Measuring Marketing ROI

The leading reason why companies don’t invest more money in digital marketing is a generally restricted budget for all types of marketing, per a recent report from Econsultancy and Oracle Marketing Cloud. But beyond that primary hindrance, staff constraints, company culture and an inability to measure ROI are all cited as factors.

Wthout the ability to measure channels, ROI cannot be proved to management, and without proof, decision makers are unlikely to increase budgets.

Ability to Measure ROI

Which digital channels do marketers feel most confident in measuring?

The survey of almost 500 client-side marketers and agency respondents, primarily from the UK (55%) and other European countries (18%) provides some insights.
There’s only one channel in which at least half of the company respondents feel good about their ability to measure ROI: paid search (50% rating as “good”). Email marketing for acquisition (48%) and for engagement/retention (45%) come close in ROI confidence, though only a minority of company respondents rate their ROI measurement capabilities as “good” in these areas.

There’s a substantial drop-off after these areas, with few feeling confident about their ability to measure some popular channels. For example, only 18% rate themselves good at measuring the ROI of organic search, and even fewer feel that way about content marketing (17%), and video advertising (11%). Likewise, fewer than 1 in 5 feel confident in their ability to measure the ROI of social media investment and mobile marketing.

Restricting the analysis to areas in which company marketers feel that their ability is poor shows that video advertising appears to be the most difficult to measure, with 49% of respondents feeling that their video ad ROI measurement capabilities are poor. Not too far behind, more than 4 in 10 give themselves a poor rating for both content marketing (42%) and personalization (42%).

For most channels, marketers’ confidence in measuring ROI hasn’t changed much from last year’s survey. However, there were some areas with notable changes. In comparing the proportion of company respondents who rated themselves good this year and last, the results show that:

  • Company marketers are feeling more confident this year in their ability to measure email marketing, affiliate marketing, and marketing automation; but
  • Company respondents are much less likely this year to rate themselves good at measuring organic search, and also seem to have declined in confidence for measuring marketing analytics (for acquisition) and display advertising (for acquisition).

Change in Ability to measure ROI

Where are marketing budgets going?

Although the report’s authors link the inability to measure ROI to difficulties securing greater budgets, measurement difficulties don’t appear to be proving too much of a barrier, per separate results from the report.

This latest annual study finds 72% of respondents overall (client-side and supply-side) expecting their digital marketing technology spending to increase. That represents slightly tempered enthusiasm from last year’s high of 79% expecting an increase, but is nonetheless a strong figure. Still, this year only 57% of company respondents reported that it has become easier to secure boardroom buy-in for increased digital marketing budgets, down from 71% last year and 64% the year before. And perhaps innovation is being stifled: 35% of client-side marketers this year agreed that they reserve a proportion of budgets for more innovative but untried marketing activities, a figure which is quite a downturn from the 46-47% range over the past couple of years.

Despite the challenges in measuring its ROI, budget enthusiasm for content marketing leads all others, with 77% of company respondents planning to increase spending on content marketing this year. Many are similarly planning budget hikes for lead generation (72%, up from 68% last year) and email marketing for engagement/retention (66%, up from 62% last year). Rounding out the top 5 channels slated for increased investment this year are email marketing for acquisition and a tie between social media investment (for acquisition) and data management.

Paid search again occupies the single largest share of company marketers’ digital marketing budgets, at 14%, followed by content marketing (12%), lead generation (8%), display advertising for acquisition (7%) and email marketing for acquisition (7%).

Budgets are flowing to acquisition efforts more than engagement/retention initiatives. 38% of company marketers said that acquisition marketing is a stronger investment for their company than engagement/retention, with only 22% reporting greater investment in engagement/retention. (The remaining 40% are targeting both equally.)

It’s a different budget story for offline channels, slated for spending increases by just 21% of company respondents, down from 24% last year. Among offline channels, live events (33%) comprise the area cited by most respondent companies for budget increases, though a plurality (47%) will keep their event budgets steady. Aside from live events, more company marketers plan to increase than decrease their telemarketing and TV budgets, though the same can’t be said about direct mail, outdoor advertising, print, or radio.

Despite all the increases forecast for digital marketing over the past few years, though, respondent companies estimated spending 37% share of their total marketing budgets on digital, a figure that’s down a point from last year’s study. Additionally, digital is this year estimated by company marketers to account for just 31% of total revenues, down from last year’s 34% average.

About the Data: The Econsultancy/Oracle Marketing Cloud “Marketing Budgets 2016” report is based on a survey of nearly 500 client-side marketers and agency respondents, 57% of whom are client-side marketing professionals and 43% of whom are from the supply-side (including agency marketers, consultants and those working for technology vendors or other service providers).

Information about the online survey was emailed to Econsultancy’s user base of digital professionals and marketers, and promoted online via Twitter and other channels during January and February 2016.

The technology, media and telecoms sector (16% share) was the most heavily represented, followed by retail (15%), professional services (14%) and financial services (11%) sectors. Some 39% of respondents said they are more focused on B2C; 38% on B2B; and the remaining 23% equally on B2C and B2B.

Having difficulty measuring your digital marketing ROI?
Contact Lori at 877.447.0134 or info@BersonDeanStevens.com.

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