Posts Tagged ‘ROI’

Four Basic Approaches to Marketing ROI

Tuesday, December 8th, 2009

When it comes to measuring the return on your marketing investment, there are as many answers as there are variables. Obviously, metrics are not a one-size-fits-all proposition.

  • Timelines Making a timeline of marketing actions can be very helpful because it allows you to see what you did, when you did it, and track response, such as sales, inquiries to the call center, etc. By comparing marketing inputs and outputs you can get a sense of what drives sales.  If you can identify a correlation, the math is pretty straightforward and you can get a good idea of what drives your ROI.
  • Grids Many marketers prefer to use grids because of the limitations of timelines. They are very easy to make in excel and you can overlay activities of different durations, plus they allow you to insert additional information. However, grids also have their drawbacks.  For example, intensity can be difficult to measure, plus grids can also get cluttered, confusing, and unwieldy.
  • Tracking and Two-Variable Modeling Another approach is to track all activity using a variety of metrics.  With tracking, you lose the visual simplicity of grids, but you can include as much data as you want. You don’t have to guess beforehand what you think will be most relevant.  After tracking for six months or so, you should have enough data to build two-variable econometric models. However, if there is too much market activity, it will be hard to find a two-variable model that explains more than 50% of the variation in the data.  A model that offers more doubt than certainty is of questionable value.
  • Multivariate Modeling Some of the world’s premier marketers use multivariate modeling.  While prohibitively expensive for most companies, you can include a variety of marketing and economic factors and get much better models than you can using only two-variables. However, multivariate models are extremely complex, plus designing them is extremely difficult. A successful multivariate effort requires a delicate balance of high level quantitative skills and street level business acumen.

Tags: ROI
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Is Social Media Actually Free?

Saturday, October 31st, 2009

One of the biggest untruths in social media, and attempting to use social media for marketing, is that it’s entirely free. Of course, this comes from the “free” price that goes along with signing up for accounts on sites like YouTube, Facebook and Twitter. It doesn’t cost you one cent from your bank account to open a basic account on these sites, but there are costs involved when you are considering entering into the social media space – since these costs are not immediate, the illusion that marketing efforts in social media cost less becomes even greater for companies looking for cheaper solutions to reaching their audiences.

Your Employees’ Time is Money. Many companies seem to forget to figure into the larger picture is how much it costs them in time and resources of employees, tools and equipment. While it may be free to sign up for the account, the real cost comes with your employees maintaining those accounts and keeping them active in the social communities. Just creating the profiles and leaving them there doesn’t mean you are automatically going to gain a foothold in a social media community.

The tools are free, but they could end up costing you in the end. As every marketer knows, you still have to measure efficacy. While tools such as Google Analytics and Google Alerts, there still is a cost of your employees’ time. Also, the free tools do have a limit of scope, and you may have to upgrade to more expensive tools.

When you hear all the hype about Twitter, Facebook and YouTube and how these wonderful “free” tools are helping companies reach new people every day, step back away from the hype and ask yourself how many man hours it took for that team to attain that success with the social media site. How much time really went into research and planning? How are they measuring success?

Tags: ROI
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