marketing ppt

BCOBM222 Marketing in Action Unit 9: Measurement and Marketing ROI

Ryan Bytenski (MBA)

BCom., BCom Honors (Cum Laude)., PGDip., M.B.A.

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Measurement &

Marketing ROI

Video: https://www.youtube.com/watch?v=35OLWv9AGpU

Marketing ROI

• Marketing ROI is the practice of attributing profit

and revenue growth to the impact of marketing

initiatives.

• By calculating return on marketing investment,

organizations can measure the degree to which

marketing efforts either holistically, or on a

campaign-basis, contribute to revenue growth.

• Typically, marketing ROI is used to justify

marketing spend and budget allocation for

ongoing and future campaigns and initiatives.

How is Marketing ROI Used by Companies?

• Justify Marketing Spend:

• To secure budget and resources for future campaigns, it’s crucial that current marketing spend, and budget be justified at the executive level.

• To do so, marketers need to accurately calculate the ROI their marketing efforts are delivering for the organization.

• Distribute Marketing Budgets:

• Across online and offline channels, there are multiple possible marketing mix combinations.

• However, any combination of campaign initiatives require funding.

• That’s why understanding which online and offline efforts drive the most revenue is a must for properly distributing the marketing budget.

How is Marketing ROI Used by Companies?

• Measure Campaign Success and Establish Baselines:

• A crucial part of any successful marketing team is the ability to measure campaign success and establish baselines that can serve as a reference for future efforts.

• By understanding the impact of individual campaigns on overall revenue growth, marketers can better identify the right mix of offline and online campaign efforts.

• Moreover, measuring ROI consistently allows marketers to establish baselines to quickly gauge their success and adjust efforts to maximize impact.

• Competitive Analysis:

• Tracking the marketing ROI of competitors allows marketers to accurately understand how their organization is performing within their specific industry.

• Marketers tracking publicly available financial data can estimate the ROI of competitors and adjust baselines to reflect these estimates—helping to keep efforts consistently competitive.

How Do You Calculate / Measure Marketing ROI?

(Sales Growth - Marketing Cost) / Marketing Cost = Marketing ROI

(Sales Growth - Organic Sales Growth - Marketing Cost) / Marketing Cost = Marketing ROI

• Total Revenue: Helps in getting a clear overview of marketing efforts and is ideal for strategic

social media planning, budget allocation, and overall marketing impact.

• Gross Profit: Helps understand the total revenue produced by the marketing efforts concerning

the cost of production or delivery of goods and services.

• To do this, add the following to the marketing ROI formula: = (Total revenue - the cost of goods to deliver a product).

• Net Profit: Helps in identifying the impact of marketing efforts on the net profit.

• To do this, add the following to the marketing ROI formula: = (Gross profit - additional expenses).

Common ROI Terminology

• Digital marketing tactics—including social media, online display ads, email marketing, and your

company website, the most obvious is that their effectiveness is trackable and measurable.

Five metrics that better represent the value of and ROI of your digital marketing efforts:

• Cost Per Lead (CPL): Cost of Marketing Campaign / # of Leads.

• Customer Acquisition Cost (CAC): Sales + Marketing (including salaries) + Overhead / # of

customers acquired over a given period.

• Lead-to-Customer Conversion Rate: Total # of Converted Leads / Total Lead Volume *100%.

• Lifetime Customer Value: Avg. sale per customer * # of purchases per customer * Average retention

timespan for customers.

• Visitor-to-Lead Conversion Rate: Total # of Converted Website Visitor / Total Website Leads *100%.

What is a Good Marketing ROI?

• A good marketing ROI is a ratio of 5:1 - or making five dollars for every dollar you spend.

• A marketing ROI of 10:1 is considered exceptional.

• This is because you're turning a profit, even when you account for external variables.

• Anything below the 2:1 ratio is barely profitable because after factoring in the business expenses,

which will likely reduce it to a 1:1 ratio.

• The marketing ROI calculation assumes direct investments but only usually includes business costs like salaries and office space that were also necessary to make that campaign happen.

• It's important to note that a “good marketing ROI” is entirely subjective.

• It depends on your niche, industry, and use case.

• For example, some industries are more saturated or competitive and require large budgets to produce some profit.

Challenges of Measuring Marketing ROI?

Measurements are Simplistic:

• Marketers must get a clear and consistent sales baseline to measure against.

• Also, ROI measurements should take for external factors that impact campaign success, including

weather, marketing industry trends, events, supply chain issues, etc.

Cross-Channel Landscape:

• Campaigns aren’t run on a single channel.

• They often use various online and offline channels simultaneously.

• Therefore, focusing marketing ROI measurements on a single channel will only feed marketers

with a tiny piece of the overall marketing impact data.

