blogMarketing is tough. We juggle the constant demands of improving value in the customer life cycle while always attempting to legitimize the credibility of our function within the organization. Therefore it is not surprising that strengthening the accountability of the marketing department is a consistent theme in this year’s CMO Council annual Marketing Outlook survey.
According to the survey, 34% of marketers are planning to introduce a formal ROI tracking system, with over half saying that quantifying and measuring the value of marketing programs and investments remains the top challenge in the year ahead.
However, using ROI to gage marketing effectiveness provides an incomplete picture. Let me illustrate with an analogy. My sage finance professor, Dr. Stendardi, taught us padwans that when using Ratio Analysis to evaluate the fiscal health of a company you need to compare multiple ratios. Liquidity, asset management, debt, profitability ratios – all of them put each other in context.
What we seem to be trying to do is equate marketing ROI with financial ROE.
Breaking down marketing into short sighted campaigns, and linear processes. When in fact it tends to zig zag.
I say that ROI is good for evaluating our tactics, but it will not guarantee future success. For analyzing our strategy we should rely on long term metrics, perhaps Customer Life Time Value, Return on Objectives, etc.
Care to weigh in on the topic?
Tags: roi
