Tips for Measuring the ROI of Digital Marketing

social analytics suckIn the bad old days, digital marketing was a free-for-all where instant gurus touted their money-making formulas (usually little better than snake oil salesmen) and deluded followers into spending thousands for coaching programs that didn’t work. Of course, without metrics for measuring the ROI of digital marketing, these gurus continued raking in the money from gullible and desperate businesses.

This isn’t a new problem and it’s unique to digital marketing. As far back as the late 1800’s John Wannamaker is quoted as saying:

Half the money I spend on advertising is wasted; the trouble is I don’t know which half.

Traditional advertising faces a similar problem with companies allocating 60% of their media budget to television when only 18% of TV advertising campaigns generate a positive ROI, according to Nielsen.

Now, of course, digital marketing is much more sophisticated and it’s harder for false gurus to seduce business owners without proving the ROI resulting from their digital marketing programs. Below are results from studies showing the ROI of digital marketing:

ROI of digital marketing

the ROI of digital marketing

  1. A study by Microsoft used big data to measure the ROI of digital marketing both with and without traditional advertising. They found digital marketing outperforms all forms of traditional advertising (TV, print, radio, and outdoor), while combining both resulted in the highest ROI. Thus, digital marketing isn’t an either/ or strategy, but businesses should blend traditional advertising and new media. Also, businesses whose media spend is still focused on traditional advertising should migrate their budgets in favor of digital marketing.
  2. A case study by Google and Dove showed a 6% lift in sales, while combining traditional advertising (TV) with digital marketing resulted in an 11% increase in sales. Interestingly, the study showed the “tide lifts all boats”. In other words, advertising a single product through digital marketing caused an uplift in sales of other Dove products.
  3. Nielsen showed that CPG (Consumer Packaged Goods Companies) demonstrated the positive ROI of digital marketing was nearly 2.8%, with some industries showing an ROI of over 5% — not too shabby.

The state of ROI assessment

The state of ROI assessment is dismal, according to the Fournaise Marketing Group, which found:

Nine out of ten (90%) global marketers are not trained to calculate return on investment (ROI), and 80% struggle with being able to properly demonstrate to their management the business effectiveness of their spending, campaigns and activities, according to new research.

Why is ROI assessment so bad?

Fournaise CEO identified 2 problems in their study that account for the dismal state of measurement of ROI in digital marketing (or marketing in general, for that matter).

The first is the poor training of marketing majors in assessment of marketing ROI and the second is the influx of non-marketing majors into the marketing discipline (over 1/2 of all marketing employees have non-marketing degrees, most often in the social sciences). He sums up the problem with this statement:

In other words, every Tom, Dick & Harry is a Marketer, lacking the scientific and financial knowledge necessary to inform and optimize the creative side of Marketing. CEOs have told us again and again: they want ROI Marketers, i.e. 360-degree performance machines trained to deliver (real) business results and prove/optimize ROI. As long as Marketers continue to fail to get trained in, master the use of and optimize Marketing Performance & Marketing ROI, they will struggle to demonstrate to CEOs that they are not ‘money spenders who jump on (and hide) behind the latest fads and blow smoke’, but real business generators

ROI of digital marketing and market performance tips

First, let’s take a look at digital marketing and where it fits within the spectrum of traditional marketing. Here’s a very cool infographic I created with the help of Matt Valvano from Ideas and Pixels — a first-rate graphic designer.

digital marketing strategy

The infographic shows the various elements necessary to achieve positive ROI of digital marketing campaigns. Basically, 2 things account for positive ROI:

  1. bringing more visitors to your store (or estore)
  2. convert more visitors who show up at your store or estore


Unfortunately, many attempts to measure the ROI of digital media focus on these end results, totally ignoring the variety of factors that generate positive outcomes — a very dangerous practice.

Tip #1: Think beyond outcome measures

So, my first power tip for measuring the ROI of digital marketing is understanding the complex set of activities and interrelationships among activities resulting in positive ROI. For instance, a focus on building a social media community backfires quickly if you have problems with customer satisfaction due to poor product performance — all you’ve done is give disgruntled customers a platform for complaining about your product or service.

Tip #2: Measure what matters, not what’s easy

Often you’ll find digital marketers measuring the easy things — likes, clicks. Sure, these things matter (somewhat), but they’re not the most important (or only) important aspects of a successful digital marketing campaign.

