Does Your Marketing Pay Dividends?

If Marketing is an Investment, Where’s the ROI?

One of the most overused adages in the marketing world is, “I know half of my advertising is wasted, I just don’t know which half.” This quote is attributed to famous retailer John Wanamaker, who probably first uttered it over 100 years ago.

Wanamaker’s statement has become a common refrain for modern marketers who are caught unprepared when asked about their marketing return on investment (ROI).

While not all marketing is measurable, we need to move move beyond century-old excuses and start focusing on what we do know.

We know that…

  • It can be difficult to attribute specific sales transactions to individual marketing touchpoints, and this may, in fact, be undesirable. Why? Because it’s rare that a single contact leads to a completed transaction. Marketing is a process, and should be measured as such.
  • Marketing dollars are only wasted when you keep spending on tactics that aren’t working. Testing a campaign, strategy or communications channel is an investment in learning. Part of every marketing budget should be allocated for trying new things. That’s the only way to continuously improve results.
  • Technology makes marketing more measurable than ever, but people are still people. Their behavior can be predictable, yet mystifying. As long as people are making purchasing decisions, stats will be only part of the ROI equation. Understand the limitations of data and analytics, and apply a liberal amount of human intelligence to marketing decisions.

Art Meets Science

Given what we know, we should focus on balancing the art and science of marketing. Use available data to evaluate tactical activities in order to refine results. Data can easily prove that a campaign is not working. When that’s the case, it’s time to make some changes to fine tune, or possibly change course all together.

Look at the big picture, especially when accurate data is hard to come by. Not everything is quantifiable, but that doesn’t mean it can’t be tested. Is there a specific tactic in your marketing mix that you’re not sure about? Try testing with and without that element. The impact on sales will tell you if you should keep that item or cut it.

Be cautious about assigning too much value to single activity. Think about the results of combined efforts – your integrated marketing – instead. It’s like baking a cake. If done right, the finished product is delicious, but forget the flour or add too much salt, and you’ve got a failure on your hands.

Rebalance Your Portfolio

We’ve all seen the financial disclaimer, “past performance is not an indicator of future success.” The same is true of marketing dividends. Things change quickly, and marketers can’t afford to assume that what worked last month will pay off next quarter.

To keep up with evolving markets, test, test, test your programs. Rebalance your marketing mix as needed, and test again. The fastest way to increase your marketing ROI is to aggressively prune your portfolio to eliminate tactics that have the lowest return.

Keep adding fresh ideas at the top and dropping the bottom performers. Pretty soon you’ll have results that are the envy of your competitors, and you can brag about amazing dividends from your marketing efforts.

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