Amplify Marketing Impact with MECBot’s Integrative Approach to MROI

Time and again, business leaders find themselves asking the question, “is our Marketing really working?” 

Sometimes, of course, this line of inquiry becomes more specific, like the impact of the latest ad campaign on sales, or the changes in the revenues that are attributable to the recent influencer marketing campaign. But regardless of how the question is asked, one thing is for sure - there’s always a fuzzy, grey area when it comes to determining the impact of Marketing on sales and profitability. John Wanamaker was once famously quoted as saying, “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.”

iven this, it comes as a bit of a surprise that it’s only recently that marketers have started taking the Marketing ROI (MROI) seriously. It is yet to become a mainstream and must-have marketing yardstick for many businesses. One study reports that only 35% of marketers said that understanding the ROI of their campaigns is “Very Important” or “Extremely Important,” while according to this article, a recent study by Digital Examiner shows that 45% of the respondents don’t measure ROI from Digital Marketing.

So, are marketers lazy? 

Far from it. In reality, measuring, tracking, and predicting the MROI is no easy task, even with the plethora of marketing analytics tools at the disposal of marketers and c-suite leaders today. But that’s just one half of the problem. The other half lies in the lack of timeliness and relevance of data since marketing activities often create benefits and gains that start showing in a much longer time-frame. In this post, we uncover some of the key challenges that marketers face in taming the elusive yet critical metric of MROI and shed light on taking a data-driven approach to make marketing more impactful and results-driven than ever before.

Why Measuring the MROI is Mission-Critical

As we already established in the introduction, the MROI is a way of calculating the return on investment that a company makes on Marketing. It can be used to calculate both the return generated from a given Marketing campaign or program as well as that from the company’s overall Marketing efforts.

But what makes keeping an eye on the MROI indispensable and mission-critical for today’s marketers? Here are the top 5 reasons.

Getting Sanction for Marketing Budget

When it comes to pushing the envelope on Marketing spend, marketers often have a hard time convincing C-suite professionals to invest generously in Marketing. This is due to the underlying difficulties in justifying the Marketing spend by tying it to the Financial performance of businesses. According to a study, only 27.62% of marketers report that they are very effective in demonstrating the value of Marketing internally, as shown in the figure below. Putting in place a streamlined process to measure, track, and project MROI against marketing expenditure can be a great way to demonstrate the gains from Marketing to senior leadership. 

Image Source: Marketing Leadership Survey: Strategy Technology and Data-Driven Management 2017, TrackMaven

Identifying the Right Marketing Mix for Business Goals & Objectives

It is important to pair company-wide MROI results with program or campaign-level MROI estimates so they can inform future Marketing decisions. This is particularly important to ensure that the budget is allocated across channels, media, campaigns, content forms, and tools such that the same is in alignment with the various Marketing objectives. The top marketing objectives by level of importance are as shown below.

Image Source: Marketing Leadership Survey: Strategy Technology and Data-Driven Management 2017, TrackMaven

Staying Ahead of Competition

Businesses don’t just compete on how much money they are pumping into Marketing, they also compete on Marketing effectiveness and efficiency. Tracking competitors’ MROI and comparing the same with the company’s internal MROI can be a great way to outsmart competitors. Since the MROI is not usually disclosed to the public, marketers can use proxy variables to calculate the MROI of competitors as well as benchmark against MROI trends prevailing in the industry.

Ways to Calculate the MROI

An important thing to remember about Marketing success is that it is somewhat subjective since Marketing behaves differently in different businesses and industries. For example, generating 10 leads in a quarter for a B2B niche-startup may be a cause for celebration, while generating as many as 1000 leads for a leading B2C brand in the same window of time might not even make the cut. Some businesses also have longer sales cycles, while some industries may have higher fixed costs. Each of these variations affects the way the incremental value generated from Marketing is perceived by the business. 

As such, MROI can be calculated using several different formulae, the most important ones among which are discussed below.

