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ROI Is a Crapshoot: How Metrics Fail to Tell the Full Story

Written on
Jul 7, 2017 
Author
Joseph Kuchta  |

For too long, clients have demanded that marketers prove ROI. Marketers have responded with the equivalent of grainy photographs of Bigfoot in the wild. It’s time to admit the photos are fakes. Agencies need to stop wasting money and effort chasing a myth and measure marketing success in more credible, productive ways.

An overemphasis on ROI puts marketers and clients on a road to ruin. An agency that overpromises ROI might later discover the difficulty of proving that return. This can quickly spiral into a loss of credibility with clients, with everyone missing an opportunity to consider more meaningful measures of a campaign’s success.

Technology has made it relatively simple to measure analytics on any sort of online content, but it's not as easy to track results from print or television. Anyone who promises to show you a straight line between one particular action and a desired result is probably not being completely honest.

Lies, Damned Lies, and Statistics

A recent survey found that 74 percent of CEOs expect marketers to be completely focused on ROI. Meanwhile, a different study found that 73 percent of CEOs don’t think marketing is able to show its business value. So three out of four CEOs want hard figures on their marketing return, but nearly the same number don’t think that’s possible. What we have here is a failure to communicate.

It might be time to admit that ROI isn’t all it’s cracked up to be. Many agency leaders seek this holy grail of the marketing world, but few will ever find it. Key performance indicators can offer an excellent alternative. You can define your KPIs in advance — whether they're sales revenue, cost per lead, or various conversion rates — and see whether your indicators are met regardless of how many channels a particular campaign employs.

Proper KPI tracking can fuel segmentation efforts, giving your client a more accurate picture of which efforts are paying off. It will also give you a better idea of how that client’s audience responds to marketing messages in multiple mediums.

A Return to Form

All clients want a neat, clean package. I’ve seen few instances when ROI is as neat, clean, or simple as they want. We gather all the data we possibly can on various campaigns, but skillfully interpreting that data and using it to inform actions moving forward is a separate matter entirely.

Are you trying to slowly steer client conversations away from ROI? Here are a few pointers to consider:

1. Topple the Tower of Babel. When talking about ROI, marketers and business leaders aren’t speaking the same language. Marketers might be on the same page in terms of ROI, but 75 percent of CEOs think marketers misunderstand and misuse the terms “results,” “ROI,” and “performance.”

It’s critical at the beginning of any relationship or deal to reach a precise, mutual definition of expectations. That definition will guide you toward quantifiable goals. This takes the ROI concept out of the haze and back into the world of cold, hard facts.


2.
Figure Out What You Really Want. Every marketing effort is unique. Each foray has distinct goals, and companies measure success differently for each campaign. A cookie-cutter approach will never work.

Regardless of your desired outcome, you must clearly communicate the desired outcome to all parties. If your goal is a higher intensity of engagement from respondents, you can discuss how to structure a campaign around that goal.

3. Redefine ROI. Sometimes, you might need to flip the script. I’ve found it helpful to reframe ROI conversations as “return on idea.” Forget about your investment, and focus on the big marketing concepts — changing packaging or reinventing a product’s audience, for example — that can dramatically change a brand.

Turning the ROI concept on its head like this can be productive. By separating marketing initiatives from financial aspects, you can focus more on the payoff of efforts rather than the money that went into it. Sales increases are great, but there are plenty of other potential benefits.

Let’s face it:
ROI is a crapshoot. An overemphasis on ROI sets marketing agencies and clients up for failure. Stop wasting time and money chasing the marketing equivalent of Bigfoot, and determine what tangible, productive metrics you should be measuring to make your agency's campaigns successful.

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Joe Kuchta serves as Chief Client Officer of Sandbox Group LLC and served as its Principal. Mr. Kuchta serves as the Chief Executive Officer of GA Communication Group (Goble & Associates, Inc.) and served as its President since 2000. Mr. Kuchta served as Goble's Creative Director. Nearly 10 years ago, he left Corbett Health Connect as Group Creative Director (after having launched Cozaar & Hyzaar…& working on such brands as Augmentin, Depakote & Ultane). He is an expert strategist with a creative flair. He served as an Advertising Manager at Abbott Laboratories, responsible for launching a multitude of products into the diagnostics arena. His hands-on contributor to all business, marketing & creative strategies. His sharp ability to cut through the clutter to core market & creative issues makes him a superb partner & invaluable mentor. He has been a Director of Illinois Biotechnology Industry Organization since January 2010. Mr. Kuchta is a full-fledged Second City improv graduate.

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