As our cover story discusses, the really critical aspect is to show that the way marketing spends its budgets ultimately leads to an improvement on the bottom line for the business. Agreed, some of that uplift may be in the long term, through higher customer lifetime value, or in intangible benefits, such as improved brand status.
Even so, providing measures of short-term ROI continues to be elusive. Just think of how many thorough and convincing case studies of marketing performance you have read and you will realise the rarity. Without the IPA’s effectiveness awards and publications, the library shelf would be bare.
There seem to be two main reasons for this barrier to demonstrating how marketing works. The first is the ease with which measures of marketing activity can be got. Reams of data that show campaigns are in the field and being noticed, either through clickthroughs or phone calls, can easily look like reports on marketing effectiveness.
Yet there is a gulf between demonstrating efficient media buys, via ever-reducing figures for CPK, and the impact of a campaign, via figures for CPC, and the return those are yielding. Cost per response is not marketing’s real objective – cost per acquisition is. Media buyers do not want to highlight this fact, nor can they get that far downstream in the customer lifecycle, so they generate instead a blizzard of volume metrics.
Another big obstacle is the fact that true ROI measurement crosses over from the marketing department into operations. There may as well be a sign saying “Here be demons” over the portal into the customer service or dot.com areas of the business, for all the fear these can strike into the heart of marketers.
Only when marketers buy into the notion that they are there to drive the business will they be able to generate real ROI statistics. And only then will the business buy into marketing as a real value-adding function.