ROI is a term used to identify the return on an investment. Understanding the ROI helps marketers to evaluate how efficient an investment was. It can sometimes be difficult to compare investments using ROI because not every form of advertisement (especially digital) can be measured and recorded accurately. It is also important to consider that ROI calculations can be manipulated because industries use different factors to measure their perceived ROI. For instance, a marketing agency will often compare their gross profit with their marketing expense, while a clothing might compare the net income with their cost of production. In an interview with Yann Gourvennec, he touches on the limitations of ROI while focusing on Digital ROI.
Expert Interview with Yann Gourvennec: ” Digital ROI: A Necessary Evil
Yann Gourvennec is the founder of the Digital Marketing Agency ‘Visionary Marketing’, Director of Digital Business Strategy Program ,and author/speaker. He shares more about himself in the interview regarding digital ROI that follows.
Yann Gourvennec: I founded my Digital Marketing agency in 2014, but I created the website named Visionary Marketing in 1995. I have worked for large companies, my last experience was at ‘Orange’ as the Digital Director. I spent many years moving organizations as an intrapreneur. In 2014, I moved on the other side of the fence and I took the entrepreneurial leap. Our agency works on digital transformation missions, content marketing (blogs, The white paper is one of the pillars of a B2B content marketing strategy. It is proof of your expertise. etc.) and marketing automation to large groups and medium-sized companies in France and abroad.
What is your definition of Digital Marketing ROI? Vast subject! I have no standard definition otherwise it would be too easy. Each manager must adapt its Digital Marketing ROI calculation according to his specialty. Digital marketing is wide, as illustrated in the Gartner Digital Marketing Transit Map. Metrics are different depending on BtoB or BtoC sector, according to its segment, Bottom Up or Top Down Market definition in B2B and B2C - The very notion of "market" is at the heart of any marketing approach. A market can be defined....
There is no standard. A lead can cost between 5 and 1500 euros according to its business sector. The ROI on a lead for an office-supply business will be easy to measure because the purchasing decision process is short. While the ROI on a niche, such as a CIO in a specific area on a specific industry, will be more complex to analyze.
Every marketing manager should create its own dashboard according to his specific needs. In addition, many elements are possible to analyze, but however, are not necessarily interesting. Others seem insignificant from a statistical point of view and yet are crucial. For example, links referring to an element of your website will certainly be constituted of a myriad of links bringing a few visits, a “long tail” of words created by Chris Anderson, or that is precisely that long tail that makes the value of SEO, and not only the few important links that point to you. Things are not as simple as they sometimes appear to be. Another element that does not mean anything in terms of analysis is the number of fans on Facebook, for example. It is often a metric that is presented during board meetings where people are somewhat lost with all those data, and try to cling to something known.
‘Look, we have won 200 “fans” on Facebook! Congratulations, but in terms of ROI, it’s not necessary very interesting because your commitment rate will fall accordingly. At the opposite side of this spectrum, we can find the Word-of-Mouth Marketing (WOMM). This is a widely used tactic in Digital Marketing, inexpensive, but difficult to measure. Indeed, it is much more difficult to demonstrate the ROI of a technique that does not cost much money, than to prove the ROI of an expensive advertising campaign. Marketers like to spend, because “If I spent a lot of money, it means it’s important”, as François Laurent likes to repeat, President of the French Marketing Association, and he is right.
For Social Media in particular, ROI calculation remains a real headache. The number of views or shares may be meaningless while it is possible to make profitable a marketing operation on only one verbatim. This happened to me many times in B2B: just a good recommendation or an enthusiastic reader can make a lucrative sale.