I haven’t heard much said about marketing return on investment in recent times. Could it be because of the low activities as a result of COVID-19? As expected, whether rightly or otherwise, marketing activities have not been as overwhelming as it was in the first two months of 2020.
Again, it could be because Marketing Managers, whether intentionally or otherwise, have suddenly turned to brand activation as the most viable way to prove their brand claims, and since activations are largely event-in-nature involving physical interaction, not much has been done this period. I guess we are all thinking very seriously about how activations will be done post COVID-19 or in the new normal that is emerging.
Marketing ROI is the incremental financial gain that can be attributed to a particular marketing initiative or campaign. Two things have to be in place—a system of proper evaluation and the ability to smartly amplify your campaign i.e. take your conversation from offline to online to achieve cost optimization.
By calculating marketing ROI, we can measure the degree to which marketing efforts either holistically, or on a campaign-basis, contribute to revenue growth. To secure budget and resources for future campaigns, it is crucial that current spend and budget be justified with facts and figures.
Marketing Managers, therefore, need to accurately calculate the expected incremental financial gain (ROI) their marketing efforts will deliver for the business before seeking for approval. Knowing if brand activation or native ads are driving conversions and ROI while display ads are not, will help you in properly allocating budgets for your planned initiatives. Herein lays the need for understanding and deployment of proper evaluation approach to managing your campaigns. This reminds me of State-of-the-Art-Marketing concepts which encourage Marketing Managers to evaluate their campaigns along the phases of the campaign – pre, during and post campaign. This chart by jmexclusives captures it well.
Pre-campaign phase called “Ex ante” is where the choice of marketing actions with the highest possible future impact on marketing ROI is made. The second phase is “in action” and encompasses the implementation of various marketing activities as well as their monitoring and further development, while the post campaign – the final phase called “Ex post” is where marketing controlling is done. This includes the measurement and evaluation of the campaign plus its impact on her target audience 3 – 6 months after the campaign. Very interest stuff. These truly give meaning to ROI of marketing activities.
Here’s a simple calculation: MROI: Incremental financial value gained as a result of the campaign Less Cost of the Marketing Initiative / Cost of the Marketing Initiative.
In conclusion, Marketing Managers should constantly bear the financial impact of marketing initiatives in mind, and make allocation of resources and budget for marketing efforts a top priority. This should not hinder creativity but should spur Marketing Managers to go for ideas that will not only wow their target audience but also deliver good returns (value and volume) to the brand.
Ikechukwu Kalu is a Value Creation Consultant with an exciting decent work experience spanning manufacturing, telecommunication and financial services. He is the Lead Consultant at Customer Passion Point Limited (CPPL). He teaches Brand Strategy & Communication as well as Experiential and Alternative Marketing at MSc level at the Pan Atlantic University, Lagos. He is also a Resource Person (MBA Stream) at the Lagos Business School. Finally, he designs and executes customized brand activations for small, medium and large corporations across industries.