Multiple Touchpoints Before Purchase:

• It usually takes 6-10 touch points on average before a potential customer makes a buying decision.

• So, a marketing team needs to understand the relationship between these touchpoints in the sales

funnel and use a multi-touch attribution model, measuring direct and indirect relationships.

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ROI Mindset

How Can Businesses Adopt an ROI Mindset

• While the importance of calculating ROI is obvious in almost every business case, it is less clear

where to begin.

• While ROI often gets labelled as a financial measurement that doesn’t look at the total cost to the

organisation, it is important to apply findings to help prioritise tasks, compare expected outcomes

to actual results, draw conclusions and learn for the next project.

• The first step toward understanding ROI is determining what data is being collected.

• Conducting a data audit across the organisation will identify where information sources are located, how to access them, what questions each source can answer, and which gaps still need to be filled.

• After the data audit is completed, each initiative that has been completed or is in the works will be visible.

• Connecting the information gathered with actual results to establish a baseline for future improvements.

How Can Businesses Adopt an ROI Mindset

• Communication is one of the most important aspects of an ROI mindset.

• It is best to involve teams in determining key goals at the start of a project.

• Many people in an organisation will be unfamiliar with ROI, bringing them along for the journey by setting up training to get them up to speed on any new terminology, while incorporating ROI into future initiatives.

• Finally, organisations need to ensure that stakeholders who receive ROI reports are familiar with

the inputs used and how results are calculated.

• Creating an ROI culture increases engagement throughout the decision-making process, making it easier for those involved to see the impact of initiatives.

• Executives must summarise the team’s activities and link those to quantifiable, financial outcomes at the end of a venture.

• When projects are completed, they must report back to the team on their success and how it compares to previous initiatives.

Measure the Unmeasurable

• No matter how hard you try, some content

marketing efforts can’t be fully tracked.

• Nonetheless, you can and should measure those

aspects that can reveal the extent to which you

are making progress or impacting growth.

• Sometimes, there are still gaps in the data where

it’s just not possible to see the immediate impact

of certain metrics on core objectives.

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Performance Branding

Video: https://www.youtube.com/watch?v=EOAPF2H90Vg

Performance Branding

Performance Branding describes a multi-dimensional

analysis that gives companies instant insights into the

performance of their brands—in real time.

Performance branding delivers insights and solutions

in six dimensions:

• Brand persona

• Brand marketing

• Brand strength

• Internal & employer branding

• Brand market audit

• Brand ad-hoc insights

Moving to Performance Branding

• Media Consumption: Increasingly, the impact of traditional advertising can be measured and

optimized at the individual or household level.

• For example, many smart TVs have a unique IP address and are equipped with automatic content-recognition (ACR) technology that lets them create a record of which ads have been viewed.

• Identity Graphs: An identity graph is a collection of user-level data combined with identifiers such

as digital cookies, physical addresses, email accounts, and mobile phone numbers.

• This type of database enables advertisers to better understand consumer preferences and habits along their entire decision journey and across channels and devices.

• Individual-Level Transaction Data: In their efforts to understand and improve the impact of joint

campaigns and promotions and also to monetize their data assets, retailers increasingly provide

access to individual-level transaction data to manufacturers and advertisers.

• By combining their own data about advertising exposure with these records, advertisers can enrich their data sets to derive more reliable cause-and-effect relations.

Moving to Performance Branding (Cont’d)

• Personalization of Consumer Surveys and Panel Data: In the past, surveys generated insights

about the average customer.

• Thanks to agile insights applications, questionnaires can now be customized, and individual responses can be matched with an existing individual-level database.

• Technological Advances: The increasing capacity for data storage, faster IT infrastructure, and

partial automations is allowing market researchers and data scientists to handle much larger

sample sizes.

• Sophisticated algorithms can help companies understand individual customer behavior in real time.

Core Elements for Efficient Performance Branding

Good data and a single source of truth that everyone agrees on.

• Strong data starts with building out a customer-data platform (CDP) that incorporates data from

internal sources, external partners, and third parties in a compliant fashion and at the level of

individual customers and provides links to execution platforms.

Agile operations to move quickly and learn.

• These allow teams to both make quick tactical decisions and incorporate learnings to continuously

improve offers.

• Marketers need to pursue a rigorous test-and-learn regime to ensure that new insights based on

changes in technologies and consumer behavior are fed into performance-branding programs.

Close collaboration with well-vetted agencies.

• Marketing teams should work closely with their agencies on key elements of performance

branding, from detailed media planning to the ability to execute more changes at a much higher

frequency.

