Tag Archives: marketing roi

Marketing ROI: Return on [Your Concept Here]

I got a trackback this afternoon from Brian Solis, and his post on ROI vs. ROP for social media metrics. ROP? Yet another formulation of RO[blank] intended to sound like a financial metric. Brian’s passion about the need to engage customers and the value of social media is spot on. But I have to groan when I see another new permutation of Return On Anything Short of Actual Revenue.

As I argued passionately during the last frothy marketing trend on "brand", marketers are great at creating, evolving and innovating ideas. But they are also trend-crazy. And when you combine those two predilections with serious business issues, you end up with a profession that continually confuses the hell out of the rest of the business group. Every marketer you talk to defines things a different way. But more important, especially on the topic of ROI, marketing loses all credibility with the board room suite when it twists and bends financial metrics designed to measure value creation into concepts that skirt the issue of accountability for actually creating value. This goes for Pepper’s and Roger’s Return on Customer as well–even though there are many good ideas there about how to value customers. 

ROI means something important that too many marketers seem completely unable to get their arms around. It means demonstrating in clear terms that the programs you’re pumping money into are returning real cash value to the company. Is that hard in marketing? Absolutely. Often it’s next to impossible, or at least the cost of measurement is greater than the cost of the program in the first place. But marketers need to be straight up with those challenges, and not dismiss or dilute the value of ROI by introducing ROFOTM (Return On Flavor of the Month).

Businesses are right to ask about the ROI of social media. If I put a dollar in the stockmarket, I get a ton of data that helps me peg the risk of getting my dollar back with interest. Sooner or later, marketers are going to have to learn how to explain why a shareholder’s dollar is better invested in the company’s marketing programs and not the stockmarket. Marketing will not win any points by responding with a feint and a dodge, and saying "these other metrics are more important", or my personal favorite, "they don’t get it."

Social media is early in it’s evolution, even if it is building on older concepts (remember The Well?). The value creating potential varies tremendously from industry to industry, and from company to company, and it also comes with some significant risks for companies used to commanding and controlling their messages and markets. Those challenges should not be swept under the rug, with social media packaged up, wrapped in a bow, and sold as the new Web 2.0 elixer of life. Those challenges–like how best to measure the potential ROI of social media–should be mapped, debated and addressed openly.

There are a lot of good arguments to proselytize social media today. It’s relatively cheap, it can generate market insights often more expensive to gain in other ways, it can improve customer intimacy, it can dramatically improve visibility on the Web–there’s a lot more, but good measurement is not on the list, yet. Let’s please spend a little time and energy figuring that one out before we package it up and sell the hell out of it.