Is ROI important? Or is it just another tongue-twisting marketing acronym we could really do without?
From CRO (Conversion Rate Optimisation) to CTA (Call to Action) and beyond, marketers seem to only communicate in letters, not words. However, ROI is an acronym worth knowing about and adding to your never-ending list.
More than that, ROI helps us to justify our marketing efforts and impress all the right people.
Read on to find out the 13 reasons why ROI is important in marketing, making it a must-use metric for all marketing managers.
- Marks marketing success (in numbers)
- Aids data-driven decision making
- Balances your marketing budget
- Streamlines your marketing strategy
- Makes omnichannel less overwhelming
- Sets the stage for competitor analysis
- Holds creatives accountable
- Creates a future-focused team
- Gets everyone behind the same goal
- Improves forecasting accuracy
- Introduces teams to new technologies
- Diffuses departmental tension
- Keeps your big boss happy
1. Marks marketing success (in numbers)
Too often, we’re quick to admire our creative genius and slow to establish if our work is actually effective.
At some point in our marketing career, we’ve all been guilty of being blindsided by new, exciting graphics and infatuation with our words. But we should always be interested in how a piece of work is performing and even more intrigued about whether or not it’s making any money.
This is the point of calculating ROI to determine a marketing activity’s worth, no matter how pretty, polished or put together it is.
Marking marketing success in cold, hard cash helps us to do more of what makes business sense.
On the contrary, it also reminds us to do less of what feeds the ego but puts little back in our pocket.
2. Aids data-driven decision making
We’ve been making data-driven decisions (or at least reading about them) in marketing for a while now.
We all know the importance of using historical data to back up our actions and shape our strategies, yet adding ROI metrics into the mix takes data-driven teams to the next level.
After all, what better data to reference than the amount of solid, shiny sterling you receive in return for a marketing activity?
Spoiler alert—there isn’t one.
Giving an almost certain promise that a future investment will pay off is a sure way to justify marketing spend. So, calculating ROI proves worthwhile for any department that feels judged or undervalued by others internally—marketing usually being one of them.
3. Balances your marketing budget
If you’ve been crossing your fingers and hoping for the best when putting together your marketing budget, all of that is about to change.
Measuring ROI makes it clear just how much you should reinvest into your next creative campaign.
Once you have the right results at your fingertips, balancing your marketing budget is little more than common sense.
It doesn’t take a genius to start pinching pennies when the pot is low and being a little more generous when the going is good.
If the previous quarter proved successful, there’s inevitably more room to invest, experiment and indulge in this quarter’s marketing activities. Yet, we all understand that tough times call for tough measures meaning we might have to drop some tools, pull back on training time and muck in where it’s most important.
4. Streamlines your marketing strategy
In the same vein, ROI metrics make streamlining your marketing strategy a piece of cake. Just like a cake, it’s easy to divide your strategy into slices and chuck out those that have gone stale.
Why bother continuing to fund the same failing PPC campaign? Why spend four hours writing a new blog post if you can spend two hours optimising an old one and yield the same result? Why keep paying for a piece of software that nobody in the team takes value from?
Strategic decision making is that much easier when you know your ROI.
Of course, not everything is as clear cut as this and there are some intangible benefits worth keeping on the brain, especially when it comes to content. But more often than not, having ROI high on your agenda will speed up decision making and help you to be as cutthroat as producing a profitable campaign requires.
5. Makes omnichannel less overwhelming
Attributing marketing value allows us to segment the success of any marketing campaign. And since marketing is becoming more intricate than ever with as many as 11 touches to make a sale, this breakdown helps in making omnichannel less overwhelming.
Yes, being eagle-eyed on ROI even extends to your understanding of the buyer’s journey, letting you know which eggs you should put in which basket and just how many of those baskets you’ll need.
ROI alongside other data streams paints a picture of where most customers come from as well as which actions are most likely to amount to something other than brand awareness.
6. Sets the stage for competitor analysis
Looking at your competitors should be less of a jealous stalking session and more of a stealthy survey.
Understanding ROI helps you to ease out your emotions and look at the matter objectively.
Is a competitor’s strategy similar to yours? If it’s different, what’s the reason? Are they doing something you haven’t ever tried before? If so, how much would it cost for you to initially invest in it?
Performing competitive analysis is a skill that marketers should consistently look to learn about and improve. Yet, most of us tend to approach this part of our workload lightheartedly by “taking a stab at it” rather than approaching it as the formal, results-driving responsibility that it is.
Just like the ability to write, competitor analysis seems like a job that anyone can do. Yet, only a few can do it well—and in the case of competitor analysis, having a real grasp on ROI is key.
7. Holds creatives accountable
We all either know or are the creative type—a stereotypically shy, sensitive soul who takes great pride in the finished product of their work.
With such enthusiasm for their art, creatives are often hard to manage as they meander through tasks and take up more time than is needed in a quest to make their prized possession perfect. Often, marketing departments might find themselves going over budget as a result.
A laser focus on ROI can equip you for the inevitable battle between a marketing department’s head and heart.