First, set clear goals for your digital marketing campaign — goals that go deeper than just outcome performance measures. Then, create KPIs (key performance indicators) related to those goals.

If you’re convinced customer satisfaction impacts market performance (as is the case for most businesses), assessing sentiment makes a lot of sense. But, don’t stop with sentiment analysis — look at the totality of KPIs and measure all of them. Better yet, chart performance across all KPIs over time, which is much more insightful than putting all your faith in point measures.

Tip #3: Metrics aren’t enough

Don’t simply create dashboards with displaying your metrics. Statistics don’t speak for themselves and require interpretation by skilled analysts combining both the art and science of analytics to uncover actionable insights from your metrics.

While we’re on the topic of dashboards, think about issues related to the level of analysis appropriate for different users. For instance, the VP marketing needs a broad overview of metrics related to the entire product bundle, while brand managers need a more detailed view of just the products they handle.

A good dashboard allows users to dive deeper or take a broader overview of metrics. Also, adding the ability for users to create ad hoc reports and alternative visualizations increases the effectiveness of your dashboard.

 Tip #4: Tie compensation to metrics

One of the biggest challenges firms face (once they get over the hurdle of generating meaningful metrics) is translating data into insights then applying those insights to actions. So, it’s a good idea to tie compensation to metrics — this ensures your employees pay close attention to metrics and try to optimize market performance by using insights provided through these metrics.

I have 3 caveats, however, when it comes to tying compensation to metrics:

  1. Balance the compensation to ensure it’s challenging to achieve higher levels of compensation without being too difficult to achieve. If you expect too high an ROI of digital marketing employees (something unrealistic) they won’t try. If the expectation is too low, they’ll leave money on the table by not doing everything possible to optimize your digital marketing campaigns. You also want to pay attention to the degree to which compensation fluctuates based on performance. There should be adequate incentives to optimize the ROI of digital marketing.
  2. Be very careful that you’re compensating employees for metrics that correlate highly with the ROI of digital marketing. Tying compensation with vanity metrics, like # of Facebook Fans, will drive behavior toward achieving a large Facebook fan-base. However, there’s strong evidence that absolute size of your Facebook community matters little while the engagement of your community provides a stronger impact on the ROI of digital marketing. Pay for what matters.
  3. Employees must have control over factors impacting metrics. For instance, marketers might have little control over customer satisfaction if the production department turns out a really crappy product or logistics can’t get the product delivered in a timely manner. Employees quickly become dissatisfied with a compensation plan containing elements they don’t control.

Tip #5: Don’t stop with descriptive analytics

Move past descriptive analytics (how many, how much, how often) to employ predictive analytics.

In essence. predictive analytics build models using big data to uncover relationships among the factors that impact the ROI of digital marketing (or any other variable of interest).

Your turn

What advice and tips do you have for improving the ROI of digital marketing?

Need help?

We welcome the opportunity to show you how we can make your marketing SIZZLE with our data-driven, results-oriented marketing strategies.  Sign up for our FREE newsletter, get the 1st chapter of our book – FREE, or contact us for more information on hiring us.

Hausman and Associates, the publisher of Hausman Marketing Letter, is a full service marketing agency operating at the intersection of marketing and social media.

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5 Tips for Helping Your New Product Score Big!

new product
Courtesy of CES

As we’re embroiled in the circus that is CES (consumer electronics show), I thought it made sense to give some tips on how to help your new product score big. So. let’s dive right in.

Tips for helping your new product score big

1. Solve real customer problems

Of course, I could be done at this point, since the biggest single factor in new product success is meeting customer needs, but that wouldn’t be much of a blog post.

Consumers don’t buy products.

I know that sounds insane as we all know consumers buy products and it’s this factor that ensures our survival or failure.

But, consumers don’t buy products. They buy solutions.

The first step in creating a successful new product that flies off the shelves is to start by solving a consumer problem.

What do consumers need? By all means, don’t ask them or you’ll get some gobbledy gook that’s meaningless. Consumers just don’t know what’s possible and it’s not their job to think up new products for you. Sometimes they can’t even articulate their problems because, without a solution, they don’t often think about something as a problem.

