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ROI for marketing communications

The good news: Measuring the ROI of marketing communications is getting better. A good part of this improvement has come from innovative technology companies whose solutions automate and track marketing activities and communications. In doing so, they have modeled real-dollar measures of specific communications.

Revenue Performance Management video.

For instance, two companies with leading technologies are Zift Solutions and Eloqua. Through their automated marketing solutions they are providing new insights into how companies can measure the performance of their marketing communications. Zift has developed their Marcom and Zift123 platforms, which automate channel marketing for companies such as CAT, HP, Skandia, Sage and EMC and their channel partners.

Zift123 provides partners with customizable syndicated marketing activities and content, along with analytics that track the results of these activities. Zift Marcom shows vendors (CAT, HP, etc.) how their syndicated marketing activities and communications are performing for each partner and from many different viewpoints such as emails sent and opened, content accessed, ads clicks, social interaction, and lead production and conversion. For instance, Eloqua and Zift have partnered to provide a complete picture of how automated marketing and revenue-performance management can figure ROI for certain marketing activities and communications.

Underpinning these new methods is the wealth of big data that can match marketing and media deployment with customer interactions, behaviors and outcomes. A big part of the analytics provided have produced a Attribution>Optimization>Allocation model that allows companies to measure performance (prospect and customer response) of spend on different media see what is working where and allocate marketing funds “on the fly.” In other words, companies are able to measure more precisely the effectiveness a particular media and message in moving their prospects down the pipeline from awareness to buy and advocacy.

The place of cognitive science

New research into linguistics as a cognitive science is putting us on the cusp of understanding how humans process and assess communications. Market and customer surveys (done right) are still a useful tool, as are user-experience studies, focus groups and customer-experience analytics.

Still, problems remain in figuring actual marketing-communications ROI:

  1. Marketing is an expense, not an asset, and financial types figure ROI by dividing a capital investment by its return over time. Your accountants will show money spent on marketing communications in a P&L statement, not on the balance sheet. Goodwill, characterized as brand recognition, intellectual property and reputation is a balance sheet item. This measure, however, is quantified for privately owned companies by venture capitalists and in the sale publicly traded companies who are bought at a premium over their stock value. Forgetting that marketing communications outlays are an expenses and not an investment can cause abuses of the term Marketing ROI, such as DMA’s claims about the ROI of email marketing. Also, if you wanted an apples-to-apples ROI comparison of TV, radio, SEO, email, print, web ads, sales collateral and social media, wouldn’t you need to spend the same amount on each item during a period? Who does that?
  2. Many marketing experts have gone further, suggesting that ROMI (Return on Marginal Investment) is a better measure of the real value of a marketing activity and/or communication. That is, what do spends on a particular item add to the return on all marketing expenditures, assuming certain base of marketing expenditures: personnel, infrastructure, and fixed costs. There’s an interesting article about this method by
  3. Marketing communications elements such as public relations, definition of the target community, building brand and, most important, word-of-mouth (buzzword: “advocacy”) are all but impossible to measure discretely. What is the dollar value of a favorable (or unfavorable) article in The Wall Street Journal, or an analysis by Gartner, or of customers ranting about your inadequacies on Facebook? The answer is that you know such things impact your communications effectiveness and profits, and you can tell whether they are or are not working. But can you put an ROI figure on them?

So the science of marketing communications is improving, but there will always be intangibles in marketing communications that add value to your company. It makes more sense to admit that marketing communications will always involve The Art of Rhetoric—complemented by new technologies and sciences that can quantify how humans process and assess The value of words.

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Posted in Communicate Your Technology
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