Understanding ROI (Return On Investment) is key to optimising marketing spend. Numerous models and methodologies exist and at 4C we utilise a broad set of tools and strategies to determine where marketing spend is most effective. Each method has its own strengths and weaknesses, which mainly equate to a trade-off between the time and cost of the process and the thoroughness of the subsequent analysis. The key factor for each method is a consistent, cross-channel, stakeholder supported approach.
Chart 1 illustrates the result of an ROI study which compared two channels, one “old and one “new”. Analysing the data from each channel in a consistent manner, revealed that at the current level of spend, the new channel had a 20 per cent higher ROI. In this case moving 25 per cent of spend from the old channel to the new, would result in an overall increase in ROI of five per cent. In addition, the analysis makes it easier to measure the impact of reducing marketing investment through traditional procurement.
One of the biggest challenges with ROI is that is varies by amount spent. Chart 2 shows the impact of ROI and channel spend for a traditional media campaign. The channel’s ROI peaks at a certain point. Spend does not need to be set against the maximum point, however, this type of information is extremely valuable. This analysis can be used to determine which areas of spend foster the highest return and where investment can be rerouted for maximum efficiency.Reaping the Benefits
Marketing spend is often difficult to quantify in terms of ROI. However, using the latest tools and techniques, businesses can ensure their investments deliver as much value as possible. Rerouting as opposed to cutting marketing spend is often key to getting the most out of investment in volatile economic times.