• One way to look at Marketing success is to see how much growth in sales was achieved in a given period with regard to the Marketing cost incurred in that period. The Marketing cost or expenditure refers to the full cost of the marketing activity, including creative resources, media costs, tools and technology, and team spend. The formula in this case is: 

MROI = (Sales Growth - Marketing Expenditure) / Marketing Expenditure

• Another way to measure the effectiveness of Marketing is to ascribe the entire gross profit of the business to Marketing and then to identify the rate at which each dollar of Marketing expenditure has impacted the business’s gross profitability. The formula for this scenario is:

MROI = (Gross profit - Marketing Expenditure) / Marketing expenditure

• The third approach to MROI is to see it as a simple ratio of revenue to cost. In this case, marketers ask the question, “how much revenue are we generating for every dollar of marketing expenditure?” The formula is as follows:

MROI = Sales / Marketing Expenditure

The Rise of Soft MROI

The above approaches to MROI are typically referred to as Hard ROI. They are driven by the monetary value of business performance, and hence, can be easily tied to the financial goals of the business. But, when done right, Marketing can lead to many more benefits with far-reaching implications other than just revenue boost or jacking up the profit figures on the immediate horizon. These benefits are captured through Soft MROI.

In the real sense of the term, there is no limit to what metrics marketers can use to demonstrate the Soft MROI generated from their efforts. This is because there is no limit to what great Marketing can do for a business. Even so, a few metrics are conventionally used to measure the success of Marketing through Soft MROI, like footfall or traffic generated in websites & social media, improvement in engagement of prospects, number of inbound leads generated, outbound success rate, Lead-to-customer conversion ratio, ease of hiring talent (due to improved brand awareness & reputation), improvement in shareability of marketing content, and improved shareholder perception. The image below, for example, shows the various tools used by digital marketers to track their MROI and online marketing success. (Source: State of Marketing Measurement report)

The following image shows the top KPIs used by marketers to demonstrate and evaluate the impact of Marketing on the business.

Image Source: Marketing Leadership Survey: Strategy Technology and Data-Driven Management 2017, TrackMaven

MROI is Tricky Business - Here’s Why

The Trap of Vanity Metrics

In Marketing, it is easy to lose track of what matters and get lost in the whirlwind of metrics that are easy to track but are not complete in themselves. Unless they are coupled with value-based metrics, they generate no real value for the business. Such metrics are referred to as Vanity Metrics and makes measuring the MROI tricky and complicated. For example, a company’s fan-base on social media could grow exponentially without generating a single lead. The following image gives a few examples of vanity metrics and real (or value-based) metrics.

To overcome the trap of vanity metrics, diverse forms of Marketing data and customer insights from multiple channels and streams need to be unified and integrated at scale. Insights need to be gleaned from this raw data after preprocessing, unification, and auto-recognition of patterns in the data need to happen such that measuring and reporting of critical MROI metrics happen effortlessly. Current analytics tools don’t serve this need. In fact, 42% of marketers can run only basic performance reports.

Accounting for Marketing Lag Time in MROI

Marketing is rarely time-bound. This effect is further compounded by longer and complex sales cycles that necessitate risk-accounting for the time lag as well as factoring in the time value of money. But that’s just the beginning of how lag time in Marketing complicates the MROI.

While Marketing expenditures show up on Profit and Loss statements immediately, the gains in sales and profitability can take months to appear on the same. Branding assets like brand equity and goodwill can take even years to materialize on the company’s balance sheet. Each dollar that a business spends on Marketing could be pushing the leads-pipeline forward - even if purchases haven’t yet been made.

Addressing the Attribution Challenge

Marketing campaigns seldom work in isolation - they often feed each other and work best in tandem. This means that even with modern analytics tools focusing on individual Marketing campaigns, marketers still have a hard time pinpointing exactly which of their Marketing efforts have been paying off.

