The key to calculating Return on Investment (ROI) is understanding – clearly – what kind of ‘R’ you want to achieve from your ‘I’. Spending money on content and campaigns should only ever take place when you have a clear target in mind, and a strategy that will take you there.
Marketing funds are finite, whether you’re a multi-billion-dollar enterprise like Apple, or a five-seat small business just starting up, so you’ll often need to prioritise some goals over others. Whether it’s generating leads, increasing engagement or building brand awareness, each requires a subtly different approach if you’re going to maximise the return on your marketing investment.
ROI by channel
The appropriate approach is often determined as much by the market you’re targeting as it is by your product or service – and the complexity of gauging your return will be similarly affected.
The return on B2B-focused content marketing, from posting on a corporate blog to publishing thought leadership pieces through LinkedIn or Medium, is relatively simple to quantify. You often have a direct connection to your reader and can set up dedicated communications channels in the form of bespoke email addresses, landing pages or phone numbers. Traffic to any one of these is an immediate marker of success.
In the consumer space, where it’s more common to reach customers through an intermediary, it’s often more difficult. When you’re raising awareness through social media channels, for example, and selling through Amazon, it’s difficult to tie visibility on the former to sales on the latter without encouraging direct feedback from customers. Often this is only possible if you offer an inducement, like an extended warranty or free gift, further increasing the cost of the initial acquisition – and, conversely, reducing ROI.
Even where there is no financial transaction, direct customer interaction is key to understanding whether your limited resources are being appropriately consumed. We have seen this with organisations like the BBC, which is increasingly publishing in-house content exclusively through its own BBC Sounds smartphone app. Before this, when it was reliant on third-party podcast directories, such as Apple’s, it would have been unable to gather the rich customer metrics that it can acquire when it has a direct link to its audience. Such analytics will be more relevant, timely and valuable, allowing it to tailor its services based on the supplementary metadata delivered through its own platform. This includes not only users’ subscriptions, but even how far they got through a programme before hitting pause. As well as using that information to sync a listener’s position across platforms, it’s the basis of ongoing recommendations.
ROI and brand awareness
Return on Investment is frequently measured with reference to the bottom line – but this isn’t always appropriate. Sometimes it’s better to take the long view.
Amazon knows this. It’s been focused on growth almost since its inception, with the result that, in some markets, it’s starting to look like the only player. Its revenues have historically grown faster than its profits as it’s invested in the customer experience. As a result, it’s now the first place many customers turn, whatever they’re buying – from an eBook to a garden shed. Its brand awareness is second to none, as influencers and websites working on commission consistently link to products, deep within its store. These third-parties are doing much of Amazon’s lead generation work for it, freeing it up to focus on the overall business strategy.
What Amazon will do when it achieves market dominance remains to be seen – and that’s the point. While it’s difficult to accurately measure Amazon’s ROI right now, that’s only because it’s still playing the (very) long game, reinvesting its revenues in growth. Instead of an immediate financial payback, the return Amazon is banking today is twofold – an increase in both its brand awareness and the attention its getting from customers, both actual and potential.
Return on Investment, then, isn’t always a simple sum. Money in versus money out is just one of many metrics against which success can be gauged. It may be the most interesting to the start-ups looking to cash out quickly, but growing companies, fully invested in long-term growth, are wise to pay more attention to share of voice and benchmarking well against their closest competitors.