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Why Marketing Is Like Investing in Stocks – 7 Insights

Marketing Stocks

In conversations with Fortune 500 CEOs, they often express frustration about marketers’ inability to prove the bottom line. One of them noted that investing in marketing should be just like investing in stock: you expect to see a return on investment.

The fact is, marketing is either delivering ROI – incremental profit – or it isn’t.

If you invested, say, $1 million in the stock market, you expect to have basic insights into the investment, and whether or not it performed favorably. What was my ROI? Over what period of time? Which stocks or funds performed the best?

1. Expect Investment Insights

It’s the same in marketing. How much incremental revenue did our investment generate? Over what period of time? Where did it come from, such as what channel or customer segment?

2. Marketing’s Fuzzy History

In the past, it was difficult to measure marketing investment. It was challenging to quantitatively prove the outcome of, say, TV ads or billboard campaigns. In the digital age, marketers have shifted to new fuzzy metrics, such as impressions and clicks.

3. ROI Can Be Measured

But the fact is, due to recent advances in marketing technology, marketing ROI can be measured. Today nearly 1,000 marketing technology solutions are available, up from roughly 100 a decade ago. Some of these, including our Black Ink tool, have been created specifically to measure marketing ROI.

4. ROT?

Some marketers will focus on return over time (ROT). But ROT is a subset of marketing ROI. Returning to the stock market analogy, let’s say your $1 million investment earns a return of 25%. Is that a good return or not? Depends on the time frame. If it was one year, fantastic. But if it took 25 years, your money would have been better invested elsewhere.

5. Next Best Investment

That is the purpose of measuring marketing ROI: to determine where to best invest your limited marketing dollars. The benefit of knowing your marketing ROI, is finding out exactly where to spend your marketing dollars for maximum return.

6. Modeling Variables

There are of course myriad variables that can affect the outcome. But today’s sophisticated ROI models take into account these key variables, measuring effectiveness and efficiency, positive and negative, and more.

7. Return on Objective

Measuring ROI will also reveal your return on objective (ROO). For example, marketers often focus on generating leads as the objective. The fact is, lead generation is a means to an end, the objective being to drive more sales and boost profit. Focus on the end objective itself.

Conclusion – In summary, would you ever invest in the stock market, without expecting clear insights into the result of that investment? Marketing is also an investment – one spends money with objective of making more. And the only way to know whether your investment was successful, is to measure the return.

By Jeff Winsper

Jeff is the President of Black Ink and offers more than 20 years of leadership experience in marketing, serving companies ranging from Fortune 500 to start ups.

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