not the best for monthly or quarterly planning.
Industry standards provide national standards for businesses of similar size, market and demographics. This type of benchmarking is helpful in similar ways to competitive benchmarking in that it allows you to see how your business stacks up against competitors. It also provides a broader scope, allowing you to see how your company is fitting within the marketplace as a whole.
Big Picture vs. Tactical Goals.
Big picture goals are the major outcomes you want to achieve through your efforts. For example, selling more products, increasing customer base, generating more leads, being the preferred company in the marketplace or simply changing attitudes and increasing awareness for your brand. These ultimately help to grow your business and should be kept in mind when crafting the strategy and media mix of your campaign.
Tactical goals are smaller stepping stones that relate directly to marketing and each campaign individually. These could include increasing web traffic, increasing attendance at an event or increasing click-through rates on a monthly e-newsletter. When setting tactical goals, its important to keep the big picture goals in mind and vice-versa. Tactical and big picture goals work together to help drive the strategy of marketing efforts.
Leading vs. Lagging Indicators.
Leading indicators suggest a trend. They are the measures of the public’s initial response, action or activity to a campaign. They could include phone calls, web visits or social mentions. They provide early warning of the results of a campaign and allow marketers to adjust their tactics to provide a more positive correlation of the trend and, in turn, increasing the chances of a more successful outcome for the campaign as a whole.
Lagging indicators are the statistical outcomes at the end of a campaign. For example, total sales or market growth. They are the measurable results that a campaign works to drive its audience to accomplish. Examples of lagging indicators could include purchasing an item, becoming a member or calling a salesperson.
Positive leading indicators generally lead to positive lagging indicators. For example, a business runs an advertising campaign to increase purchase of a new product. The creative drives them to a landing page, which encourages the purchase of the new product. The leading indicator is activity on the landing page. The lagging indicator is the purchase of the product, carrying out the overall goal of the campaign. In this scenario, if viewers are spending a considerable amount of time on the landing page, it’s likely that the lagging indicator will also be positive and viewers will purchase the product. If activity on the landing page is minimal, this is indication to the marketing team that a different approach may be necessary to achieve the overall goal of getting the audience to purchase the product.
Proving the return on your marketing investment
Measuring ROI allows marketers to determine the effectiveness of their campaign and give them justification of their budgets, time and efforts. How can you measure ROI in your next campaign? For suggestions on applying measurement to your campaign’s tactics, read the upcoming white paper, Proving ROI: The Marketing Measurements You Can’t Ignore.