The great Tom Fishburne (marketoonist.com) draws attention to great unease over marketing ROI in some quarters of mainstream marketing land…
“Marketers are facing increasing pressure to demonstrate ROI, but giving a simple answer to the ROI question still isn’t that simple.
Econsultancy released a report last month titled “Marketing Budgets 2016” that flags ROI measurement as a major impediment to increasing marketing activity.”
In other words…senior management are reluctant to pour more money into marketing without some idea of what kind of results all that activity is producing.
You might think there is a simple answer to this simple question. But…what a surprise…for some marketers it’s not so straightforward…
“Illustrating ROI has always been tricky in traditional marketing, but even in digital marketing, marketers don’t rate their ability to measure ROI very highly. Fewer than a quarter of marketers valued their ROI measurement ability as “good” for channels like social media, mobile, and video advertising, and half felt “good” about search and email marketing.”
At this point, if you’re a practitioner of Direct Response Marketing you might well be scratching your head wondering what exactly is the problem. But of course, in traditional marketing there is no direct (and measurable) link between marketing actions and results.
In contrast, one of the great strengths of direct response is that it it possible to know exactly the marketing ROI.
The great Claude Hopkins would also, I suspect, be perplexed about this issue. Way back in 1923 when he wrote “Scientific Advertising” he believed that…
“The time has come when advertising has in some hands reached the status of a science. It is based on fixed principles and is reasonably exact. The causes and effects have been analyzed until they are well understood.
The correct methods of procedure have been proved and established. We know what is most effective, and we act on basic law.
Advertising, once a gamble, has thus become, under able direction, one of the safest business ventures.”
Hopkins came to that conclusion because he developed 2 key ideas over many years based on experience from real life marketing campaigns. These are…
(1) Firstly, that advertising and marketing should be viewed as an INVESTMENT and that as an investment you would naturally expect to receive an adequate return on that investment
(2) Secondly, in order to know the return on investment, it’s essential to MEASURE both the results and the inputs.
These might seem disarmingly simple and obvious ideas, but clearly many in the current world of advertising and marketing appear not to understand them.
Many could benefit from a quick read of “Scientific Advertising” In The 21st Century: An Introduction To Timeless Principles For Success In Advertising And Marketing.
One further point…if you do know the ROI on marketing expenditure, then budgeting and investment decisions become much easier. If the ROI is acceptable, then you simply invest as much as possible until the ROI declines below your target level. Simple eh?