So, according to wise guy Malcolm Gladwell, if you practice a skill for 10,000 hours it is enough to make you an expert at it. Perhaps this is why my 12 year old self became so obsessed with pogo-sticks – because I was actively aware of how much I improved with every hour I spent pointlessly jumping up and down. God, return on investment was so simple as a kid.
ROI in digital marketing is, however, far more dynamic.
For even if you spend 100,000+ hours evaluating your ROI, it’s not gonna mean jack if isn’t measured accurately, if it doesn’t specifically consider your business model, or you fail to refine it over time. You can’t just steal a formula and ‘hey presto’ that’s you done. Your ROI process needs to grow as you do. Which leads us nicely onto our first ROI bullshit point..
ROI is bullshit if you simply follow a formula
To give you some ROI calculation examples found on the web:
ROI = (Net Profit/Total Investment) x 100
Return on Marketing Investment (ROI) = (Sales Growth – Marketing Cost) x 100 / Marketing Investment
Now don’t go running at the sight of equations. Logically speaking though, they probably just exemplify what you already know; an ROI ‘calculation formula’ just shows how much return you get from your marketing investment. Yet, truthfully, it’s not as clear-cut as this. It’s all about what ROI means to YOU, and what you quantify as ‘success’...
*Alan from the Hangover making use of some serious ROI formulas
ROI is bullshit if you don’t set SMART goals
SMART goals - those that are specific, measurable, attainable, relevant and timely - are essential for calculating your return on investment. They are the ketchup to your chips, the light in the darkness, the air to your lungs… OK, perhaps a little over dramatic, but you get my drift.
Here is an example of a SMART goal for digital marketers:
Increase the number of *leads by 50% (from 20 per month to 30) for our new pretty product launch by January 2018.
Having a SMART goal will give you a specific focus and a drive to achieve. HOWEVER make sure you’re basing this on your own historical benchmarks. You can’t just say ‘"I want to be at X, by Y amount of time". It may just be your bullshit ego talking, not an actual attainable form of ROI.
*this can be leads, sales, visits to website, conversions, customers… ‘sup to you.
ROI is bullshit if you fail to use the right tools
Let’s face it, there is an incredible range of ROI measurement tools out there, and a lot of these have overlapping functions. But it’s about finding the best ones for you, and using them efficiently for your business. For instance, what’s the point of sending weekly emails out on MailChimp if you aren’t analysing and testing their performance? The success of emails can be affected by the time sent, the subject line, the format and text content… so don’t get complacent, you lazy bum. You could be missing out on a big increase in your return on investment!
You also need to make sure your ROI tools are both qualitative AND quantitative. For instance, an increase in the number of backlinks to a site (tracked by Majestic) can be an indicator to Google that your website is popular or important, BUT if this is from a high number of low-quality sources, it may do just the opposite (*spam alert*).
Segregation is also key. Google Analytics is a great example of an ‘all-encompassing parent’ tool, but more-focused tools, such as SEO ranking tools (SEMrush), or social media specific tools (Facebook Insights), are the kids that will get down to the nitty gritty.
ROI is bullshit if you don’t implement a proper measurement framework
Having SMART goals is one thing, but if you’re not monitoring your progress and breaking down your goals - at both a micro and macro level - then this is a bullshit ROI measurement. You need to make sure they’re attainable, after all, and have a regular schedule for checking your progress.
Key performance indicators (KPIs) are also vital in a measurement framework. Ultimately, these show how effective your company is at achieving its business objectives. For example, a social KPI can be the number of clicks on the links you share, and Professor Traffic is an awesome chrome extension for measuring this. It effectively ‘tags’ the URL of the landing page, so you can assess where your traffic is coming from, and how many of these clicks are converting (into sales, for example).
Ultimately, a measurement framework allows you focus on the key measures that are important to your business; providing targets and clarity in how you use measurement tools. Want to know more? Then download our free framework guide, silly.
ROI is bullshit if you don’t cross reference
It never fails to amaze me how important proofing is - just that extra double check that reveals you wrote conservation instead of conversation, defiantly instead of definitely, or one sex instead of one sec. So, unsurprisingly, the same goes for ROI in digital marketing. Not only should you check the reliability of your data with another person, but you should also cross-reference your channels - are they all getting roughly the same results?
ROI is bullshit if you don’t set benchmarks
Benchmarking is particularly useful in assessing the performance of marketing campaigns, methods and strategy. Not only should it consider the historical success of your marketing over time, but it provides a means of comparing your business against the efforts of others in the industry. For instance, at a strategic level, doing some market research will reveal whether you are targeting the right social media channels, or charging a competitive price. Therefore, if you’re not using benchmarking, then you’re basically missing out on a vital means to compare your business to others, a great way to monitor your progress, and a useful method of providing an insight into potential areas of improvement. So, yeah, that’d be pretty silly - wouldn’t it??
Here are some key areas to think about when benchmarking your digital marketing activities (a.k.a the inbound methodology):
- Acquiring visitors- How ‘attractive’ is your business, e.g. SEO, Ads
- Converting - How is the user experience? Are website visitors becoming leads? e.g. enhanced content, CTAs, forms
- Retention - Are leads becoming customers? Are they coming back? Is your database growing? E.g. Email marketing, CRM
- Customer insights - Are your customers happy? Are they talking about you on social media? E.g. surveys, social monitoring
ROI is bullshit if you fail to see the bigger picture
Know what you’re doing, and why you’re doing it. Don’t just get swallowed up with how well a certain image or campaign is doing. ROI in digital marketing is all about the long run- considering the how, the what and the why for everything you do.
So, as you may have noticed, your return on investment processes can be bullshit in a number of ways, but that doesn’t mean you can’t boss it... Which is where we’ve got some GREAT news for you. This downloadable eBook is all about digital marketing ROI. And it’s free. Yes, FREE! So get yours today, y’all (you’re welcome).
*GIF from Nevada Film Office. Much appreciated.