Performance Branding: Benefits

Improved Campaign Insights:

• The use of analytics gives you access to improved insights into how your branding efforts are

working, and this data helps you to make more informed decisions and continuously improve your

campaigns.

• For example, you can figure out which advertising channels get the best results.

• You can then focus more of your budget on the most effective channels or update your strategies

to improve your results.

A More Integrated Approach:

• Performance branding can also give you a more cohesive view of your marketing and branding.

• This helps you ensure that all aspects of your campaigns work together and can help you improve

the results on both ends.

• For example, you can ensure your branding targets people who are likely to become customers

and make sure that your marketing efforts are consistent with your brand.

Performance Branding: Process

1. Set Goals:

• Specific: Make your goals detailed and avoid ambiguity.

• Measurable: Your goals should be quantifiable, and there should be a way to gauge your progress.

• Achievable: While your goals can be ambitious, they should also be realistically achievable.

• Relevant: Your branding goals should be relevant to your overall business goals.

• Time-bound: Put a time limit on achieving your goals to help keep you on track.

Examples:

• Increase search volume for branded keywords by 25% in the next six months

• Increase brand recall by 30% by the end of the year

• Increase social media engagement by 15% by the end of the quarter

Performance Branding: Process

2. Choose Metrics to Track:

• Brand Recall: The number of people who remember or recognize your brand is useful for

measuring brand awareness.

• Website Traffic: The amount of traffic coming to your website can help you estimate the reach and

popularity of your brand. Also, pay attention to where your traffic is coming.

• Search Volume for Branded Keywords: How many people are looking for your business on

Google and other search engines? Search volume indicates how many people are actively seeking

out your business online.

• Backlinks: If your website is organically earning more links, this is a good sign that your reach is

expanding online.

Performance Branding: Process

2. Choose Metrics to Track (Cont’d):

• Social Followers: Social media is a valuable tool for measuring branding success. The number of

followers your brand has is an excellent measure of its popularity.

• Social Mentions: You can also track the number of times people mention your brand on social

media, whether on your profiles or elsewhere.

• Social Reach: Social reach is a measure of how many people see your name on social media. To

measure this, consider the number of mentions and how many people will likely see those mentions.

• Social Engagement: Engagement through comments, posts, and other interaction types is a great

way to monitor the number of users who are more actively interested in your brand.

Performance Branding: Process

3. Choose Tools:

• Surveys: Consider sending out surveys to existing customers or surveying a sample of random

people. You can conduct surveys via email, phone, and social media, on your website, and in

person. Try asking existing customers how they heard of you and asking random survey takers if

they recognize your brand.

• Website Analytics Tools: Website analytics tools such as Google Analytics are an excellent way to

measure website traffic, interactions, and more.

• SEO and Keyword Research Tools: Using SEO tools like Ahrefs and Google Trends, you can

research keyword search volume, backlinks, and more.

• Social Media Analytics Tools: Social media analytics tools, including ones built into the platforms

and third-party tools, are powerful brand tracking tools.

• Social Media Monitoring Tools: You can also use various social media monitoring tools to track

mentions of your brand on social media.

Performance Branding: Process

4. Experiment with New Branding Campaign Tactics:

• Once you have your branding performance tracking tools ready, continue following your branding

campaign strategies.

• As you do so, though, keep track of your results and start experimenting with new tactics.

• As you make changes to your campaigns, monitor the results and update your strategies

accordingly.

• If you try a new approach and it works well, consider investing more into that method.

• If a campaign doesn’t meet your expectations, adjust various elements until you get the results

you’re looking for.

• Also, consider running A/B tests — tests in which you change an element of an ad, page, or other

item and see which version performs best.

• Then, you implement the winning version as the final one.

Performance Branding: Process

5. Continually Refine Your Campaigns:

• As you gather more data and try more new tactics, continue refining your branding strategy.

• Also, use the data you collect to ensure your branding and marketing efforts remain aligned.

• Improving the results of your branding and marketing is a continual process.

• You should always track data, run tests, and adjust your campaigns.

• As you do, your campaigns will get better and better over time.

• Due to its focus on measurable KPIs and improved visibility into your campaigns, performance

branding sets you up for success with this process of continual improvement.

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Spend Management

Video: https://www.youtube.com/watch?v=O4ZWk1LJEz4

Spend Management

• “Spend management is a set of practices that ensure

organizations make procurement and sourcing

decisions in the interests of both the bottom line and

company efficiency”.

• “Spend management is a set of practices for controlling

how a business spends money”.

• “Spend management is about maximizing value from

company spend while decreasing costs, mitigating

financial risk and improving supplier relationships”.

• Spend management is primarily related to procurement

and encompasses spend analysis, strategic sourcing

and supplier relationship management.

Why is Spend Management Important?