A good example is the new lift gate on many SUVs and Minivans that opens using your foot or by pushing a button on your key fob. If you asked consumers about their biggest problem with these products you probably didn’t get that it’s hard to open the lift gate with your hands full of kids and groceries. But, watch them for a couple of days and you see them struggling — a big problem.

Ask consumers about what they need and your new products will also be derivative rather than transformative. Derivative products require a strong brand image and expensive marketing if they’re to have any hope of succeeding, while transformative products can come from 2 guys in a garage with no marketing budget.

If I see one more startup pitching a dining app, I’m gonna scream. Grubhub and several others own that market. Unless you have something transformative, a derivative product enhancement isn’t gonna fly against the $$$ they’re investing in advertising.

If you’re a big brand, like Proctor & Gamble, you can develop a derivative new product like Tide Sensations to build on your powerhouse brand (and still flop). But, if you’re like most startups, you can’t afford a mistake like that. Even if Tide Sensations were successful, it’s unlikely its sales would have resulted in a strong ROI.

Instead, take a page from the Apple playbook and give consumers products that solve problems they didn’t know they had. Take the iPhone, for instance. iPhone was so successful it survived rampant criticism that the phone element is almost useless and other features were, at best, substandard. Part of iPhone’s success is certainly due to the reputation of Apple for “cool” products, but much of it is based on first mover advantage — iPhone made the market for smartphones when none existed.

Now, if you’d asked the average mobile phone users if they wanted something to connect them to the internet and allow them to play fun games on their phones, most would likely say no. An even bigger group would have nothing to say if you asked them how to improve their existing mobile devices. But Apple execs were smart enough to see problems we faced in our daily lives, problems they could solve by creating a transformative product that combined traditional phone features with the things we needed most from a laptop on the go.

Witness the power of transformative new product development. Facebook did the same thing — Zuckerberg and his buddies wanted to find women (hot women) to date — like almost any red-blooded 20-something male. His first attempt failed because it created more problems than it solved. His second attempt, Facebook, flew around campus as each man invited his friends to the experience. Today, Facebook boasts over 1 billion users.

2. MVP

MVP stands for minimum viable product.

Let’s say you discover a great problem and develop the perfect solution. Asking consumers if that’s something they want is fraught with danger. Asking them if they’d be willing to buy it is even less likely to produce accurate results.

Instead, develop a prototype representing an MVP and test it out with real consumers to validate your idea. Even though you’re solving a real problem, you may need to tweak your idea based on this customer feedback. Not only will testing result in a much better fit with your customers, it helps dramatically in convincing investors to provide working capital to get your product to market.

3. Protect your product

You need to file for patent protection because anything you created can be copied by someone else. And, if you’re a tech startup, Google or someone can come in an recode your new product, putting their cadre of smart developers to recreate your solution in a couple of hours instead of the weeks it took you to create the original.

I know it’s expensive, but hire a really good patent firm, don’t use your cousin the tax attorney. I think the phrase: “penny wise and pound foolish” was created for just this case.

4. Marketing is not an option

Money comes into the firm in 2 ways — and only 2 ways. You either borrow it (or get it from investors, which still places restrictions on the firm) or you make it. There’s a limit to what you can borrow, but you can make an infinite amount of money. Making money requires effective marketing (not selling) and tracking to improve marketing performance of your new product.

And, unless you have about 10 years of marketing experience, don’t try doing it yourself (see above about hiring an experienced patent attorney). Despite what many seem to think, marketing does have rules and tools. It’s really expensive to discover those rules by making mistakes rather than hiring someone who already knows them.

If you really have a tight budget, hire a consultant to develop strategy and provide oversight, then implement the marketing strategy yourself. Bring the consultant on early in the process to help identify problems using social media and other conversations — such unstructured data is where disruptive, transformative new products come from. Involve them in the development of your idea and in testing your MVP. Then, have them create a marketing strategy that bootstraps your existing resources to build interest in your new product and stimulate sales.

Likely that strategy involves using content marketing (the new SEO), social media marketing (especially engagement that amplifies your messaging), and building relationships with customers that drive loyalty. You can implement these strategies internally (if you have time) rather than paying an agency to do them. While this isn’t optimal, it can save you a ton of money.

