The marketing ROI problem has its roots in marketing culture

Problems demonstrating marketing ROI? Think about company performance rather than marketing performance and reconsider your metrics. The post The marketing ROI problem has its roots in marketing culture appeared first on MarTech.

The marketing ROI problem has its roots in marketing culture


Click the link to join the registration on WhatsApp: https://chat.whatsapp.com/KThkuZlWaTcCu3iJHGBmLM


Click the link to join the registration on WhatsApp: https://chat.whatsapp.com/KThkuZlWaTcCu3iJHGBmLM


Click the link to join the registration on WhatsApp: https://chat.whatsapp.com/KThkuZlWaTcCu3iJHGBmLM
Thought leadership: The human element your marketing needs

Why is putting a figure on marketing ROI still a problem?

While advances in marketing analytics and technology have been made, a significant portion of businesses still report facing difficulties in calculating ROI. In the fall 2023 CMO survey, CMOs report increased pressure from the CFO to properly report and improve marketing ROI.

The problem of marketing ROI is simple, but it’s difficult to solve. In essence, many marketing leaders know how to drive marketing results. However, they do not focus on or do not know how to market internally. For most marketing functions there are two primary roadblocks to effective internal promotion and to developing ROI measures the CFO and CEO can buy into. 

1. The right metrics

Martech is an asset, but also a distraction from ROI measurement. Most marketing KPIs and related technology have an underdeveloped view of ROI the solution may not lie in more martech. Even with advances in addressability, identity mapping and identity resolution, perfect evaluation of marketing ROI remains elusive, especially in B2B or B2B2C business models.

Advances in 1:1 attribution are still imperfect and in a constant balance with consumer privacy.  While the operational marketing metrics and improved attribution are critical to growing the marketing function and making it more efficient, they rarely have visceral meaning outside of the marketing group.

Even if you achieve perfect sales attribution (direct and indirect), it still is not earnings or profit and not all marketing exposures are trackable. Marketing funnel metrics such as click-through rate, cost per acquisition (CPA), cost per lead (CPL) or cost per sale are important and can be used to demonstrate growing marketing efficiency. Many marketers believe these metrics are ROI.  But they are not ROI, they are ROI-adjacent.

True ROI is focused on earnings, cashflow and margin. Finally, while advances in martech are empowering and important, marketing leaders should also recognize their distraction value when it comes to communicating marketing effectiveness to other company leaders. 

Fundamentally, marketing ROI should demonstrate incremental profits due to marketing expenditures. However, core profitability metrics such as gross margin, cash flow, and lifetime value are rarely discussed in the marketing departments. These are the very metrics that can elevate marketing from the cost center to a critical growth engine. 

2. Branding: Too much art, not enough science

Branding or brand development is a critical function that drives the long-term health of the business. However, this is also the area of marketing where quantifying ROI presents the biggest challenge.

Significant costs go into branding, from customer research, brand strategy and branding materials to ad buys. The costs of brand development add up. When it comes to estimating the returns, however, we generally hear crickets. What’s more, branding leaders constantly promote the intangible benefits of their brand work, making the effort to calculate ROI seem futile.

This does not have to be the case. At the end of the day, branding is designed to grow customer loyalty, increase consideration and lower the cost of acquisition and these brand metrics have a direct path to core profitability metrics.

Dig deeper: Marketing attribution: What it is, and how it identifies vital customer touchpoints

The solution

The biggest challenge facing the quantification of marketing ROI is the focus on marketing performance at the expense of company performance.

While the two are related, making the connection is not trivial. Often, it requires specific initiative and ongoing work. Marketing leaders can be brilliant, intuitive and creative. This makes them great promoters of the organization but terrible promoters of the marketing function. Marketing leaders need to put on two hats.

Marketing management

The first hat focuses on marketing management leadership. This involves managing activities that drive the metrics and KPIs that drive greater marketing effectiveness and efficiency. Under this category fall activities such as channel strategy, communication strategy, branding and improving KPIs such as cost per acquisition, cost per lead, etc.

