How To Improve The Return On Your Investment in Marketing (ROI)

For: CEOs, CFOs, CMOs

OUTLINE - What to expect

1. Elements of Return: Today’s new leverage
2. Rationale for a systematic approach to marketing spending
3. Action Steps to take now to begin improving marketing ROI

1. ELEMENTS OF RETURN: TODAY’S NEW LEVERAGE

In simple terms and not to belabor the point, return on marketing spend is a matter of managing input vs. output, cost vs. benefit. Reducing inputs/costs, increasing output/benefits, or both will improve ROI.

Today’s New Leverage: Web 2.0

Web 2.0 helps companies replace marketing dollars with brainpower and converts short-term costs into long-term annuities. This is how.

Dollars vs. Smarts

With traditional advertising, the way to increase results was to spend proportionately more. The way to improve ROI was to make that incremental spending more effective. Some of the ways this was done was through better strategies, more efficient media buying, and “breakthrough” creative work.

Regardless of the methods and tactics used, extra spending was typically involved. The problem with this approach was that, for example, after an ad ran it lost its benefit; it was an expense, not an investment, and had no long-term benefit.

Web 2.0 gives companies the opportunity to leverage its assets (marketing brainpower, budgets, knowledge base, etc.) exponentially. For example, content produced on a website blog and extended into other social channels such as Facebook is typically less expensive than traditional media, has the potential to be broadly distributed at no cost, and live forever on the Internet.

Key Takeaway

Using Web 2.0 assets such as social media with new marketing strategies can provide new opportunities to improve marketing ROI through lower cost inputs and higher return, long-term benefits.

2. RATIONALE FOR A SYSTEMATIC APPROACH TO MARKETING SPENDING

What The Business Landscape Looks Like Today

The road to increased profitability and competitiveness appears unclear and complex to many business owners and key executives. Traditional marketing characterized by push or outbound activities is being replaced by new pull or inbound activities created and empowered by the Internet.

Every business is now engaged in Web 2.0 / Internet / Social Media activities to some extent. However, the issue is not what a company is doing but how well. For example, a Twitter account with occasional messages or a Facebook business page that is not regularly monitored is not a meaningful online presence.

An effective way to create clarity, understanding, and to reduce complexity is to approach marketing systematically.

A systematic approach contains these parts:

• An understanding of Social Media
• An understanding of how customers want to buy today
• The strategic alignment of marketing strategy and tactics into a total business context

 

 

 

3. ACTIONS STEPS TO TAKE NOW TO IMPROVE MARKETING ROI IMMEDIATELY

1. Commit to understanding the leverage available through inbound/pull marketing such as social media.
2. Ensure that all foundational elements of your marketing plan are solid. For example, ensure that you have personas developed for each major target audience segment.
3. Set specific objectives (e.g. website visits, leads, and sales conversions) for 1-3 inbound marketing programs. Implement, track and improve.
4. Caution: While it may be tempting to immediately engage in new and expanded levels of social media activity such as Twitter or Facebook, devoting excessive time and resources without first covering the three steps above will likely result in sub-optimal results. This may taint the enthusiasm for a properly planned and executed program