Better Returns: Marketers Must Factor In Tech Costs

by Laurie Sullivan, Feb 21, 2013, 9:27 AM

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Many marketers have become the primary buyers of new technology for their company -- even enterprise systems -- but don't necessarily factor in the total cost of determining ROI.

CIOs might evaluate the platform based on cost savings, whereas marketers look at the marginal revenue gained for bringing in new customers. The challenge becomes determining the total cost of ownership of the technologies when factoring in existing and prospective customers.

Forrester Consultancy has begun conducting studies to help gain perspective. One sponsored by BloomReach, and another from Covario, determine the total impact of technology on marketing strategies. They delve into the total economic impact, a method developed by Forrester Research.

The BloomReach study finds that an established brand retail organization selling $3.5 billion annually from a portfolio of 25,000 products could experience a three-year return on investment of 196% for every $1 spent with a return in 2.2 days by using BloomReach's BloomSearch application. Emerging brands can gain a 600% return in about one month, with about $75 million in sales for three years.

Joelle Kaufman, head of marketing at BloomReach, said marketers at the most successful companies will work in partnership with the IT departments. "Marketers are used to quick experiments, whereas IT thinks in terms of 18-month-long projects," she said. "The most successful companies carve out ways to think in two-week increments, implementing large-scale projects that move at the speed of marketing."

While the Bloomreach report concentrates on finding the return based on software, Covario focuses on services. Covario commission Forrester Consulting in February 2013, and found similar results in three years. Covario’s customer three-year risk adjusted ROI averages 94% in less than one month. The total benefits of about $7.8 million on a total cost of -$4 million presented a net value of $3.8 million, which is the incremental net benefits from working with Covario’s platform, according to the report. The benefits point to volume of orders gained through non-branded paid search. Brands managed to spend less, while maintaining or improving returns. The report will post on Covario’s site Monday.

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