The Fallacy of Return on Investment in Marketing
The Canadian Marketing Association published an interesting article on the ROI (Return on Investment) in marketing and “how it cannot be measured accurately as most actions from marketing are not instant and many actions from marketing are caused by accumulation of impact over a period of time.”
“Because of the difficulty in measuring ROI, some companies will just stop marketing. This is great news for those that keep marketing. In time share will shift to those that continue to invest.”
Great Article! I have to agree and disagree however. Let me explain…
For every dollar you spend on marketing you need to get an ROI
When you’re not getting any ROI then you need to re-think your strategy. Chances are your marketing plan needs changing.
Many small business owners think tactical and when one tactic doesn’t work just switch to another. This can be dangerous. If a low cost method doesn’t work, then why would a more expensive medium suddenly work?
Yes, You Can Measure Your ROI
If you can’t measure it, you can’t manage it. Tracking Conversions is the best way to measure your ROI. For every marketing initiative you must track the conversions. It’s as simple as keeping track of responses (leads), interested prospects, opportunities (those that are genuinely interested and qualified), and sales.
Will cutting your Marketing Budget bring you more leads?
The part I totally agree with is that most small business owners make the mistake of cutting their marketing budget… That’s great news… for the competition!
Lets face it, Marketing makes the phone ring and it takes a great marketing plan, strategy, tracking conversions, and ongoing testing and measuring to stay on top of your ROI and make educated decisions and perhaps changes to your marketing plan.
Business is a numbers game designed around systems and processes. Marketing is THE most important function of your business.
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Hi Gregor,
Thanks for your thoughtful and enthusiastic ideas. Have you come across this piece of research done by Google?
http://www.naa.org/PressCenter/SearchPressReleases/2008/NAA-ANALYSIS-OF-NEW-GOOGLE-RESEARCH-FINDS-NEWSPAPER-ADVERTISING.aspx
I’d love your opinion.
Thanks!
Interesting article, I’ll create a blog post out of it and give you my feedback.
Overall I agree, that a combination of print AND online advertising is very powerful.
Print advertising alone in my opinion may not be as effective, depending on the industry and target market.
The way I see it, the internet and an online presence is vital for any type of advertising, whether radio, tv, print, direct mail, etc.