On a routine basis, bring the consultant back to review the market performance of your new product — not just sales, but intermediate steps along the customer journey. A good consultant uses these metrics to suggest tweaks to your initial strategy focusing efforts on what’s working and using performance to identify additional strategies that might improve performance.

5. What’s next?

Lather, rinse, repeat.

Certainly you’ll want to carefully monitor what consumers say about your new product and make improvements on it to better fit consumer needs. But, you should already be thinking about the next transformative new product you’ll develop. Instead of resting on your laurels and spending all the profits, resolve now to recycle a portion of your profits back into the next new product.

Need help?

We welcome the opportunity to show you how we can make your marketing SIZZLE with our data-driven, results-oriented marketing strategies.  Sign up for our FREE newsletter, get the 1st chapter of our book – FREE, or contact us for more information on hiring us.

Hausman and Associates, the publisher of Hausman Marketing Letter, is a full service marketing agency operating at the intersection of marketing and social media.

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7 Reasons Why Social Media Analytics Suck

social analytics suckJust a few years ago, businesses stumbled in the dark trying to make sense of their social media marketing efforts because they lacked metrics for systematic assessment. Today, businesses fare much better with social media analytics from Pinterest, Facebook, Twitter and a host of cross-platform analytics tools. Some are even free or very low cost. But, businesses still struggle to prove the ROI of social media marketing and optimize their strategies and tactics.


I think social media analytics suck for a number of reasons. Here are my to 10 reasons why social media analytics suck.

Reason #1: Too much emphasis on vanity metrics

Despite the availability of more effective metrics, many firms still rely on vanity metrics: likes, Fans, RT, etc. Certainly these metrics have a slight bearing on your ROI, but they’re not the most important metrics when it comes to measuring and improving ROI — they’re just easy to measure.

Not only do firms spend too much time and effort looking at vanity metrics, they use other historical metrics to evaluate and plan. Historical metrics are good, especially when you go beyond vanity metrics to assess performance based on elements such as headlines, time of day, length of post, and other elements that correlate with success over time. Examples of historical metrics include Facebook post performance such as the one below:

using historical social media analytics

Companies need to go beyond simple historical data, however. They must shift focus to predictive analytics – algorithms that predict outcomes, not just assess what happened.

Reason #2: Data is all over the place

Data comes from different social media platforms — Facebook, Twitter, Pinterest –, from Google Analytics, internal records, and potentially other sources.

Here’s what Kelsey Cox, Director of Communications at Column Five, said about building social media insights:

We place a large emphasis on reporting ROI, including social metrics, and as of right now these are very hard to report on since there is no tool that generates aggregated numbers across platforms – including sharing via earned media placements.

The Facebook data are insightful, but how did the same posts perform on Twitter?

How well did social media efforts translate from engagement to sales?

With data all over the place, it’s difficult to evaluate your social media marketing as a whole and develop effective strategies.

Reason #3: Inaccurate data

Even worse, is the situation encountered by Newscred:

It took no less than seven social media analytics platforms to patch together the metrics I truly cared about. Even worse? Not a single number, from engaged users to reach, matched at all.

How can different numbers be right?

Obviously, they can’t and relying on historical data becomes increasingly problematic when that data is inaccurate. Because predictive analytics relies on correlations rather than raw data, inaccuracies MIGHT have less effect since the inaccuracies likely represent systematic errors.

For instance, Google Analytics shows 1 number reflecting bounce rate on my website, while Alexa shows a wildly different number. The numbers appear to move in tandem, with both going up or down at about the same time. Since I’m really assessing correlations when I use predictive analytics, I’m really looking at movement rather than placing much emphasis on the number itself. I can build an algorithm showing how various factors move in relationship to each other, which helps build effective social media strategy.

Reason #4: Measuring the wrong thing

Social media analytics don’t help a lot if you’re measuring the wrong thing and that’s the biggest reason why vanity metrics don’t mean much — they don’t correlate very highly with ROI.

So, the first step in creating an effective social media analytics program is figuring out what your KPI (key performance indicators) are. What are the factors that contribute most to ROI?

Every business is different so your KPIs won’t necessarily be the same is other businesses, but here’s a list of possible social media KPIs.

