Are you a data person? If so, you are no doubt happy to be alive. You’ve got data in spades, don’t you? It’s at your fingertips, it’s accumulating in the cloud, it’s compounding by the second. You can slice it, dice it, collect it, collate it, and endlessly compare it to past performance and industry benchmarks. If you’re one to drive your decision making with quantifiable data, you’re living in a world primed and pumped to make that happen.In marketing, our gold standard, data-wise, has long been ROI, or Return on Investment. ROI seeks to quantify the results that can be directly attributable to marketing initiatives. It’s why, back in the salad days of direct advertising, every new version of a sales letter solicited response to a different P.O. box, and every infomercial used a different toll-free number. Consumer response could be directly tracked, and winning (or losing) sales pitches could be easily identified.
Nowadays, with so much of our sales taking place online, data is even more immediate, and immediately available. Click-throughs and page-views are easily trackable in real time, can be traced back to particular IP addresses, and can be compared against exhaustive records on evolving consumer behavior. If you’re engaged in digital marketing, you might think you’ve got a better handle on ROI than has ever been possible.
Please – think again.
The dirty little secret about twenty-first century ROI is just how misleading those numbers can be. So your hit counts and individual impressions are sky-high and climbing even higher whenever you up your Google Adwords bid. Is that translating to sales? Is it resulting in money in the bank? Take as cautionary the latter-day parable of the seller who’s dazzled by the real-time reportage from his digital marketing manager...both of them trying their darnedest not to think about the inventory gathering dust out there in the warehouse.
Those numbers? They can be gamed. People click on banner ads and follow links – not always because they want to buy, but sometimes just for the heck of it. If you’re advertising on a popular website, its followers (or even its publishers) might be clicking on your ad just to keep them in business.
Andy Frawley at AdAge recently tackled this conundrum in his article, “ROI Is Dead.” He argues for a new, updated metric, one he calls ROE2 (return on experience times engagement), which would quantify the experience your audience has with your outreach, and how they engage with it.
Amen, we say. All we’d add is that we cannot, must not, shalt not discount the incontrovertible gospel of sales. If product isn’t moving, then our marketing is faulty – no matter what the other metrics say. Our solution is to join marketing and sales at the hip. Let their functions be separate, but let them sing from identical hymnals in terms of consumer engagement, product offerings, and the unique solutions we provide to customers. Consistent messaging always gets results, regardless of the format.
In the abstract, ROI will always be relevant. If you make an investment, sure, you’re more than a little curious regarding the return. It’s how you quantify it that matters. If you’ve been doing it wrong your choices are clear: Keep going on down that well-trod primrose path, or pivot to one that might actually get you where you need to go.
The C4:
1. ROI is the king of marketing metrics, for pretty good reason. Marketing ain’t cheap, and decision makers need to know if their marketing dollars are well spent.
2. But metrics are malicious if you’re measuring the wrong thing. We’ve all had a particular approach to digital ROI, ever since Berners-Lee flipped the www switch. It’s dawning on us, perhaps slower than it should, that this approach might be all wrong.
3. Hit counts and click-throughs and eyeballs-on-the-page are interesting, but they tell us diddley about sales. Sales tells us about sales. Digital marketing, like all marketing, has to be about consumer engagement and consistent messaging. The rest will take care of itself.
4. Le ROI est kaput. Off with its head. If history teaches us anything, it’s that nothing is so replaceable as a king who’s outlived his usefulness.
