When I was starting my little agency and the name Webroi first came up, I met some skepticism. A lot of people aren’t marketing to make more money, was one of the arguments. This shocked me a bit, for to me ROI in marketing should be a no brainer. Here’s how.
What ROI should mean in marketing
ROI means return on investment. Positive ROI means getting back a value grater than what you put in. Negative ROI means the opposite – getting back less than you invested. So far so good. The misconception begins when you limit this value to money. Especially when you assume that by value in return it means a dollar amount in return. This may work for the financial industry, where this acronym apparently originated, but for marketing ROI or ROMI(Return of Marketing Investment) this definition short-changes the potential.
ROMI is more than money
Your marketing investment includes money, time (which we all know is money) and possibly some other assets (reputation etc). Your return, however, is interdependent on your goal for the marketing activity. If your goal is sales, then this can be measured in money. If, however, your goal is to raise awareness for a public cause, this can be completely different. It may be volunteers, petition signatures, followers, advocates or sponsors. It can even be press coverage or politicial awareness for lobbying, for all I know. The point is, if you get more of whatever your value is than you invested, then you have positive ROI. If not, It’s negative.
A ROI example
If you have $5 000 dollars to get you 100 new members by 2013 and your Google Analytics account pr 31.12.2012 shows 1000 new members that track to these advertising spendings, then thats a great ROI. Instead of each member costing you $50 dollars they cost you $5. Money saved may not be money earned in this case, but it’s an opportunity to get more for your money. Who doesn’t want that? Wether you’re spending tax payers money or that of your sponsors, investors or your own hard earned cash, I sure hope this is your goal.
The nature of the marketing beast
Now think about the nature of marketing in general: Hasn’t the whole point of marketing always been to get more back than you invested? Although it’s harder to measure in most traditional media than it is on the Internet, the goal has always been positive ROI. Why else bother?
3 simple steps to web marketing ROI:
- Set SMART goals. Smart stands for Specific, measurable, attainable, relevant and time-bound. Without this you can’t measure to find out the ROI. Remember, It’s better to start with a goal you have to adjust than no goal at all – intelligent “guestimation” is allowed until the numbers are in.
- Get ready to measure right from the start. Make sure your website is hooked up to an Analytics tool like Google Analytics (free) and that it is set up to measure on what your goals are. It’s no point in counting visitors when what you need to know is how many signed the membership form, for example. Even if you have others doing the work for you I strongly recommend to learn to understand your own data. The ad agency and your IT department are not looking for the same things as you are in the data.
- Optimize your optimizations. Do more of what works, less of what does not. If someone else is doing the marketing for you, make sure they do this. Ask questions based on the data in your analytics. Good web marketing for ROI isn’t just a campaign effort but a continuing process. That’s what gives the great opportunities for continual improvement, just getting better and better.
So, what gives you marketing ROI?