What You Need to Know About ROI
As business owners, managers, and accountants sit down to take stock of their respective budgets, the first place they look is the major expense column. And the major expense item most difficult to quantify in terms of value provided is the cost of marketing products and services.
Marketers, both in-house and agency-based, are regularly cross-examined: “What is the ROI on that?” “Are we getting our money’s worth for our marketing effort?” or “Is your agency making us money for all that we pay you?” I’ll bet most marketing people would be millionaires by now if they had $10 for each time they were asked “Can you prove to me that this will work?” or “How do we know that advertising actually will improve/did improve our sales numbers?”
You can’t blame the accountants. In their perception, marketing people deal in “fuzzy-logic” concepts and issues such as “brand recognition,” “audience response,” “creative vision,” “building buzz,” and “client outreach,” because those concepts are at the center of the marketing effort. And, although they may not be able to predict how well, or by how much, they know that employing the same concepts will strengthen sales efforts, and the bottom line profitability of their companies.
Marketing people and their agency counterparts live on that line between creativity and hard numbers, working hard to synthesize the two to generate business. But business owners (and their accountants) want to see a lot more than creative input. They want proof – specifically in the form of defined returns on their investment in agency work. They live to see ROI in everything their companies do, buy, and sell. But, as we all know, ROI can be elusive when applied to some areas of business.