Commentary

It's Not ALL About ROI

In December, I began working on a project with Econsultancy to understand where marketers are allocating their budgets in 2010. Consistent with other reports, we found the migration of budgets from traditional to digital channels continues. In fact, digital marketing budgets will increase by an average of 17% in 2010, and 28% of marketers are migrating at least part of their overall marketing budgets from traditional to online channels.

 

54% of marketers plan to increase email budgets in 2010. Another 43% plan to keep their email marketing budgets the same, leaving only 3% that will decrease spending on email. So yes, our expertise will be in demand for the foreseeable future.

Questions about how and why budgets are being reallocated are more intriguing. We're all familiar with reports showing that ROI from email is very good. The DMA reports figures each year and, while we may debate the finer points, few disagree with the general premises that email is very measurable and provides a good return.  According to our study, email is one of the most successfully measured marketing channels, along with paid search. As such, it makes sense that people would increase their investment in email and search.

However, only 17% say they do a good job measuring ROI from social media, while 70% are planning to increase marketing budgets in this area. Granted, figuring out how to track and calculate ROI for social media is a hot topic. I attended OMMA Social in San Francisco last week and there was a lot of talk about ROI: tracking, proper calculation, allocation, etc. (Sorry, I didn't walk away with any answers.) But that's beside the point. The point is that something other than ROI is motivating brands to increase social media budgets -- while cutting budgets for print, radio, and television.

So what is? Brand reputation.

While only 41% of marketers use "brand reputation" as a measure of marketing effectiveness, these marketers are significantly more likely to be shifting their budgets from traditional to digital channels than those using other success metrics. Ironically, marketers using ROI as a success metric (65%) were less likely to be shifting their budgets from traditional to digital channels. It's not that ROI isn't important. It's just that these marketers have already made the transition.

Email marketers need to take note of brand reputation as well. Consider:

1)    Monitoring brand reputation through social media can help avoid disaster in other areas. Promoting a product or service that is falling flat in the market only perpetuates the problem. By monitoring how your products (or those of your suppliers) are doing in-market through social media, you can get a good feel for which products should, and should not, be featured in your email program. Monitoring social media can also provide much-needed inspiration about the talking points that best highlight your products.

  

2)    Relevance is only getting more important. We are all growing a bit tired of talk about relevance. However, your ability to deliver relevant content impacts your brand's reputation, both online and offline. As brand reputation becomes a bigger online focus, make sure your email program is enhancing, not detracting, from that reputation.

  

3)   Branding is no longer about simply being known, but being known as good global citizens. Several companies, like Chase Financial Services, have used social media as a tool for getting fans involved in their charitable endeavors. However, as fellow Email Insider Kara Trivunovic wrote recently, some companies have broadcast their relief efforts in Haiti by using email to notify subscribers.

 

So yes, ROI is a critical success measure. However, your brand's reputation sets the stage for everything else. If your reputation is tarnished, no channel can be effective, no matter how efficient it is.

4 comments about "It's Not ALL About ROI".
Check to receive email when comments are posted.
  1. Andrew Worob, February 3, 2010 at 4:41 p.m.

    Completely agree with your thoughts. Good post.

    @Worob
    PR at Sunrise Blog - worob.com

  2. Richard Austin from 1973 Ltd, February 4, 2010 at 6 a.m.

    I think the main point here is too recognise Brand Reputation as an ROI metric along with other 'soft' metrics like Brand Recognition, Ok they're not "instant hard cash in your pocket" ROI but ROI all the same and any lead in these over competitors will increase revenue over time.

  3. Morgan Stewart from Trendline Interactive, February 4, 2010 at 5:45 p.m.

    @Richard Yes! However, one of the data points I did not include in that only 27% are measuring Lifetime Value. If ROI is looked at on a short-term basis and not curtailed by a longer term metric, then you can easily start to justify some bad practices--like overmailing.

    So I'm happy marketers are looking to Brand Reputation... and hope more will start looking at LTV.

    For these stats (and a bunch more) check out my recent blog post: http://blog.exacttarget.com/blog/morgan-stewart/0/0/marketing-budgets-2010

  4. Bex White from Bubblegumkitten.com, February 10, 2010 at 5:52 a.m.

    Using brand recognition and reputation as a measure along with ROI is highly advisable - it ensures you are monitoring factors which affect long term engagement and brand sucess as well as short term ROI cash injections from sales or similar.

    It will be interesting to see how in the ever growing and competitive market of email marketing how peoples increased budgets in 2010 affect their online marketing programmes. Intergration with social media and offline campaigns which serve aim to have a high ROI but also build brand recognision ought to perform the best overall and longer term. Will increased budgets allow for the planning, A/B testing, research and design time needed to achieve this? I hope so, too often email campaigns are underbudgeted and real expertise and innovative solutions are turned down in favour of cheaper options.

    Will this change in 2010? I look forward to finding out.

Next story loading loading..