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You Can’t Always Measure ROI, Deal With It

Marketing in the digital age allows us to measure impact like never before. We are privy to readily available data that tells us exactly how our marketing efforts perform. Good marketers use this data not only as an indicator of past performance, but to inform future activity and build an optimal marketing mix.

But there is a problem. Despite how far measuring capabilities have come, they are not perfect. Sometimes far from it. Take multi-channel tracking – a giant leap for the measuring kind, no doubt – but what happens when touchpoints happen (and they do) across multiple devices? No solution yet. What happens when our tactics are designed to influence decision in the long run (like with Social Media Marketing)? Sure, tracking
conversation rate and amplification rate is nice and good, but ultimately a leap of faith is necessary to assume cause and effect on sales/leads.

This post is not about improving our measuring capabilities. It’s about dealing with situations in which true ROI cannot be measured, despite our best intentions and efforts.

Less measurable ≠ Less effective

It’s important to realise that just because we can’t tie an activity to a bottom line outcome, it doesn’t mean it’s not effective. Just because Social Media is less measurable, it doesn’t mean it’s less effective. It only means it’s less measurable.

You can write off the less measurable, a strategy many choose to adapt (“I don’t see direct sales from this activity, so I’m not doing it”), but it means you miss out on opportunities. Your marketing mix won’t be optimal.

The Measurability Scale

All marketing sits somewhere on the measurability scale, depending on how accurately we can measure bottom line return (e.g. revenue, profit) on investment. It may look like this:

The Measurability Scale

Understanding where each of your tactics sit on the measurability scale is important because it allows you to put them into measurability context. ROI on Social Media or Display will almost always look worse than say, PPC. By taking Social and Display into measurably context we can make a case for their effectiveness despite that fact.

Applying measurability context

Applying measurability context means we concede that we cannot fully measure a tactic, and therefore apply a degree of speculation in assessing its effectiveness. The lower on the measurability scale, the more speculation we must apply.

We do this carefully, building our speculation based on soft (micro) conversions, past experience, studies, qualitative data, and our intuition. That’s right, I said intuition. There are times it’s the best we’ve got.

For the data driven marketer this feels uncomfortable. That’s a good thing. It means you take data seriously. Now take another leap forward and make an informed decision despite the incomplete data. This is when you’ve truly matured as a data driven marketer.

This is no excuse for settling for poor measuring. Our job as marketers is to improve measurability as much as possible, and in many cases we are guilty of settling for less that that. Only when our measuring is as good as it can be do we get to pull the measurably context card.

Steps to a more effective marketing mix:

  1. 1. Optimise how you measure ROI for each tactic
  2. 2. Assess where it sits on the measurability scale.
  3. 3. Apply measurability context to assess effectiveness despite limited data.

Do this and you create a sound rationale behind tactics you can’t prove value with hard data. Don’t, and you become paralyzed by data in a world in which data is incomplete.

One day measuring might be perfect. When that day comes, this post will be obsolete. In the meantime, obsess about measurability, but also face its shortfalls. You can’t always measure ROI, period. What matters is how you deal with it.

July 29, 2014 by Filed in Analytics, Data, Display, PPC, SEO, Social Media

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