For example, an end-of-the-year festive sale at a newly established startup eCommerce platform will probably not generate the same amount of takers as that of Amazon, because Amazon’s amazing marketing campaigns have been running successfully for more than a decade and will influence the success of the current campaign. Even if both the companies spend the same amount of money and resources in campaigning for the sale, Amazon will have a clear advantage. Marketing, therefore, continues to be largely a guessing game for many enterprises in an age when insights from data inform even the most mundane decisions of our everyday lives. 

This is where we come in.

Marketing ROI and Data Analytics

The role of data analytics in improving Marketing effectiveness and efficiency is a no-brainer. In fact, according to The Annual CMO Spend Survey 2019-2020 Research by Gartner, 32% of marketers surveyed ranked marketing analytics and competitive insights as to the most important factors in supporting their marketing strategies over an 18-month period. Marketing analytics is also the top category of investment for marketers, constituting 16% of their annual budgets.The following figure shows a few important ways in which analytics augments Marketing.

 Recently, a study by McKinsey & Company shed light on an insurance company that jacked up its MROI by 15% in four years without increasing the marketing budget by utilizing big data analytics. The insurance company’s Chief Marketing Officer was quoted as saying, “Marketing analytics have allowed us to make every decision that we made before better.”

However, despite these advances in the understanding of Marketing data and analytics, 43% of marketers say that “they lack the tools to transfer that data into real-time action”. Further, only 7% of marketers report that they are effective in ensuring real-time and data-driven marketing campaigns across both digital and non-digital customer touch-points, while over 59% of them are facing challenges in unifying their multiple and disparate data sources. At the heart of this problem is the lack of Marketing tools that enable marketers to understand the attribution of their efforts across customer segments, as depicted in the image below.

Staying on Top of Your Company’s MROI with MECBot 

Our flagship unified data analytics product MECBot comes with inherent super-powers to keep you on top of the MROI game. MECBot is not a band-aid fix for your Marketing data problems and insight gaps. Instead, it is an overarching data solution that helps you to build an ROI-focused marketing ecosystem that sets you up for success and market-winning decisions with accurate and actionable insights, as shown in the image below:

 Before we shed light on how MECBot helps in streamlining all your marketing data with an ROI-first approach, here’s a quick overview of our award-winning product. 

About MECBot

Powered by innovations in AI, Machine Learning, Natural Language Processing (NLP), and Deep Learning, MECBot is an augmented data management platform that puts your business first by adopting the Business Domain Entity-Model approach without any dependency on the underlying databases or the structure of the data. With MECBot, a business model can be directly created by CXOs, Data Scientists, or Data Analysts, or all of them collaboratively. MECBot directly pulls the data from the configured sources and maps it to the specified Business Domain-Entity Model. 

Ink is a unique feature of MECBot geared to clean, analyze, contextualize, and unify unstructured data with structured data in a seamless manner in real-time. Powered by a state-of-the-art Knowledge Base that is based on the concepts of Linked Data, MECBot Ink can understand various domains and semantics across industries by enhancing the existing Universal Knowledge Base with Domain and Tribal Knowledge. In MECBot’s smart data grid or Knowledge Graph, data takes the back-seat, while relationships between the data are first-class citizens. Since graphs are highly versatile and flexible formal data structures, all the available data formats can be easily converted into graphs using standard tools. In MECBot, these tools are embedded into an automated functionality that underlies the data ingestion process and converts all ingested data instantly into graph format without any coding by the user. 

MECBot allows you to create a flattened data view for the chosen entities without writing any complex SQL joins. Unlike other platforms where data needs to be teleported to various external tools for advanced analytics and modeling, MECBot’s AI, Machine Learning, and Deep Learning modules work out-of-the-box and allow you to build models like loyalty, churn, and segmentation within the platform without having to dump the file or moving the data around. 

