The CEO of a well-known company once said to me: “When I give money to sales, they give me money in return. When I give marketing money, I get some sort of marketing-speak gibberish in return.”
According to a 2015 survey, an astonishing 64% of CMOs feel unable to demonstrate the short-term financial impact of their spending, and 71% can’t prove long-term financial benefit.
Marketing can be seen either as a cost or investment. Companies will always try to slash costs wherever possible, so it’s wise for marketers to avoid being seen as a cost.
An investment, in contrast, makes money. Businesses like making money. And the only way for marketing to be seen as an investment is to prove its incremental profit.
The fact is, with the advent of new marketing technology, it’s possible for CMOs to tell CEOs, for marketers to tell leadership, yes, marketing can increase your revenue, cut your costs, or both, and I can prove it with precise financial reports.
Traditionally, marketers have steered clear of the mysteries of dollar signs and financial reports. Marketing ROI, for example, was seen as notoriously difficult to prove. In the past, radio and television were seen as tools for building awareness, rather than specific ROI.
Yet despite unprecedented technological advances, today’s digital marketers measure their outcome in a similar irrelevant manner: impressions, clicks, etc. New technologies, old mindset. The fact is, new advances in marketing technology make it easy to measure the exact financial ROI.
C suite executives are putting increasing pressure on marketers to prove their value. What these executives really wants is for marketing to demonstrate – dollar for dollar – the financial benefit the company receives, from investing in marketing.
Marketers want their C-level superiors to know that their digital marketing strategies are making money. Yet marketers falsely see this as an insurmountable challenge. While it’s comparatively easy, for example, to prove how many transactions were generated by a campaign, proving ROI seems impossible.
Marketers have migrated en masse to new technology channels for delivering and measuring their messaging. The next wave is new technologies that measure the exact financial results of marketing.
Most companies today lack these tools. And without these tools, it takes intensive brainpower and labor to make these calculations. Investing in better capturing and analyzing the data will make it much more easy and accurate to calculate ROI.
These new technologies also give marketers a bigger picture of their digital empire. Most marketers look from the bottom-up, such as click throughs and open rate. But it’s much more important to look top-down, to see the forest rather than the trees. That top-down view marketing’s total financial benefit to the enterprise.
To get that top-down view, you need a holistic view that collects data across disparate silos and departments. Thus companies also need a solution that will aggregate and parse this disparate data.
In some cases it can be difficult to assign a financial value to a certain marketing outcome, such as a brand impression. In that case, it’s best to just assign any sort of value to it, so that there can be some sort of benchmarking and measurement.
Conclusion – one of the biggest changes in recent decades is the ever-accelerating pace with which entire industries become irrelevant and obsolete: landlines, CDs, print media, pagers, faxes, etc. Marketing five to 10 years from now will look very different from today. Will you be relevant – or obsolete?