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elationship between input and output of a campaign, external factors are involved as well:
the marketing actions of competitors, running concurrently, affect the own success too. (c)
Interactions between different actions take place, within the so-called marketing mix. Finally
(d), costs and benefits are rarely measured in a controlled experimental setting (i.e., one
group with and one group without advertising). This makes it difficult to have a view on
causality: perhaps there was also an increase in revenue or customers without the action, or
there might be a general decline in revenue or customers, but the decline would have been
even worse without the action. Concerning the latter possibility, experts stressed the
interest for SMEs to include some experimenting or A/B testing – if possible – as the first
step in a simple ROI calculation. The professional marketers (of international companies)
made use of A/B testing, by varying actions and codes per region, by experimenting with
different coupon values (€ -0.1 vs. -0.3 €) or by sending different newsletters or Facebook
images toward other segments of customers.
The cost side of a ROI formula could be simple. All costs can be listed: for radio spots,
television commercials, advertising in newspapers, airtime, boosts on Facebook, websites,
printing of flyers, the hostesses during an open house day, sponsorship or participation at a
fair. However, additional hours spent by the own personnel also need to be charged, as well
as the time spent into making choices by the (marketing)management team (e.g., judging
several pitches, mailings & meetings in the decision process concerning a gadget) and the
time spent on analyzing (ROI) marketing campaigns. The difficulty in measuring costs often
concerns the allocation of the costs of the SME’s personnel, coworkers and staff to specific
actions.
The revenue side of a ROI formula most obviously includes: (more) turnover and/or (more)
profit. But, other aspects than additional sales such as brand awareness or brand image,
number of (new) customers, customer retention, fanbase, #likes should be included too.
These variables are referred to as soft and hard metrics. Hard metrics can be directly linked
to an increase in revenue, turnover, numbers of visitors buying stuff. Soft metrics lead to
more brand awareness, satisfaction, likes, and are indirect influencers. Note, however, that
soft metrics still need to be translated (estimated) into hard metrics, since “likes do not pay
the bills”.
The experts all stressed the importance of yet another dichotomy. Analyses can be done in
retrospect: one measure costs and revenues of a campaign or action afterwards, and/or,
prospectively: the effects of (several variants of) an action can be assessed in advance. In
this prospective approach, it is possible and recommended to work on the basis of a
breakeven analysis: "What return is minimal necessary to recoup the investments made and
is it feasible?"
Where do companies get their metrics?
The following sources from which SMEs get (buy) metrics were mentioned:
Measures of digital marketing activities (Google adwords, Facebook buzz,
newsletters) are easier to collect than measures of offline marketing campaigns.
Actually, clicks are so easy to track that this makes online marketing tools so popular
(see above).
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