Overcoming the Challenges of Calculating Digital Marketing ROI


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Article ImageThere's really no escaping it. No matter how innovative your use of the latest tools and technologies in digital marketing may be, no matter how closely you follow industry trends and implement solutions that reflect the cutting edge in digital marketing practices, it will always come down to the bottom line-at least, as far as your C-level executives are concerned. Being able to demonstrate the dollar-for-dollar benefit that your marketing efforts provide to your organization is the elusive brass ring that marketers are perpetually striving to grasp.

The ROI of digital marketing technologies and strategies-especially those that employ new technologies and practices-can be notoriously hard to measure, let alone express cogently and concisely to your CEO or CFO. According to a 2013 online study of digital marketers by Adobe, 76% of survey respondents believed measuring marketing performance was important, but only 29% felt that they were doing it well.

Bridging that gap is a key challenge for marketers. Part of the strategy for doing so lies in thinking critically and creatively about how to represent something as tangible as ROI for a set of tools and practices that can be hard to completely quantify. Another important part of that strategy is learning how to recalibrate the expectations one's organization might have for digital marketing ROI and the means of communicating about those expectations.

Mitch Lapides is a web marketing strategist, founder, and president of FulcrumTech, an online marketing agency. Lapides has more than 20 years of experience in strategic planning, marketing, IT management, software product development, content licensing, and product management. When it comes to the drawbacks of measuring ROI for digital marketing, Lapides says that organizations should be aware of the challenges presented by their data measurement systems and of measuring digital marketing success directly in relation to sales.

"Lots of companies don't have the rigorous data systems to put together a metric, or set of metrics, that can accurately define the ROI of their digital marketing," Lapides says. "It actually takes labor to analyze that data." Putting the effort and the capital into tools that will help you capture and analyze that data will go a long way toward the goal of capturing a reliable ROI figure.

Jeff Winsper, president of Black Ink, is a member of the Marketing Accountability Standards Board (MASB) and a developer of SaaS reporting software for marketers. He echoes the sentiment that capturing the right data is essential for measuring marketing ROI, but that data can't tell the whole story. He advises marketers to step back and consider their marketing strategy from both ends of the continuum.

"Most companies think from the bottom-up-looking at the specifics of the behavior and the traction generated by a particular campaign," Winsper says. "Sometimes, however, the top-down approach to looking at marketing strategies and effectiveness needs to be taken into account as well." In that way, Winsper says, an organization can look at the resources it has available as well as its goals, and take a holistic look at its entire digital marketing strategy.

From every perspective, however, it is data that provides the backbone to the strategy. "Without proper data management, you won't have the analytical capabilities to understand the behavior of your customers," Winsper says. "And without that, the systems you have on hand to activate your business strategy will not be able to reach their full potential."

Winsper's company, Black Ink, provides a SaaS tool in its cloud-based Eye On, which is a digital marketing ROI product. The product puts an emphasis on collecting and analyzing data across multiple facets of a marketing department's business practice, including customers, markets, staff, and vendors. It reports on more than 50 interdependent key performance indicators (KPIs) across marketing ROI, customer ROI, and business ROI. It works with any database environment, including enterprise resource planning, sales force automation, marketing resource management, marketing automation, and point of sale.

But even with great data and capable analytics, determining how to calculate and conceive of the ROI for a digital marketing strategy might not be as cut-and-dry as evaluating, for instance, how many sales were generated by a particular campaign. "ROI is not always calculated with a sales metric," Lapides says. "Companies struggle with measuring the strategic benefit. In the old days, radio and television were seen as awareness-building tools. Many of the technologies we use today in digital marketing-social media, for instance-play that same kind of role. And it can be hard to assign specific value to those tools."

For those elements of a digital marketing strategy that don't fit cleanly into a quantifiable column of the data spreadsheet, Lapides suggests assigning some sort of value to them in order to track progress and, ultimately, make decisions about allocation. "When companies look at allocating resources to various aspects of a digital marketing strategy," Lapides says, "they need to look strategically at where the market is, where their prospects are, what their customers look like, and where they've been headed as a company historically." By assigning a tangible value to otherwise intangible aspects of your digital marketing strategy, Lapides says, you will be able to benchmark your progress and make adjustments to your resource allocation in order to optimize your individual digital marketing channels.

Making sense out of how to convey the inherent and often intangible value of certain digital marketing strategies and tools is one of the most significant challenges any marketer faces when it comes to making the case to his C-level superiors that certain strategies are working and that certain strategies need increased institutional support in order to succeed. By thinking creatively and strategically about how to give those upper-level managers a sense of the real ROI for digital marketing efforts--including, but also beyond, the concrete sales numbers--marketers will go a long way toward overcoming that perennial challenge.

(Image courtesy of Shutterstock.)