Is it really cost-effective to make every part of a marketing campaign just so? Or is it worth splitting your time according to a task’s profitability?
8. Creates a future-focused team
Much of marketing is fleeting—push notifications, social shares, Instagram stories—encouraging us to focus on instant responses and short-term results.
Yet, the true value of marketing campaigns are gained over time, in evergreen content, continually converting pages and memorable marketing that keeps customers aware of your brand long after its launch.
For us, How much does AdWords cost? is a blog that keeps on giving. It’s our best-performing blog of all time with 21.2K views and counting. It’s important for us to know this information so that we push it to the top of our priority list for optimisation and also look to it as a template for any future content we create.
Again, ROI is just another pile of important data to add to the pile to give our marketing team more context.
Understanding how something can generate clicks, interest and therefore, revenue over time makes for a group of better marketers and a more future-focused team.
9. Gets everyone behind the same goal
The first step to calculating ROI is deciding on what this means to you and your team.
Yes, a return on investment is anything technically equivalent to or just over the initial investment you put in. But, calculating your company’s ROI should go beyond its dictionary definition and be specific to your firm’s financial goals.
Perhaps a pound for a pound isn’t as successful an ROI as you’d expect for an established activity, so the goal could increase to two pounds for every pound invested in your marketing campaign. Then again, this goal could be way too ambitious for some other projects in their early stages, helping you to decide that breaking even wouldn’t be so bad on such occasions.
Taking the initiative to calculate ROI forces us to have these conversations while pushing us out of our comfort zone to ask our boss about their expectations.
When we have a clear goal in mind, every piece of work is aligned. No two people should be on a different page or confused about why they’re doing something. So, return on investment is a sure way to rally up the troops and raise morale while you’re at it.
Although financials might seem too fancy a topic for mere marketers to understand, including your team in your company’s business objectives can have real benefit for your business.
10. Improves forecasting accuracy
It isn’t really until you understand what constitutes concrete marketing success that you can know when to expect it in the future.
Most of us dabble in forecasting as something we feel we ought to be doing. But very few marketing managers can confidently say that success is just around the corner.
And while, by its very nature, viral content always comes out of left field—we didn’t guess that The 15 most viewed Christmas adverts would be such a smash hit when we were writing it—most marketing can be predicted, with audiences generally being more receptive to some formats than others.
At Digital 22, we know top-of-the-funnel blogs that provide plenty of expert information always perform well and produce more pennies than we spend on them.
Detailed decision-style blogs that prioritise promotion, however, remain a mystery.
Sometimes these more sales centred blogs work, other times they don’t.
So, we spend time creating both types of content but invest more in the format we’ve come to rely on.
Accurate forecasting (essentially a greater understanding of what works and what doesn’t) helps us to fight for our right to market and create a steady stream of traffic.
11. Introduces teams to new technologies
You’ll likely adopt an analytics platform such as HubSpot to track your ROI, opening your team up to new opportunities. Analytics platforms like this help you to view your marketing from afar as well as up close, seeing what’s on the horizon for your team as well as what’s on your immediate agenda.
Not only this but, reviewing ROI more generally helps you to see where there’s additional wiggle room and budget to buy new tools and develop new techniques in specific areas of the business.
For example, if blogging is a booming marketing initiative, it could be worth upgrading to Grammarly premium to get your grammar just right as well as feasible to invest in a content optimisation tool like Clearscope to better butter up Google.
Each time you introduce new technology to your team, their skillset and wider marketing knowledge expands allowing them to offer more value and create better content over time.
12. Diffuses departmental tension
We’ve already touched on how ROI can act as armour when talking to other teams.
It immediately communicates value, equips you with all the right information and demystifies a seemingly subjective craft.
It’s for this reason that return on investment is such an important metric for marketing managers.
Keeping a close eye on the end result of marketing—be it traditional or digital—you can prove to any sceptical senior staff members that your department is just as deserving as their own.
In particular, it’s common for there to be rivalry between sales and marketing teams with some marketing experts even describing this workplace wrestle as a war.
Plus, it’s never been more important for sales and marketing to put their differences aside and get along as the two functions are becoming indecipherable in the modern age of marketing. If ROI can play a part in helping to align these all-important teams, then surely, this alone is a good enough reason to roll up your sleeves and give it a go.
13. Keeps your big boss happy
If nothing else on this list has piqued your interest in ROI, then the prospect of delighting (and never disappointing) your boss will.
While you might be more inclined to take every marketing perk into account when considering campaign success, the ‘big boss’ is likely only interested in their bottom line.
Brand awareness, social stardom and cohesive content mean little in the way of making money, although as master marketers we understand that these can become indirect sources of revenue in their own right.
Communicating this long marketing game to others isn't easy.
With ROI at least you have an easy translatable way to say something is a success, in a way that everyone in the company can understand. It’s a quick win for keeping the peace and a legitimate way to level up your practice.
To get started with calculating ROI and get one step closer to being in your boss’ good books, try our Conversion Calculator to see exactly how your content is currently performing.
Take the results to your next meeting and begin to reap the rewards of ROI reporting instantly.