Contemporary, professional marketers need to make sure the brands they represent appear everywhere. We're talking banner networks, affiliates, Twitter conversations, retargeted ads, branded ebooks, convention panels, email funnels, Pinterest boards, local directories, Google search results, event sponsorship, coverage in third-party blogs – the list goes on. Marketing in the digital age can encompass so many different types of activities that many have simply stopped measuring the ROI (return on investment) of their various efforts. According to the latest CMO Survey results, under 32% of marketers can demonstrate the long-term impact of their marketing on actual business. 49% say they can't track ROI at all when it comes to social marketing. I get where they're coming from. If your audience can't access your Snapchat post after 10 seconds of its appearance, then why should you even try to determine if the time you put into the post was worth it a month later? If Gary Vaynerchuk says Snapchat is where your brand needs to be, then isn't that enough? Sorry to break it to you, but no. No it isn't. There's plenty of value in branding for the sake of building awareness, but these tactics require significant manpower hours, if not production costs and media buying budgets. If you're going to try to maximize the bang you get for your buck, then you need to be systematically thorough and have some kind of mechanisms in place for measuring impact. And no, we're not talking about the number of likes your latest kitten post on Facebook yielded – we're talking about metrics that have direct influence on the bottom line. This principle speaks to branding activity on various marketing channels, but it also speaks to variations on activity within each marketing channel. Usage trends, algorithm updates and evolving competitor activity can all necessitate that you keep what you're doing fresh and continuously try new things. (Make sure you keep good records on your impact, so you'll know what works well and what should be dropped. An eye on ROI helps keep you agile.) If you can build a formula for ROI tracking that works well for your brand and its various marketing activities, then you'll have it made. You'll never need to guess whether or not a given tactic has resonated with prospects. And you'll never need to scramble to justify your activities to your superiors or clients. There's a lot of noise out there when it comes to the ROI debate, and plenty of "social media gurus" are giving bad advice, recommending that you focus disproportionately on vanity metrics that don't matter. Just keep your head on straight and keep the following five things in mind, and you'll be well on your way to building a better ROI formula for your marketing.
Just like any topic in the world, from baseball cards to confection baking, there's no end to how much you can learn about tracking metrics. There will always be another layer to peel away, or another model that might take more of the right factors into account. But the basics are the basics, and when you're just getting started with digital marketing for a specific project, there likely isn't enough activity taking place to learn anything from the more complex ROI calculation models. Just look at the number of conversions that your website brings in as a result of referrals from each channel, and you'll be in great shape. You can always drill down later.
There's no shortage of expensive tracking tools you can integrate into your site's programming so you can benefit from enterprise-worthy big data when monitoring marketing impact. But the free version of Google Analytics offers more functionality than you could ever need, and it also happens to be the industry standard. Get the most out of Analytics by setting it up to track what matters, so the data will be where you want it, when you need it. Set up "Goals" for all of the conversions that matter to you, which may or may not include sales, subscriptions, form submits and downloads of promotional materials. When this setup is done properly, correlating conversions with referrers is simple. Just click on over to Traffic Sources and refine according to media type or social channel. Of course, this won't help you to understand the holistic picture of how your audience found out about you and came to trust you enough to opt in, but for those who want to see this information, Anaytics also supports customizable attribution modeling.
Once you've been at it for a few months, you can start to get more complex with your thinking about ROI. You'll have enough data at your fingertips to start calculating your business's average lifetime customer value, churn rates and even conversion rates per marketing channel. And once you know those things, you can assign value potential to various conversions. For example, let's say you know that in the past year, out of 2500 email newsletter subscribers, 75 people made first-time purchases. And let's say that your customers yield you average of $800 in profits before eventually taking their business elsewhere. Then you're looking at a subscriber-to-customer conversion rate of 3%, which, with a lifetime customer value of $800, keeps you in the black as long as you spend less than $24 on getting each new subscriber. This magic number is your cost per acquisition, or CPA. When you know your target CPAs for every marketing channel you work with, then you can make the tough decisions about priorities and spending. But you still have to make sure that your metrics cover all phases of the sales funnel. To measure awareness building, metrics like reach and clicks matter. For the nurturing phases, page impressions per referred visit and volume of requests for more information make the biggest difference. And when it comes to purchases, it's all about the revenues and conversion rates. All of the above have costs, and all have ROI tipping points.
Marketing efforts' impact on leads, conversions and sales can measured, but there's plenty of other stuff happening out there that can't. All it takes is for one influencer to have a bad experience with your brand, and the negative sentiment can spread like wildfire. All it takes is for you to accidentally overlook the irrelevant comments fans left on your brand's Facebook photos in which they asked for some customer support help, and all of a sudden you're creating the impression that you're unhelpful, unresponsive and callous. Especially when it comes to emerging digital channels, an effective ROI model needs to take into account the potential costs involved with not being active. Compare the cost of running a support call center with the cost of managing a Twitter account that provides super fast response times, and you've got a no-brainer. But the indisputable value of digital marketing goes well beyond its ability to proactively manage an online reputation or minimize overhead. Consider these benefits:
So no, digital marketing might not be the magic bullet that many pretend it is when they cite a jaw-dropping case study. But the ROI potential from doing it well is too big to ignore – and it goes far beyond user clickthroughs that eventually yielded sales.
Don't get excessively distracted by red herrings like daily landing page impressions, blog post comment volume or (heavens forbid) total number of Twitter followers. These "vanity metrics" can give you an ego boost, and they can help you to convince decision makers who lack new media savvy that what you're doing has value, but they're not going to have any impact on business – not unto themselves anyway. Fake account Twitter followers can be bought, and so can unqualified, outdated, irrelevant email lists. It doesn't take a first-world coder to build a bit of script that leaves random comments on blog posts. This all means nothing without quality engagement. If you're not providing real engagement value to real people, then vanity metrics won't correlate with any definition of ROI.