Reason #5: Using 1 size fits all reporting

Different users within your organization need different data so using a 1 size fits all report won’t cut it. For instance, the community manager in my organization handles the day-to-day elements of social media management for a client. They need to understand how their community responds to posts (which ones they like best, which drives engagement, which results in highest CTR (click-through rates), etc). They focus on factors impacting tactics, like headlines, post length, time of day, etc. They change these elements to optimize ROI for their client.

My marketing strategists handle several community managers across different clients. They need a higher-level view of performance that goes beyond tactics to strategy. They’re also responsible for Google Analytics and internal data from clients. Marketing strategists need to calculate ROI for each client based on this enhanced data. They then make recommendations to the community managers for changes in social media strategy.

Meanwhile, I monitor what everyone is doing so my reports are even higher level looking at all clients. I then go to clients to suggest ways to optimize their social media ROI.

The best way to provide custom reporting is to use the right tool — one that aggregates data for view by different levels with different needs. The perfect tool also allows anyone to drill down for more nuanced information should they want a deeper understanding of why high-level data shows a particular pattern.

Reason #6: Analysis is part art part science

Numbers don’t tell the whole story — social media analytics is part art and part science. Over-reliance on either separately doesn’t perform as well as both together. Thus, the data scientist needs to have the skills of a good detective; going beyond the report to question why.

Reason #7: Ignoring text analytics

Text analytics involves developing an understanding of unstructured data — which makes up about 80% of all digital data according to IBM. But, text analytics is hard, because, as Capgemini says:

The meaning of texts depend more on context. In the real life world around us, words can mean more things: you’ve multiple language, you’ve homonyms and synonyms, jargon, humor, subtleties, nuances, poetry, under- and overstatements. So how can you derive meaning out of it and why should you want to do that anyway? In a Business Information context, that is.

Computers don’t understand unstructured data very well because of the problems identified by Capgemini. Plus, you have the problem of sarcasm and other conversational conventions that further compound analysis even for trained analysts.

IBM claims you can derive meaning from utterances more effectively using Watson, which aids analysis by analyzing Petabytes of data and learning as it analyzes. Other tools exist for text analysis and I’ll review them in a future post.

Need help?

We welcome the opportunity to show you how we can make your marketing SIZZLE.  Sign up for our FREE newsletter, get the 1st chapter of our book – FREE, or contact us for more information on hiring us.

Hausman and Associates, the publisher of Hausman Marketing Letter, is a full service marketing firm operating at the intersection of marketing and social media.

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5 Steps for Data-Driven Digital Marketing

social media insights
hausman graphic

I know I’ve said this before, but there are vast differences between traditional media and social networking — digital marketing. If you want a good recap, check out this post on the 16 differences between traditional media and social networking.

A major difference between traditional media and social networking is that, while traditional media struggles to find meaningful metrics to guide decision-making, digital marketing is literally DROWNING in it! Data floods in from Google Analytics and Webmaster Tools, Facebook Insights, Pinterest Analytics, AdWords Analytics — and many more sources.

You could assign a full time employee just to COLLECT all the data from various sources every day (luckily APIs bring the data together with a lot less effort).

Collecting mountains of data, however, doesn’t improve your digital marketing strategy! To increase your ROI (return on investment) or reach other organizational goals, you need to translate this data into insights that drive better decision-making. But, how do you tease actionable insights from a bunch of charts? How do you develop a data-driven digital marketing campaign?

Data-driven digital marketing

1/ Goals

The not-so-obvious first step in creating a data-driven digital marketing campaigns is to actually take a step BACK to develop sound goals and objectives for your strategy. Remember you want to create goals for not just sales (macro conversions), but micro conversions like awareness, amplification, loyalty, sentiment, and other factors that lead to macro conversion. Social Media Examiner makes a great case for 4 overarching social media goals, while Jason Falls presents 7 goals. Regardless of the number, set SMART goals for factors that help achieve your mission.

I developed this infographic (see above) as a tool to help you understand the myriad of factors impacting your digital marketing ROI.

2/ KPIs

Next, develop KPIs (key performance indicators) that assess your goals. For instance, a KPI for amplification might be the cumulative # of shares for a particular piece of content across all platforms. The infographic is a good starting point when looking for KPIs that’ll support your digital marketing strategy.

