Return
on Marketing Investment
by Guy R. Powell
ROMI Defined:
Return on Marketing Investment (ROMI) is defined as the revenue
(or margin) generated by a marketing program divided by the cost
of that program at a given risk level.
According to
a recent Accenture survey, 68%1 of marketing executives
report difficulty measuring the ROI of their marketing campaigns.
Yet in this economy what should the marketer do, when his/her budget
is on the line and the CEO demands:
"Why
should I invest in marketing when I can get better results by investing
in the sales team?"
Without concrete
data based on reliable metrics, marketing can only give vague answers
about brand awareness, creativity, and slogans but not the cold
hard facts that the CEO needs to report back to his shareholders.
The concept of Return on Marketing Investment (ROMI) was
developed for just this reason and is critical to helping marketers
drive accountability, increase their effectiveness, grow their budgets
and keep their jobs.
ROMI is key
to gaining credibility with the CEO and the rest of the executive
management team. Marketing Investments have real and direct impacts
on revenues and profits in many ways:
- Directly
through lead generation programs
- Indirectly
through brand awareness development programs
- Indirectly
through operational improvements in marketing leading to lower
cost programs and competitive advantage
Improving your
company's ROMI is critical to improving the profits of the company.
Many types of marketing media make it very difficult to provide
direct metrics of marketing effectiveness. Can you imagine tracking
every sale to a TV advertisement? Or, how about a roadside Billboard?
With e-mail marketing many of these issues go away. By its very
nature, good e-mail marketing can provide:
- Tracking
& reporting
- Sampling,
testing & remarketing
- Personalized
messaging
With the right
infrastructure and software driving your e-mail marketing, it can
become the marketers dream by providing accurate and timely accountability,
easy campaign testing & tweaking and finally, message personalization.
Yes, it is
worthwhile to invest in new marketing technologies!
1
"Insight Driven Marketing," research report (Accenture,
2001) 44-46.
This is
the first in a series of contributed articles by Guy R. Powell,
author of Return on Marketing Investment: Demand More from your
Marketing and Sales Investments and CEO of Coacta Marketing Group
on how Digital Asset Management Systems can improve your ROMI. Go
to www.returnonmarketing.net
for more information on his book. For questions on ROMI, feel free
to contact Guy at author@returnonmarketing.net.
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