Spend management is a complete process of requesting and

approving the company’s spending, completing payments, capturing

the crucial details of transactions, booking, tracking, managing, and

analyzing the company’s business.

• Higher level of finance data visibility and transparency.

• Complete control over the company’s finances.

• Efficient and continuous business operations.

• Consistent cost-saving refined opportunities.

• Better process of financial decision making.

• Identification and management of risks.

• Builds up the supply chain management.

Types of Spending

• Managed vs Unmanaged:

• Managed Spend: Any expenditure that’s happening under contract, and involved in sourcing, selecting, negotiating, and signing the contract.

• Unmanaged Spend: On the other hand, happens outside of the procurement cycle (once-off).

• Direct vs Indirect:

• Direct Spend: Involves purchases that are directly related to the production of a company’s final product or service.

• Indirect Spend: Encompasses all other expenditures required for the business to run.

Types of Spending

• Operating vs Non-Operating:

• Operating Costs: Repeated expenses that stem from the day-to-day business operations.

• Non-Operating Costs: Expenses that do not stem directly from the core business operations (interest, taxes).

• Fixed vs Variable:

• Fixed Costs: These are the expenses that must be paid regardless of the production volume. They usually don't apply directly to production.

• Variable Costs: These are expenses that fluctuate based on how much the company produces and sells; accordingly, variables usually rise when production volume rises.

Spend Management: Benefits

By taking a big-picture view of spending, more addressable

spend can be brought under management, driving more

organisational value.

The Value is Derived From:

• Greater Efficiency: From automating manual, error-

prone processes.

• Lower Supply Costs and Risks: By knowing exactly

what is being bought, from whom, and for how much.

• More Effective Collaboration: Between trading

partners and cross-functional teams.

• Improved Productivity: By freeing time and resources

to focus on more strategic activities.

Spend Management System

• Each company adjusts its spend management process

individually based on its industry, size, structure, and other

specifics. An efficient spending strategy is grounded in the

real-life spending data of the company.

• There's no universal scenario applicable to every company,

but the following 9-step process can serve as a starting

point for building a custom spend management system.

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Revenue Management

Video: https://www.youtube.com/watch?v=wbQbRqcS8YY

Revenue Management

• “Revenue management is a business technique that

enables the optimization of your inventories and

maximizes your profits”.

• “Revenue management is a strategic approach to

pricing and selling products or services to maximize

revenue”.

• “Revenue Management is a disciplined analytics

technique used to predict consumer behavior at the

micro-level, which is used to optimize product

availability and pricing and maximize revenue

growth”.

• It involves understanding market demand, customer

behavior, and pricing strategies.

Revenue Management: Key Elements

• Encourage the Culture of Revenue Management: It is essential to incorporate a culture wherein

all the employees are well aware of its purpose and benefits.

• Keep Pace with the Changing Customer Behavior: Although historical information is vital for

revenue management, it is equally important to keep track of changes in customer behavior and

habits to build a robust strategy.

• Focus on Value Proposition: Sometimes, it is better to focus on creating valuable product/service

offerings than lowering the prices because people are usually willing to pay more if offered a better

overall experience.

• Forecasting: This revenue management system is a method that uses various types of historical

data, predictive models, and market analysis that help in planning inventory and production levels.

• Technology: Updated and advanced technology is necessary so that the solution will facilitate

proper revenue management and automated solutions. This will ensure price management and

decision making.

Revenue Management: Strategies

1. Segmentation and Price Optimization:

• The customers are classified into different segments based on various criteria.

• Each segment has to be analyzed separately to understand customer behavior in each segment;

their preference in terms of pricing and product features.

• Then different pricing strategies and marketing strategies are built to approach the different customer

segments.

2. Moment Based Pricing Strategy:

• The right strategy must be selected for pricing strategies, keeping in mind the current situation.

3. Distribution Channel-Based Strategy:

• Using the right distribution channel to find the right set of customers while reaching as many

customers as possible is important.

• The strategy’s priority should be to reduce the number of intermediaries to pass the benefit of a

lower commission fee on to the customers in the form of lower pricing.

Revenue Management: Benefits and Limitations

Benefits:

• It provides insight into the customers’

specific needs and wants, which can be

incorporated into the product/service

offerings.

• It helps build a competitive pricing strategy

that can draw more customers and offer an

edge over the competitors.

• Used to analyze the market to identify new

and potential customer segments;

Limitations:

• It makes the already complicated job of the

manager or revenue management analyst even

more complicated.

• The process becomes complex in case the

business has a huge line of products and

services.

• This also involves cost cutting or control. If cost is

not handled and kept to its minimum level, even

higher revenue will not increase profitability.

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Thank you! Ryan Bytenski

[email protected]