You also must identify sources of data necessary to understand your social media success. Where do KPI numbers exist? Is the KPI in a single place or do I need to capture metrics from several sources to approximate my KPI. Hence, if you need # of shares, you’ll need to gather data from every social platform — I use a Cognos dashboard to bring everything to a single location.

3/ Collect & display data

Now that you have your goals, collect metrics related to all your KPIs. This may mean using a 3rd party tool, like Omniture or CoreMetrics (if you’re an enterprise business) or SproutSocial (if you’re a small business). With some tweaking, you might also use the APIs from available tools like Google Analytics to generate your own dashboard. The key is to bring all your KPIs to one place, so you’re not flipping back and forth between tools.

Whatever tool you use should allow you to drill down into any metric to get a more nuanced view of performance. For instance, you want to understand not only where visitors came from, but which platform generated the most conversion …. the highest sales volume … the greatest profit.

That’s where products like Omniture come in — they gather data and allow multiple filters and display options to ensure you can make sense of your data.

4/ Develop insights

Developing insights is probably the hardest part of managing a data-driven digital marketing campaign. This is where analysis becomes 1 part science, 2 parts art.

Here are some tools that can help you develop insights:

  • Consider weighting factors. Not every metric is equally important in reaching your goals. For instance, earned media (social shares) might be more valuable than paid media (adwords, traditional advertising). That’s because earned media represents WOM (word of mouth) from friends, which we know is more influential than paid advertising, which consumers view suspiciously.
  • Correlations. Rather than viewing metrics alone, consider exploring the relationships BETWEEN metrics, such as correlations. Correlation analysis might tell you some metrics had little impact on your goals while others had a tremendous impact on goals. Thus, your efforts will generate more rewards when focused on improving more influential metrics.
  • Create models. While this sounds complicated, a model is simply a way of viewing the relationship between several factors at once. For instance, I developed a 4-factor model of social media I think does a good job of translating a bunch of metrics into a single insight.

5/ Make decisions

Once you’ve collect and analyzed metrics related to your goals, it’s time to make DECISIONS. If you don’t use insights gleaned from your analysis to make better decisions, you’ve just wasted a bunch of time.

This is where you need buy-in from management to ensure your insights translate into changes of the status quo. If, for instance, you discover a particular type of post resonates better with your target audience, you need authority to change the content marketing calendar in a way that capitalizes on this insight.

Need help?

Whether you need a complete analytics strategy, some help with brand marketing, or some consulting to optimize your existing social media marketing, we can fill your digital marketing funnel. We can help you do your own social media marketing better or do it for you with our community managers, strategists, and account executives. You can request a FREE introductory meeting or sign up for my email newsletter to learn more about social media marketing.

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Prove the ROI of Digital Marketing Content

business successMarketing is constantly challenge to PROVE the ROI of everything they do. Meeting the challenge is often difficult. A quick look at a scenario might help.

You finish a meeting to the C-suite where you show a beautiful trend line demonstrating a steady increase in sales volume and revenue. The CEO looks totally unimpressed. He asks, “How many of the sales are a result of the advertising?”

You answer, “Well, certainly our advertising is effective. Look how sales continue increasing over time.”

Unconvinced, he continues, “Well, we’ve spent over $1 million on that fancy new website you wanted. What’s the ROI of that investment?”

“We had over 2,554,635 visitor to that website last month. The average visitor stayed for 1:45 before exiting. On average, visitors read 1.4 pages. Our bounce rate dropped to 64.2%”, you tell her proudly. “Our Facebook page is really taking off. We had 145,452 new Fans added to the page last month,” you add.

“But, what was the ROI?” she repeats.

Does this sound like a conversation you’ve had within your firm?

Sometimes I think it’s not a situation of women are from Venus and men are from Mars, but one where marketing is in 1 solar system and the rest of the C-suite is in a totally different galaxy.

Wringing our hands over the lack of communication isn’t the answer. Instead, we need tools to help prove the ROI of digital marketing content.

Prove the ROI of digital marketing content

To an extent, the problem results because we don’t really KNOW what lead to a consumer reaction. In fact, after many studies of consumer behavior, I’m not sure consumers always know themselves. But, playing devil’s advocate for a moment, the CEO has to make tough decisions and project that don’t produce sufficient return must lose resources to those producing superior ROI.

So, how do you prove the ROI of digital marketing content? That depends a lot on what type of content you’re creating.

