How to measure Return on Marketing Investment correctly

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Do you know the TRUE return on your marketing investments? Unfortunately, dividing profit by marketing cost isn’t enough.

Most companies run multiple marketing channels simultaneously (TV, radio, social media etc). As a result, determining whether a change in sales is driven by a given tactic is the hardest part of any Marketing efficiency analysis.

There are two ways to approach this:

1️⃣ Run the marketing activity with a hold-out group to determine the sales lift relative to the do-nothing-different scenario. This is often used for digital marketing, for example by showing a discount code to only 90% of the website visitors. That allows you to isolate the impact of the promotion.

2️⃣ Conduct a Marketing Mix Modeling analysis (MMM). That's a fairly complex statistical analysis. It uses algorithms to isolate the impact of individual campaigns. Many companies use third parties to run MMMs, for example, Nielsen provides it as a service.


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