Return on Investment

💡 Executive Summary: Most marketing activities can have a broad impact, so tracking the ROI of your marketing isn’t a simple process. Rather than simply looking for direct attribution, you also need to pay attention to signals of success. These signals differ for every goal and activity, so you need to watch them all to understand the big picture.

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Before you spend on anything, it is reasonable to want to know what value you will receive. Your marketing can only be deemed successful if you receive more value than you spend.

Does that mean your marketing can only be successful when you have generated enough attributable revenue from your inbound marketing to break even on your marketing spend? Not necessarily. Think about it this way: how does a company calculate the return on investment of a renovation to its headquarters? Maybe they can directly correlate an increase in output or productivity because of certain advancements to their building. But there are usually more factors to consider as well, all of which affect the bottom line in some capacity. Maybe their modernized headquarters gave a prospect enough confidence to seal the deal. Maybe the renovations have helped the company attract and retain talent that has increased productivity and revenue. Maybe the renovations reduced energy costs, which increased margins. When calculating the ROI for this renovation, all of these factors need to be considered, but some are less tangible and harder to track than others.

Calculating the ROI for marketing, especially in the modern information economy, is very similar. It’s getting harder to draw a clear line from impression to click to conversion to easily validate the effectiveness of a marketing campaign. Marketing intelligence is more about tracking “signals” that indicate audience behavior rather than following direct attribution. This is because most consumer journeys involve many marketing interactions with the company. The buyer’s opinion is slowly formed over time, and all touchpoints work together to help them inform their decision.

On top of that, any given marketing campaign often has secondary and even tertiary benefits that can be hard to quantify. For example, a piece of marketing content could have increased traffic to the website and led to two leads, but it also could have contained the information a prospect needed to be pushed over the line and make a decision. Or a dormant customer who receives a LinkedIn ad for a company might be reminded to send an email to her salesperson without ever clicking on the ad. Even with the most robust analytical process in place, the full value of each marketing activity will likely always be unknowable.

So then what is the smartest way to approach the messy business of marketing ROI calculations? Let’s break it down based on marketing goal: