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The Art of Conversion

ROI

The ROI of Everything Defining a new philosophy of marketing value David Krajicek  david.krajicek@gfk.com

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here has always been a call in business to understand the performance of every dollar spent, known to us as return on investment (ROI). And the desire to define the ROI of marketing efforts— more than, say, paper shredders or holiday parties—is palpable. After all, isn’t marketing supposed to make the cash registers light up?And some marketers have come to see Big Data as a panacea, believing that in this brave new world of immediacy, all answers can be had

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through the digital data streams. The desire to do better may be noble, but are the expectations realistic? This call has gotten progressively louder and more demanding as the avenues for marketing and marketing spend have multiplied. The digitization of the marketplace and the proliferation of consumer touch points have created many more opportunities to spend (money and time) on marketing, and the impact of those new channels often is unclear. Is consumer engagement

different on Facebook? Should I assign tweets an expected cost and percent of sales goals? As marketers leverage new digital channels, the nature of the return on a marketing investment also must evolve. We need to rethink our assumptions about ROI because the ways that consumers are engaging with brands is rapidly evolving in our increasingly digital world. As brands strive to create engagement and more intimate relationships with their customers through new channels, we need to redefine the role, and value, of marketing activities. Today’s marketing ecosystems are deeply dynamic, with impressions and information continuously flowing among consumers and between consumers and brands—a real-time marketplace dialogue with a variety of voices. This dynamism has obvious implications for understanding and optimizing marketing activities. In the world of traditional media mix optimization, there has been a


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keen focus on the channels in which you are spending money. Now it is about all of the channels in which you are sharing your brand and attracting advocacy— even places where you are not spending a dime on promotion or ads. We need to continue to understand and refine dynamics that may have seemed secondary in the past: engagement and advocacy, which have longer tails but also potentially greater return. They are also essential elements of the new digital marketing ecosystem. These may seem like the kinds of “squishy” areas that can make some marketers uncomfortable, but failing to incorporate them—and even establish best practices in measuring the nature and quality of the consumer-brand relationship—is bad business, plain and simple. ROI must change not just because there are new avenues to investigate, but because the essence of the equation has been transformed. There continues to be a significant effort expended by some research companies to define, identify and quantify the impact of paid, owned and earned effects of marketing initiatives as a way to address these dynamics. These efforts, while a solid step forward, still fall short.

A Larger ROI Context for Marketing

More than anything, it’s essential that marketers today think more broadly in measuring ROI. We now live in a world in which the quality and nature of the consumer-brand relationship has important implications for a company’s long-term success, as it belies not just purchase behavior, but also engagement and advocacy. In addition, thinking more broadly about the brand-consumer relationship requires a more holistic approach to understanding how

For more on ROI, check out “Marketing ROI in the Era of Big Data” on MarketingPower.com.

the relationship develops—not just what marketing messages are seen or internalized, but how these messages are supported, or not, by the experiences that consumers have with the brand, firsthand or through others. If relationship is the key reality for how customers and brands interact (Am I a passing acquaintance, a good friend or a beloved family member?), then we need to find ways of incorporating this into ROI. At GfK, we are building the notion of the quality and nature of consumer-brand relationships into the brand engagements that we undertake for clients. To truly capture all of marketing’s efforts, the worlds of branding and customer experience must come together. Consumers do not think about marketing activities or campaigns in isolation. Rather, these exposures mix with other experiences that the consumer has with the brand to contextualize attitudes, shaping the desire to engage with or purchase brands. The experience is the brand, from the consumer’s perspective, so we have to count as an investment anything that is creating a touch point—the money spent to overhaul our website, or our investment in call center resources, to name just two. There is a lot of talk about “total customer experience” and integrated relationship strategies, so shouldn’t our insight efforts align to those? TCE should equal total ROI. This approach is a much more powerful tool for the C-suite because it directly informs decisions about resource allocations. In fact, the marketing spend issue is elevated to an even more strategic question about a company’s relationship strategy, and how all customer-facing initiatives and expenditures inform that strategy.

Silos and Suboptimizing

To make this kind of ROI integration happen, marketers and their colleagues

need to challenge conventional organizational alignments. Customer experience teams, call-center leaders, everybody typically focuses on how to rationalize their separate budgets, but if you look just at your own silo, you run the risk of suboptimizing, or optimizing marketing and customer management to narrow objectives that may conflict with the overall brand strategy. Very few companies manage with real centrality, so there is a clear opportunity to be at the forefront. This is where marketers can work with researchers and others in bringing the right metrics and tools to senior management. It is not just about the CMO, CIO or COO. In the end, it is about the “C” team understanding their interconnectedness and asking: “How are we going to maximize our dollars across that total customer experience? Do we invest in technology platforms or social media, or consumer experiences at the point of sale?

The Downside: Failing to Take Action First

Of course, all of this dashboard-driven transparency and collaboration means that each function’s strengths and weaknesses are harder to finesse. This is why the drive toward a bigger, broader ROI needs to be collective. No one wants to be the only one whose warts are seen by all. As keepers of the company’s growth agenda, marketers need to take a lead role in this transition—even if no one asks them to. The nature of marketing and ROI has changed forever. Seeing that as an opportunity, rather than a threat, is the first job of any smart marketer today. mI

✒ David Krajicek is CEO of GfK Consumer Experiences North America.

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Have our notions of ROI become quaint and outdated? How should they adapt to digital media and ...