Every marketing department these days is under pressure to prove how they’re contributing to the bottom line. And with all the Big Data available now, gathering that proof should be easy, right? Yes and no. A lot of companies are still struggling to determine their marketing return on investment (MROI).The fact is that while advanced analytics is a powerful tool to unearth growth opportunities and increase marketing effectiveness, there is rarely a single model, tool, or answer. There are different approaches for different businesses and problems. We call this approach “smart analytics” because it’s about figuring what analytics makes the most sense for the problem you’re trying to solve.
This video by my colleagues Dennis Spillecke (@dspillecke) and Jesko Perrey breaks down three useful approaches for tracking MROI:
1. Test and learn – Basic but effective, especially in the digital world, where you can experiment a lot without spending a lot of money. The main point here is that companies need to institutionalize this approach so you don't have one-off experiments that don't sustain real learning.
2. Reach-Cost-Quality (RCQ) – A great way of judging return when you don't have enough data, RCQ can also be helpful in predicting future impact of marketing spend
3. Media mix modeling (MMM) – MMM has been around for years, but the birth of Big Data and the ability to integrate new channels (e.g. social media, which we do through a SocialGRP) has allowed this approach to be more relevant. There's a great piece about how MMM needs to modernize: 5 steps to squeeze more ROI from your marketing.
Before the ROI models ever come into play, however, Jesko and Dennis highlight a critical determinant to success, which is the need to ask some critical questions, such as: What’s your goal? Who’s your target? What are you trying to accomplish? It’s surprising how often this step is overlooked or short-changed. Without sufficient thought about good questions (and the best answers to them), the result is often confused action, irrelevant data, and, ultimately, a poor return on investment.
Starting with the right questions is the best investment you can make.
What questions are you asking to improve your marketing?
Learn more about ROI and other topics on the Chief Marketing & Sales Officer Forum site, and follow us @McK_CMSOForum. And please follow me @davidedelman.