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The one marketing investment with no ROI that you must make

I am a big believer in marketing investments returning more than their investment–and you probably are, too. In these data-driven times, we all want to know that we are spending money wisely. We all want to be sure that when we put a dime in the marketing machine, that we get a dollar out.

But most clients I work with need to make an investment in marketing that they might never be able to calculate the ROI for.

This investment is in analytics. Most of my clients simply don’t know the value of their marketing spending. They can measure lots of customer activity and read the tea leaves for good signs–social shares, inbound links, page views. Hey, they are all good signs. But they aren’t return on investment. They aren’t money.

One thing I try to explain to hard-nosed executives resisting this investment is that this is their accounting system for marketing. I mean, if you were running a store that had no accounting system, and every day you looked to see how much money was in the till to decide how well you were doing, that probably wouldn’t work very well, would it?

Every Friday would seem like an awful day, because you paid all of your employees. When you run a big sale, that would be a great day–lots more money in the drawer. But two days later would be awful, because you have to buy new inventory. But is it really a bad day when you pay your employees? By just looking at cash, you never really know what is going on.

Now, anyone in that situation would say, “We need an accounting system so we can make better business decisions.” And they would invest the money required to do that, even though they can’t calculate the ROI. They just know that if they don’t make that investment that they will never be able to calculate the ROI of anything.

Well, how is marketing any different? If you have no way to even estimate how much revenue each web visitor is worth, or every paid Facebook ad is worth, or every new YouTube video is worth, it’s time to build your accounting system for marketing. I know that it might be expensive, but your accounting system is expensive, too. No one questions the need for it nor demands justifying the investment.

If you are serious about ROI in marketing, not just paying it lip service, building this system should be priority one. And when hard-nosed executives want you to prove the ROI of marketing spending but won’t fund development of the system that does it, it’s time to call them out on their hypocrisy. I know that might be a hard conversation, but it’s easier than failing. And with no ROI system and people demanding proof of ROI, failing is exactly what you are headed for.

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Mike Moran

Mike Moran is an expert in internet marketing, search technology, social media, text analytics, web personalization, and web metrics, who, as a Certified Speaking Professional, regularly makes speaking appearances. Mike’s previous appearances include keynote speaking appearances worldwide. Mike serves as a senior strategist for Converseon, a leading digital media marketing consultancy based in New York City. He is also a senior strategist for SoloSegment, a marketing automation software solutions and services firm. Mike also serves as a member of the Board of Directors of SEMPO. Mike spent 30 years at IBM, rising to Distinguished Engineer, an executive-level technical position. Mike held various roles in his IBM career, including eight years at IBM’s customer-facing website, ibm.com, most recently as the Manager of ibm.com Web Experience, where he led 65 information architects, web designers, webmasters, programmers, and technical architects around the world. Mike's newest book is Outside-In Marketing with world-renowned author James Mathewson. He is co-author of the best-selling Search Engine Marketing, Inc. (with fellow search marketing expert Bill Hunt), now in its Third Edition. Mike is also the author of the acclaimed internet marketing book, Do It Wrong Quickly: How the Web Changes the Old Marketing Rules, named one of best business books of 2007 by the Miami Herald. Mike founded and writes for Biznology® and writes regularly for other blogs. In addition to Mike’s broad technical background, he holds an Advanced Certificate in Market Management Practice from the Royal UK Charter Institute of Marketing and is a Visiting Lecturer at the University of Virginia’s Darden School of Business. He also teaches at Rutgers Business School. He is a Senior Fellow at the Society for New Communications Research. Mike worked at ibm.com from 1998 through 2006, pioneering IBM’s successful search marketing program. IBM’s website of over two million pages was a classic “big company” website that has traditionally been difficult to optimize for search marketing. Mike, working with Bill Hunt, developed a strategy for search engine marketing that works for any business, large or small. Moran and Hunt spearheaded IBM’s content improvement that has resulted in dramatic gains in traffic from Google and other internet portals.

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