The Only Way to Measure Marketing ROI

Someone asked me recently what ROI measures I use to evaluate marketing programs.  Of course there are lots of methods to choose from for different programs.  If you search for “marketing ROI,” you will get various explanations on how to measure what impact you got from a marketing spend.

There are various formulas like:

Incremental Revenue X Contribution Margin – Marketing Spend / Marketing Spend

or:  Total Revenue / Gross Profit

If those are too complex, you can break down each program by various metrics:

  • Coupon redemptions
  • Website clicks or click-through measures
  • Print impressions
  • Likes or followers on social media
  • Eyeballs possibly viewing your message

These component measurements rely on comparisons.  If you have more followers on twitter than a competitor that’s a good thing–right?  Right? Or does the quality of those likes on Facebook matter, too?

Then there’s the debate of short term return, long term return or Customer Lifetime Value.

In the end, all measures are found wanting.  Marketing is part art and part science.  Metrics and ROI valuations all center around the science part, but how do you measure art–or impact–or loyalty–viral awareness vs. changing attitudes?  And the list goes on.

In the end, there’s only one measure of marketing ROI that matters, and that’s increased sales and/or profitability.  If marketing isn’t influencing the growth of a company, then it isn’t effective.  However you choose to measure the effectiveness of marketing tactics, the ultimate ROI is: growth.

 

 

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