Lessons of a Recovering ROI-aholic
I admit it. I used to think ROI was the be all and end all of analytics. If it couldn’t be measured, it wasn’t worth doing. I brushed off measures of awareness and “eyeballs” as relatively useless terms that were thrown out to prove the success of a campaign or initiative when nothing of substance really existed beyond the printed page or website. Then, something changed - the broader marketing industry became gripped in this cycle of having to prove everything and show ROI on all marketing activities. I expected to be happy when that day arrived, but I’ve realized that we created a monster. We are starting to get crippled by ROI paralysis. You can’t measure everything – or, better said – you are limited to the extent to which you can measure some things.
Take the ascendance of Social Media. There are now huge streams of data at our disposal but none of it can easily be tied to a sale, making it really hard to measure in terms of a return. My colleagues and I have argued over how to measure this thing, how to prove an ROI. Truth is, you can’t. Get an ROI that is.
Oops...did I say that out loud?
Even beyond whether you can calculate an ROI, the first question you should ask is, do I really need to? What other measures are good enough?
Every business has to engage in advertising, marketing, promotion, public relations and sales. They are all part of the mix, but only a few can be tied directly to a sale in a meaningful way. Does that mean you should stop advertising because all you can measure is GRPs or number of views or capture awareness through a research study? Of course not - unless staying in business isn’t one of your objectives. Awareness is the first step in closing a sale, so it has to be done.
Back to Social Media. Ultimately, it is a promotional and public relations tool as well as an engagement mechanism. At the moment, there is a lot of activity that can be measured around interest, buzz and the adherence to blogs and tweets. That’s a pretty good starting point to gauge interest and awareness of whether customers and prospects are circulating in your universe.
Once they are in your universe, then you can start to do some things that can prove an ROI. Increasingly, there are companies out there that are offering capabilities to deploy offers via Twitter using a Tinyurl. Companies that created Facebook pages are targeting offers with campaign codes attached so they can start to track and measure ROI out of this environment. Now that they have prospects and customers in their sphere of influence, they are using more traditional, measurable tools to generate provable ROI.
It may be time to wean-off from the ROI Kool-aid and consider a well rounded measurement plan that incorporates elements that are appropriate to the objective. ROI can be measured on many things, but trying to apply it to everything under the sun is folly.
In the meantime, I’ve got a few extra cases of Kool-aid in my basement if anyone wants them.
