“ROI” (return on investment) is a buzzword in its own right, but most marketers will tell you that it deserves to be. As bottom-line figures go, it’s one of the most reliable ways to measure the effectiveness of your marketing campaigns. The concept is simple — if you’re making more money than you’re spending, you’re doing well, and if you’re spending more money than you’re making, something’s wrong and you need to change.
But there’s a trap people fall into — thinking that ROI is the only thing that matters, or holding a skewed perception about what ROI really is. If you focus exclusively on ROI, ignoring all other metrics and developments, is it possible to still be successful in online marketing?
The “Positive” Bias
First, you need to address the temptation that identifying a “positive” ROI can bring you. Here’s what I mean by this: usually, when businesses consider ROI, they consider it in terms of black and white. That is, ROI is either positive or negative. A negative ROI requires changes, while a positive ROI requires consistency in execution to maintain that level.
Here’s the trap; just because an ROI is positive doesn’t mean you’re getting the most bang for your buck. For example, let’s say you’re used to getting eggs for $3 a dozen. Your store offers a sale — eggs for $2.50 a dozen — so you naturally want to stock up. This is a good price, and there’s nothing wrong with buying eggs here. But how do you know that the store down the street isn’t offering eggs for $1 a dozen, or even cheaper?
A positive return doesn’t guarantee you’re getting the best possible return, which is what you’re really after. However, you can compensate for this limited view by constantly pushing your ROI higher — you’re still focusing exclusively on ROI, but you’re doing so in a healthier, more productive way.
Long-Term vs. Short-Term ROI
ROI also forces a skewed perception that slants toward short-term results. For example, if you’re paying a monthly retainer fee for SEO services, it makes sense to measure your return on a monthly basis. If you’re paying $5,000 a month, you want to see at least $5,000 in return for that month.
The problem with this is that most modern online marketing strategies rely on accumulated payoffs that grow over time. For example, in content marketing, one good piece of content doesn’t offer a one-time return upon publication. It can be syndicated, expanded, and even left alone to continue compounding its value. Theoretically, every piece of content you create will carry value for you indefinitely in the future, meaning your ROI measurements are biased in two ways. You’ll always be measuring the present benefits of past efforts in addition to present efforts, and you’ll never measure the full potential your campaign has.
You need to compensate for this when thinking about the “value” of your marketing campaign. Measurable ROI alone isn’t enough to accurately capture the entire significance of your campaign — at least for long-term strategies like SEO, content marketing, or social media marketing.
Invisible Benefits and Expenses
Most ROI calculations rely on concrete values and concrete expenses. For example, it’s easy to identify your campaign as costing $5,000 a month if that’s what you pay your SEO agency. But what about all the hours your internal project manager has spent working with that agency and writing content on his/her own?
Even more important than invisible expenses are the invisible benefits of your online marketing. You might have a reasonable grasp on the traffic and conversions your site’s getting, but these don’t capture the full scope of your campaign’s impact. For example, have you recently measured your brand reputation? My guess is you haven’t, because it’s almost impossible to measure in a reliable, quantifiable way. What about your brand visibility? How have you measured all the people who have read your guest posts and made recommendations in person?
The truth is, there are almost too many potential costs and benefits to measure. Your ROI is a best-guess metric, and an important one, but you shouldn’t let it wholly define the effectiveness or value of your efforts.
Finally, there’s a general concept that’s important to consider in this discussion — the idea that numbers aren’t everything. Yes, numbers are objective, and they’re valuable tools we can use to understand the world, but only if you can crunch them accurately and in the right contexts. Despite radical advancements in the amount of data we can pull from our campaigns and our target demographics, we’re still not very good at asking the right questions or making the right, accurate calculations. Even if we could achieve some level of perfection in numerical analysis, would that ever really tell you the full story? This is more of a philosophical question than a marketing one, but I think most of you would agree the human experience of talking to a customer can tell you more about their disposition than any numerical analysis.
This is certainly open for debate, but my stance is that calculable ROI is not the be-all end-all metric for a marketing campaign, and thanks to all the biases and inefficiencies of our measurement systems, there can never be a be-all, end-all metric. ROI is important, and should be taken into heavy consideration, but don’t fall into the trap of thinking your ROI calculation is the only thing that matters for your success.