If you created a simple CTA (call to action) on your ecommerce website and/or social media, it’s fairly straightforward. You create a funnel with Google Analytics (or whatever tool you’re using) allowing you to visualize movement down the funnel — from visiting the website, to buying the product. If you want a quick tutorial on how to set up conversion funnels, here’s a good one from KissMetrics. Now you can choose different segments so you can visualize how folks who come from Facebook are different from those coming through SEO.

But, what happens when your customers go to a retail store to consummate their purchase? Whoops! Now, all the powerful analytics tools lose their ability to track the ROI of digital marketing content.

Options to prove the ROI of digital marketing content

All is not lost. You still have some options in demonstrating the ROI of digital marketing content.

Before and after

Tracking sales before the digital content appeared with sales in the same area AFTER producing the digital content gives a good estimate of the ROI. Advertising agencies have done this for a long time, but it’s not perfect. For instance, too many other variables come into play between the before and after. Also, there might be a lag before the ad impacts sales. Digital marketing suffers the same problems.

A/B testing

A/B testing involves creating marketing tactics that differ in only 1 aspect from each other. For instance, you test 2 headlines in your ad by showing the alternate ads to different groups and tracking their response. Whichever headline works best you now push out to all new viewers. To test the impact of your digital content on retail sales, you might transmit digital content to only some geographical areas and track sales in both areas that saw the ad and those that didn’t. You now have a really good estimate of the ROI of that digital content. Facebook recently implemented new advertising tools allowing you to select specific market segments and only share digital content in defined segments.

Prove ROI in complex digital marketing situations

Does this scenario look familiar?

Sally sees TV advertising you’ve had running over the last couple of days. She remembers using your brand last week. It worked really well. She mentions this on her Facebook wall. Joan sees the mention, visits your website to learn more about you and get more information about your product. On her next trip to the store, she buys your brand.

All too often, this scenario represents the normal chain of events leading to sales. Linking these actions is a complex task well beyond the capacity of Google Analytics — even though Google Analytics lets you add external data into the system so you can track offline actions and online ones in an integrated fashion.

Let’s break this down into the individual metrics needed:

  • Advertising
    • spend
    • message strategy
    • media buys
  • Social media
    • sponsored posts or other advertising
    • fan engagement
    • sentiment trends
  • Website (Google Analytics)
    • traffic
    • traffic sources
    • funnel (conversions)
    • entrance and exits — tells you if visitors entered from an ad or organically
  • Retail – sales trend

Of course, this is the bare minimum of metrics you’ll need to evaluate this complex task. You’ll likely also need to include alternative explanations for your sales trends, such as cooperative advertising by the retailer, media mentions of your brand, retail effort (including product placement) …

Now, analyze!

Not so easy, is it? Where do you start?

Predictive analytics

Right. Analyzing the ROI of digital marketing content gets really complex in these real life scenarios reflecting how vast numbers of consumers are influenced to buy your brand.

You need a powerful tool to make sense of these complex situations. You need predictive analytics.

Using regression to build a predictive model is probably the best way to understand complex buying situations and support the ROI of digital marketing content. Alternatively, you can use an econometric model for similar types of situations rather than building the model from scratch. I’ve built a predictive model for understanding the overall contributions of your digital marketing to the bottom line.

Building a predictive model involves using data on each factor collected and regressing them against your dependent variable — usually sales volume or other surrogate measures. I commonly use a jackknife approach involving building the model with some of the data then supporting the model with the remaining data.

Predictive modeling shows WHICH variables explain the sales volume. Beta weights (which reflect the importance of each factor) show the contribution of each activity — such as social media, blog content, SEO, etc — to sales. Now, you have an estimate of the ROI of digital marketing content that everyone in the C-suite understands (and can buy into).

No longer do CMOs have to sit there with weak explanations supporting the contribution of their efforts to the firm’s bottom line. CMOs now have an equal seat at the table.

Need help?

Whether you need a complete analytics strategy, some help with brand marketing, or some consulting to optimize your existing social media marketing, we can fill your digital marketing funnel. We can help you do your own social media marketing better or do it for you with our community managers, strategists, and account executives. You can request a FREE introductory meeting or sign up for my email newsletter to learn more about social media marketing.




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