Should CMO's be discussing ROI?

I am sure many of you are already saying "thank you Captain Obvious". But for some companies believe it or not ROI never comes up in the conversation of marketing. We discuss fraud, diminished returns, flat sales and more, but few if any directly attribute sales back to what they did in marketing. You will hear "when we spend more in radio and TV, we know sales increase, but when we spend more in digital we are just not sure". These types of comments always make me scratch my head as that is blind attribution. While there are ways to do some attribution (asking customers if and when they watched or heard an ad) like directly sponsoring specific shows or broadcasts and then asking customers how they heard about you, typically that is about all you will get. No specifics as to what day, or time or what from the ad prompted them to take action. It is a little like lawn dart marketing where you got close.

"You need to spend money to make money." -

This is a common quote marketing people live by. But few can show you ho what they do is actually making money. Call centers will tell you " we make the phones ring" and while they might, and they seem busy, how many of those calls actually show up and make a purchase? What did you pay for all the calls in order to get a sale? What is the ratio of paid calls to sales and the cost per sale? The what is the ratio to profit? The same with applies with search or any other type of online marketing. What is the cost per click, lead, view, like and how many sales can be directly attributed to those. Match that against the per unit profit and there is your ROI. Seems simple enough yet many don't know because you have four or five different silo's each running their own campaigns trying to figure out big data numbers to come to some type of a "is it working" conclusion so they can roll it up. Then they show the CMO how it is working and getting traffic through the doors. Based on that they need more budget.

Many times I hear the argument "we just need more budget to make this work". The argument being there is a tipping point, and that with the larger budget that can be attained, where it is not now. The throwing more money at it approach almost never brings the desired results. Even with a "wider footprint" argument it rarely if ever brings the desired results unless they are measured and tweaked along the way.

Follow the money -

If you truly want to know what the ROI is follow the money. Look at what you pay and what you get. Much like everything in life can you do it yourself to save costs? If not is there a one stop shop to keep commissions or markups from getting out of hand.

Some examples;

• why lose 15-30% of your budget to hire someone to generate leads when you can do the same thing? While with third party numbers you could argue the safety in numbers with the cost of building an landing page, paying for hosting and bandwidth typically a portion of your cost is going to cover that. So subtract that out on a monthly basis and look at it compared to the do it yourself cost.
• When you pay for leads where does the traffic come from? Are you paying to build their brand to have them give you the leads? Look at sites like Angie's List. It is great for getting leads to local businesses. The downside is these people will likely not remember your companies name after you have left. The next time they need something they will turn back to Angie's List not "Bob The Plumber Man". Unless your technician is trained as a salesperson as well and hands the customer marketing material you have paid to build Angie's List as a brand not your company. This is an intangible that you cannot add into the cost per sale.

Other things affecting ROI to consider -

• Confusing or disconnected messaging across channels
• lack of brand continuity
• Lack of cross pollination across channel
• Lack of a comprehensive connected plan
• Lack of good data collection
• Lack of a definition of what the KPI's are or should be.

So while you are sitting down looking at 2015 budgets and before becoming fully committed think about some of these points as you look through the final plan or plans. Is it time to bring everyone to the table to work together? Does your message carry across multiple channels tracking consumer behavior all the way to the register? Are you paying to build your brand or someone else's? What are the possible unintentional downsides to using third parties? Finally, will the plan bring ROI and build our brand and make it stronger by bringing customers back?

If this is you, I want to help you reach a point where budget chargebacks are lower, where you spend your marketing dollars brings engagement and ROI back to the brand. If this is on your holiday wish list for 2015 and you are not fully committed or even if you are it is not to late to get a plan in progress and in place to make it a reality.Reach out to me and leave either a comment or send me an e-mail and I'll be glad to help.

Thoughts? Feedback? Feel free to engage each other here and keep this an open forum. Also feel free to send me an e-mail or invite or comment here so we can keep the conversation going. If you enjoyed this article please see my others...https://www.dhirubhai.net/today/post/articles/650596?trk=mp-reader-h

Bryan Gissiner has been in Digital Advertising for over 15 years in everything from retail to owning his own ad network.Currently he works for Trepoint as a marketing problem solver for retail, brands and cpm companies. His is a thought leader primarily in search, but he has also helped companies build and execute display, pay-per-call, pay-per-click, local, hyper-local and other lead generation strategies. He is a regular contributor on LinkedIn with a large following of other experts from a number of different areas.

For over 12 years Bryan Gissiner has worked on both the publisher and advertiser side helping them to find ways to lower budgets and increase return on those budgets. For the complete story, please go to www.dhirubhai.net/in/bryangiss or @bryangiss on twitter. You can also reach him directly at bryangiss (at) trepoint dot com.