Business Tools

Marketing Basics: How to Properly Evaluate ROI


SEMA News—July 2011

Media Methodology

Five Tips for Seeing (and Properly Evaluating) Return on Investment

How effective are your advertising and media campaigns? More important, how are you measuring your return on investment (ROI)?

When marketing pros speak of “tracking media,” they’re really referring to tracking promotion, which—along with product, price and place—is one of the four P’s of marketing. Promotion’s goal is to inform consumers about the other three P’s through various tactics, including advertising, personal selling, public relations, events, sponsorships and print, broadcast and online media. Obviously, promotional strategies will vary according to brand, product, targeted consumer demographics and other factors within the overall marketing mix.

Complex? Yes. But there are some tried-and-true principles for seeing and properly measuring ROI.

1. View the Big Picture

According to Eric Morley, president of Blue C Advertising in Costa Mesa, California, too many marketing departments operate as a collection of “silos” competing for internal funds. For true ROI, media campaigns must create an “interlocking web of ongoing message development, media execution, lead generation, customer relations and strategic creative.”

“If I just drop an ad in the newspaper or article on the web and expect it to do something for me, that’s never going to happen. It’s like throwing money in the wind,” said Morley. “Marketing is about building relationships month after month.”

In other words, when evaluating ROI, think beyond the balance sheet to weigh a promotion’s intangible benefits.

“We feel advertising is for the long term, and immediate ROI isn’t as important to us as a long-term branding strategy,” agreed Robin Gialanella, marketing manager for wholesale-distributor CWR Electronics in Bayville, New Jersey. “We strive to create ads and banners that grab attention. Readers might not directly buy something at first glance, but eventually, if we continue to be seen and intrigue them enough, they will hopefully become a customer.”

William Reminder, CEO for truck accessory manufacturer THI-Extang in Ann Arbor, Michigan, added: “When we have a medium which is not highly trackable, we often still use the medium for image/brand building and when we launch new products. You have to have a good sense of what is an appropriate expenditure, even when you can’t specifically quantify the direct impact of that advertising campaign.”

2. Mix It Up

Morley said that successful marketers tie multiple media vehicles together for an effective, synergistic marketing mix. “The trick is looking for media offering integrated formats, such as a print ad with an online mechanism plus some sort of promotional tie,” he explained. A well-integrated mix can achieve what he called the ideal 80/20 standard: 20% of media advertising generating 80% of a company’s business. Each company will define that mix differently.

“We use trade magazines, which are not highly trackable, for building our brand equity and product launches,” Reminder said. “Consumer magazines are used to expand and develop the different channels and build demand in the market.” Although broadcast ads have proven excessively costly, “we spend millions of dollars on free displays to our jobber base, which is critical when consumers are choosing a product for their vehicles.”

Gialanella believes print media and web news blogs offer the best ROI: “We have a new blog on our own website, and this seems to create a lot of buzz [and] an increase in sales.” E-mails, on the other hand, “have proven less effective.”

Whatever the mix, tying special offers, coupons and other promotions to specific media vehicles will help track results.

3. Allocate Resources Wisely

Eliminating silos and mixing media doesn’t mean ill-defined budgeting. Segmenting the marketing budget into appropriate buckets can help demarcate goals and measure ROI.

“We separate out the marketing/advertising into two areas,” Reminder said. “Existing product lineup—I commit to a core budget and evaluate the blend of media. Trade publications, consumer publications, our own website, customer websites, other web/electronic media, trade shows—we balance the advertising spent on each but, most importantly, we assess the quality and content of the media. New-product launches have a greater emphasis to ‘blitz’ the core media avenues, and then we branch out into other areas to get consumers to pull demand through our distribution channels—consumer, jobber, distributor.”

4. Track Online

Tracking methods for print media and collateral have traditionally taken the form of reader-response cards and dedicated toll-free phone numbers. Thanks to the Internet, companies can now add specially designated URLs, web landing pages and e-mail addresses to these efforts for increased immediacy and demographic analysis.

“Insert web addresses that are unique to the ad, event or broadcast,” advised Roll-N-Lock Director of Sales and Marketing Dan Beaulaurier. “Forward them to your primary domain name, and then review your monthly Google Analytics report to see how many unique new visitors each address is attracting.”

Of course, social media, YouTube videos and other online initiatives are instantly trackable, along with traffic to affiliated websites.

“Many of our customers are experts with their websites in reaching consumers,” Reminder said. “We partner with all of our customers with strong support to their advertising and marketing efforts. It helps them, and it helps us.”

Meanwhile, Morley noted that today’s marketing pros are especially excited by quick-response (QR) codes—those funny black-and-white jigsaw-like squares popping up everywhere (see “Deciphering QR Codes” on p. 75). Easily generated and affixed to practically anything (display and print ads, packaging, websites, editorial, buildings and even billboards), QR codes are packed with trackable data.

When a smartphone camera scans the code, it immediately launches a target weblink in the device browser. Consumers get to learn about (or even order) products or services, while the company gets on-the-spot marketing data, including which promotion generated the visit.

5. Set Regular Review Points

“Evaluate your marketing and advertising programs quarterly,” suggested Beaulaurier. “Even though early information will be minimal, it will still likely prove approximately relative to greater volumes of data gathered over the long haul.”

While marketing experts generally hold that advertising should be given ample time to sink in, completely lackluster response over a single quarter is a sure warning that a campaign is falling flat. “You won’t need to run lots more times with bad results before you can begin to believe those results,” explained Beaulaurier.

Reminder similarly advised reviewing results at fixed intervals throughout the year. “We assess response impact for web and electronic media quarterly,” he said, “and we evaluate the greater program one to two times per year.”

Still, recognize the tracking limitations of differing media. “At CWR, we’ve found that people get a lot of spam e-mails daily,” Gialanella said. “Most e-mails unfortunately go unread; therefore, it’s hard to get users to react.”

And don’t simply blame the medium if a campaign fails. Too many companies develop advertising internally without pretesting it among target demographics. Even the best of media can’t breathe life into bad creative.

Above all, clearly define your media and evaluation tactics. As Beaulaurier summed up: “Any attempt to monitor your advertising and marketing efforts is better than none. You can’t rely on potential customers to tell you where they saw your ad because they don’t care about your ad program. You must find a way to monitor their activities yourself [using tools] that are unique to each ad source.”