4 tips to understand ROI in the age of integration (Column)

Kim Medynsky, MBA, is principal at Medynsky & Associates The return on investment (ROI) of campaign spending has been a major challenge for marketers as we have tried to defend our advertising budget, and directly correlates the campaign to sales, but it has been difficult to prove for as long as I have been in […]

Kim Medynsky, MBA, is principal at Medynsky & Associates

The return on investment (ROI) of campaign spending has been a major challenge for marketers as we have tried to defend our advertising budget, and directly correlates the campaign to sales, but it has been difficult to prove for as long as I have been in marketing. With the onset of online advertising, marketers are taking comfort in the ROI tools available for promotions in cyberspace, but are they making the move to online without really understanding how traditional media fares? Budgets are being shifted to online because of a belief that it’s the best way to reach the customer, and it’s easier to track online advertising. But is the convenience really paying off?

In 2013, I conducted a research study of 100 senior-level marketers, agency leaders, researchers, analysts, and technology experts across different industries in North America in order to understand how the ROI of campaigns gets measured, and verify my suspicions about the current gaps. Over 80% of the respondents said they relied on Google Analytics plus their own ad-hoc reporting tools to collect insights, and they were switching from print to online because of the analytics.

However, as a marketer, Google Analytics doesn’t tell me if a customer went to the store and purchased as a direct result of my integrated campaign, and it doesn’t tell me which tactic brought the consumer into the store. When I asked participants how they knew which tactic generated store sales, they told me they relied on the post-campaign regression study they conducted when their budgets permitted, or they relied on their own ad-hoc reporting tools. It’s no wonder marketers are so stressed today.

I believe there are four paradigm shifts that we need to consider given the age of increasing access to metrics, data and insights:

Measuring the ROI of Traditional and Online Media, Equally

The ROI of integrated campaigns needs to be assessed in a way that incorporates the effectiveness of all tactics (combination of media, creative and message). In other words, it requires an equal playing field for all of the tactics to be assessed according to their effectiveness rather than by the tools that capture the data. For example, in retail, we need to be able to see which tactic (print ad, TV or online) brought people into the store, influenced/motivated their purchase, and determine a cost to acquire people who purchased as a direct result of our integrated campaign.

This theory has been applied for driving traffic to websites and motivating people to buy from e-commerce sites, but we need to close the gaps in the traditional media world rather than abandoning the media. An integrated ROI measurement strategy can help us accurately assess traditional media, retail channels, and our campaigns.

Assessing the Campaign ROI Impact Across the Organization

Given the information age, we need to be able to extract a level of granularity from the campaign, and link a specific tactic to sales performance. For example, let’s look at consumer packaged goods. If we launch a new product, we need to be able to assess which one of our tactics (or combination) is contributing to the sales of the product, and directly link the impact on operations and finance so budget planning becomes more accurate as a result. Imagine if marketing could finally eliminate the stereotype of being a discretionary expense, and become the strategic, accountable hub with proven impact across all of the functional areas of organizations just like marketing textbooks have portrayed.

Real-time ROI not just for E-Sales

Real-time data have become an advantage with online, but real-time insights should be incorporated across all of the campaign elements so we have a fair comparison of online and offline tactics, and insights can be gleaned while the campaign is still active. Real-time shouldn’t be exclusive to the online world, and real-time integrated campaign reports mean resources need to be aligned to respond to the results.

For example, I had one CEO tell me that they are not ready for real-time reporting and that makes me wonder if there is a fear of real-time data, and the readiness of the team or alignment of corporate priorities. How many other C-suites feel this way? Given the increasing rate of change among consumers, how do we stay ahead of the game by relying on historical data?

Need for Modern-day ROI Tools to Close the Gaps

ROI should be optimized while the campaign is active in order to maximize results. I will be willing to bet you’re saying that’s what you’re doing now, but are you able to see the effectiveness of each tactic within your campaign? Do you adjust your messaging across online and offline campaign elements and see the impact on store sales? Our reporting tools and methodologies need to close the gaps to include: relevant and timely data about all of the tactics; link to sales in bricks and mortar settings; provide accurate campaign optimization; and link all of this data together in a meaningful and timely way to help the marketer thrive.

Think about your next product launch. If you knew you had the winning formula for allocating the exact budget to achieve your objectives and secure your bonus, or if you could prove the specific elements of your TV, print, radio, and digital advertising campaign contributed to store sales, wouldn’t that make your life easier? How many marketers can do that today?

How we measure the return on the campaign investment needs to be integrated on many levels just like the tactics need to be integrated within the campaign strategy.

Kim Medynsky has a 24-year career in marketing from agency to consumer-packaged goods to business-to-business to teaching marketing at the undergraduate degree level at Western University. Medynsky & Associates advocates for the marketing profession.

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