Marketing 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 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:
- message strategy
- media buys
- Social media
- sponsored posts or other advertising
- fan engagement
- sentiment trends
- Website (Google Analytics)
- 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) …
Not so easy, is it? Where do you start?
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.
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.