Which Marketing Metric Is More Effective — ROO or ROI?
Sometimes, it can be hard to demonstrate a return on investment (ROI) with storytelling. Communications professions are constantly inundated with a bevy of data that has coincided with the proliferation of marketing software for planning, automation and execution. It is then up to these pros to take this data and translate it in such a way that they are able to justify their marketing effort and spend to clients or employers. It’s no easy feat, thanks to the sheer amount of data available and the difficulty of first setting then managing client expectations.
I believe this conversation should start with framing expectations around return on objective (ROO) instead of ROI. But before I get into why, here is some information to consider.
Today, both the local and global marketplaces are one and the same and the speed at which customers within an addressable market can react to, buy, endorse, disregard or comment is instantaneous. The currency that companies need in order to succeed is still expressed in revenue as measured by money being accepted and exchanged. However, sophisticated measuring tools now allow companies and their marketing leaders to better measure the effects of the overall brand communication.
Any company functioning in today’s modern, global economy must relentlessly market their product or service. Their brand exists in the digital space via the internet, social media and the increasing media landscape that the brand must be placed within for attention (i.e., television, digital ads and social). A “brand,” however, only truly exists in the mind. Consider the complexity of that statement and the resulting challenges that begin to surmount.
Management, investors and shareholders demand that marketing and communication professionals both internally (in-house marketing teams) and externally (agencies/consultants) justify their allocations accordingly. They want concrete verification of the returns from these investments. Traditional terms like “advertising” or “marketing” have been supplemented by new buzzwords like “growth hacking” or “performance marketing.” The desire for shortcuts is still addictive and elusive but the simple fact remains – marketing and communication measurement and the evaluation of the ROI is not likely to ever go away.
The term “brand communication” encompasses any and all forms of actions or activities that can impact and influence the relationship that a brand has with its customers. This includes efforts to acquire, retain, cross-sell or engage. These efforts all impact business decisions that happen in real time based on relevant, actionable and reliable market feedback.
Brand Communications – Budgets, Measurements and Timeframes
Traditionally, most brand communication budgeting starts with a variety of assumptions for a given organization. These assumptions determine how much to invest in the marketing and communication functions of their business. They can be historically based on a percentage of previously allocated budgets as a ratio or percentage of current or future years’ sales or some sort of generally accepted rule-of-thumb.
This approach is less than an exact science. In this framework, budgeting is an estimate and typically handed down to marketers from the company’s operating team. Brand communication should not be a gamble but an investment where the dollars are diversely spent and then managed on an as close to a real-time basis as possible. That being said, resources are never infinite; no company has the luxury of printing money!
All effective brand communication today is interactive and integrated, but a simple starting point should be a consideration around “outbound” versus “inbound” brand communication efforts.
“Outbound communication” refers to activities that are sent to specific audiences at a certain time, frequency and channel. The outbound marketer controls the system since all information about the brand including campaigns specific to a product or service is designed as outbound communication.
“Inbound communication” refers to activities that are received by specific audiences at a certain time, frequency and channel. Inbound marketing is typically synonymous or adjacent to the buzzwords or phrases referred to as “content marketing” or “demand generation.” The inbound marketer does not fully control the message; instead, they are reacting to digital, social or behavioral activities by the consumer and seeking to interact with them. Thus, communication and information result in a flow that moves in both directions as well as in multiple directions.
For all brand communication, consider reframing expectations around a ROO vs. an immediate ROI. ROO should be viewed as how efficiently these outbound messages and campaigns are delivered to, received by and acted upon by consumers.
Once this framework is developed, it can also be adapted to a brand or company’s internal brand communication. While many companies want to be integrated with their brand communication strategies immediately, this can be a complex task and should be adopted over time as metrics are established, accepted and acted upon throughout the business.
The difference between inbound and outbound brand communication is stark. However, as a brand finds traction, converts new consumers and spurs loyalty among their existing customers, the relationship between the brand and the customer begins to overlap and the sweet spot in the Venn diagram grows.
This overlap is the gift, product or service being provided by the brand and being accepted by the consumer. This sweet spot is where a brand’s value and purpose align with a consumer’s desires and needs.
Simple ROO Frameworks to Adopt for Outbound Brand Communication
Consider the following metrics for measuring your brand’s outbound performance. Ask yourself which of these will enable your team to make a decision in an objective matter. Establish benchmarks to level set where your brand currently stands in terms of the chosen metrics, then set growth goals. All companies have benchmarks for brand awareness, web traffic, leads and profits. The below can function as your starting block:
- Performance Metrics: Purchase/buying rates measured by leads, sales, close-ratio, preference and price premium.
- Brand Mentions: How are campaigns performing? Who is talking about the brand? Where are these conversations occurring?
- Media Mentions: Are media or trade associations and outlets talking about the brand? What is your share of reach against your competition? Is the media using links online to your website, directing consumers or partners to a website, an event or other calls to actions?
- Brand Searches: What sort of search volume is the brand seeing? Is it organic or paid?
- Social Media Reach: Are campaigns performing on the brand’s active social channels? Are the numbers of followers growing? Is the engagement deepening (share counts, impressions, likes, etc.)?
- Financial Metrics: This is measured by market share, revenue, profitability, cost per acquisition and brand valuation.
Simple ROO Frameworks to Adopt for Inbound Brand Communication
Consider the following metrics for measuring your brand’s inbound performance. There is no limit to the number of metrics that can be used, so brands should focus on metrics that indicate what marketing is doing, what resources are being impacted and what is leading to direct revenue. Keep in mind who is using the frameworks and what determines action and future success.
- Performance Marketing Metrics: Purchase/buying rates measured by leads, sales, close-ratio, preference and price premium.
- Customer Loyalty Metrics: This can be evaluated and measured by customer satisfaction, repeat purchases, referrals, retention, customer lifetime value and net promoter score.
- Digital Marketing Metrics: Since there really is no end to the digital metrics that can be measured, companies must decide what will lead to actionable efforts on the part of the company based on their size, agility and goals from leadership.
- SEO rankings, content downloads, social reach, inbound links or link building efforts
- Month-over-month growth in organic website traffic
- Social engagement
- Lead generation by content type, channel and campaign
- Percentage of leads with an inbound original source
The Importance of Strategy and Experimentation
Brand communication is complex, and it demands close attention, evaluation and optimization. Branding-related strategies are never complete – they should require continuous effort and be regularly examined and optimized.
Conversations with the general community and existing customers occur in real time and the sentiment of these conversations can lead to actions taken to course correct brand communications. This can assist in those areas where a company might be lagging or to gain momentum and take key advantages of a market segment. This mentality will ensure the optimization of branding initiatives. Remember that audiences need to be intrigued and engaged on their own terms and conversed with regularly for this strategy to work.
Let us determine your brand communication ROO. Contact us today to get started.