Measuring, Tracking, and Improving MROI with MECBot

MECBot helps marketers to:

1. Automatically run a trusted Marketing ETL (Extract, Transform, and Load) pipeline to clean, pre-process, blend, and assimilate all data that can be visualized using MECBot’s native reporting or external visualization tools.
2. Make mission-critical optimizations to their marketing mix on-the-go by analyzing CPM (cost per mile), CPA (cost per action), and ROI in real-time.
3. Obtain omnichannel marketing analytics combined with a single, unified view of all customer data.
4. Future-proof campaign tactics by staying on top of industry trends and consumer preferences and personalize campaigns by extracting actionable insights via Customer 360o and loyalty analytics.
5. Deploy best-in-class statistical methods and AI algorithms to intelligently unearth Marketing dark data, and leverage powerful NLP innovation to glean insights from unstructured and poly-structured data. 
6. Easily switch between granular and singular views by revealing MROI across geographical, campaign, and media levels.
7. Integrate Marketing outcomes with company-wide data like sales, profitability, cost-to-serve, customer acquisition cost, customer lifetime value, and more.
8. Auto-detect patterns and generate insights on demand through datafolding and free flow search.

Use Case of MECBot in Fostering ROI-Driven Marketing

Let’s say that Mr. M, the Marketing Head of a business, allocates the marketing budget for 2021 and identifies and prioritizes the primary marketing outcomes that need to emanate from this budget and the geographic regions where this campaign will be targeted. 

MECBot starts feeding on different sources of data on past campaigns such as – Dealership Promotion Campaigns, Push Content Marketing – Mobile and Internet, TV, Radio / FM, Newspapers & Magazines, Billboards, Ads behind / on the side of buses, Ads in metros, Event Marketing, etc. Based on the industry and the region, MECBOT recommends a smart marketing campaign mix to Mr. M. MECBOT also listens to industry-wide trends. 

MECBOT then analyses the industry-wide marketing campaign and prepares a comparative analysis of the marketing campaigns of competitors of A. These insights are delivered to Mr. M in a timely manner with an intelligent dashboard view that is easy to understand and updates in real-time. Mr. M is able to design a highly effective marketing campaign quickly and track its results on a real-time basis for further improvement.

Other Use Cases of MECBot in Marketing and MROI

• FMCG product businesses can quantify the impact on sales created by trade promotions and celebrity brand endorsements, and subsequently, optimize the mix for better returns.
• Automotive companies can rationalize their channel strategy and promotion campaigns in dealership networks across peak- and off-seasons.
• Technology businesses can map their pay-per-click campaigns across various digital media to optimize website traffic and customer conversions.
• e-Commerce businesses can channelize binge consumption through attractive discount campaigns, festive brand associations, seasonal marketing, and more.

Conclusion

With MECBot, businesses can take a holistic approach to Marketing Mix Modeling without worrying about the trustworthiness of data, the quality of insights, or keeping up their MROI management with the fast pace of marketing data and changing consumer behavior. 

Here are more reasons why MECBot is the right choice for the data and analytics needs of businesses of all sizes, industries, and offerings:

• Simplicity: Sets up the application with just a few clicks. Gives results from day one.
• Speed: Matches the pace of decision-making with the speed of the original data generation.
• Scale: Performs elastic scaling based on business needs with dynamic clustering.
• Security: Offers banking grade security and role-specific access to the platform.

MECBot saves more than 80% of pre-processing time & cost and delivers highly actionable insights to boost the ROI manifold. It is the only platform that puts the business first, not data. Its unique, built-in capabilities drastically reduce the burden on IT infrastructure and empower business decisions with powerful business intelligence in real-time through augmented data management.

Interested to know more about MECBot? Visit www.mecbot.ai. To know about the state-of-the-art technologies we use, check out our platform architecture here: https://www.mecbot.ai/platform

Wish to take a deep dive into what MECBot can do for your business? Request a demo here: https://www.mecbot.ai/contact-us