Great marketing leaders know how to manage their budgets and allocate resources to improve marketing results. The role of data — and now AI — is making that work easier, but requires greater and greater attention, resources and focus from marketing leaders. The marketing management activities take up a lot of bandwidth and are, frankly, aligned with the skills and talents of most marketing leaders.

Internal leadership

The second hat focuses on internal marketing leadership. Here, responsibilities begin by recognizing that most marketing metrics and jargon are not sufficient and may even be a distraction from conveying the value of marketing to the rest of the C-suite.

The reality is that most marketing metrics are not the lens through which most C-suite leaders view the business. Occasionally, key marketing metrics may impress them. For example, the CEO may be very impressed if the cost of acquisition is lowered by 25%. However, the subsequent question eventually comes down to: “What does this mean for my bottom line, earnings and cash flow?”

To properly address questions from the CFO and impress other senior leaders, marketing leaders should dedicate a portion of their resources to the financial analysis of marketing activities. Today, most marketing departments think of marketing finance as a budgeting exercise that places the greatest focus on the “I” in ROI. When it comes to the “R” or return, it is often a hodgepodge of KPIs and metrics that spark some cynicism, even among the most sympathetic C-suite leaders. 

Email:

The post The marketing ROI problem has its roots in marketing culture appeared first on MarTech.

What's Your Reaction?

like

dislike

love

funny

angry

sad

wow

Keep advertising to get more people

You could reach thousands of more people for every ₦1,000 you spend. https://doacweb.com/advertising

Adverts on doacWeb can be informative, educative or persuasive in nature.

doacWeb Ads is always directed at a broad audience (reaching thousands of people day by day), not few individuals — it deliver your advert to the target audience at the same time. Putting your offer in front of the right people — who have the money and interest in what you sell.

doacWeb Advertising gives you advantage as adverts passes through https://doacweb.com to the internet, reaching millions of people over the internet, and to grow your audience.

Grow your business, Be known, Boost your visibility, Drive engagements, Get new customers and Increase sales.

doacWeb acts as a global advertising media, to let people — individuals — and businesses, to promote and reach more interested people.

Get Started.

WhatsApp: 09031633831

Email: info@doacweb.com
Keep advertising to get more people

You could reach thousands of more people for every ₦1,000 you spend. https://doacweb.com/advertising

Adverts on doacWeb can be informative, educative or persuasive in nature.

doacWeb Ads is always directed at a broad audience (reaching thousands of people day by day), not few individuals — it deliver your advert to the target audience at the same time. Putting your offer in front of the right people — who have the money and interest in what you sell.

doacWeb Advertising gives you advantage as adverts passes through https://doacweb.com to the internet, reaching millions of people over the internet, and to grow your audience.

Grow your business, Be known, Boost your visibility, Drive engagements, Get new customers and Increase sales.

doacWeb acts as a global advertising media, to let people — individuals — and businesses, to promote and reach more interested people.

Get Started.

WhatsApp: 09031633831

Email: info@doacweb.com
Keep advertising to get more people

You could reach thousands of more people for every ₦1,000 you spend. https://doacweb.com/advertising

Adverts on doacWeb can be informative, educative or persuasive in nature.

doacWeb Ads is always directed at a broad audience (reaching thousands of people day by day), not few individuals — it deliver your advert to the target audience at the same time. Putting your offer in front of the right people — who have the money and interest in what you sell.

doacWeb Advertising gives you advantage as adverts passes through https://doacweb.com to the internet, reaching millions of people over the internet, and to grow your audience.

Grow your business, Be known, Boost your visibility, Drive engagements, Get new customers and Increase sales.

doacWeb acts as a global advertising media, to let people — individuals — and businesses, to promote and reach more interested people.

Get Started.

WhatsApp: 09031633831

Email: info@doacweb.com