The Dark Side of Marketing ROI | ClickInsight Blog

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05 October 2006

The Dark Side of Marketing ROI

More and more marketing managers want to measure the return on every dollar of marketing investment. More and more CEOs are holding marketing executives accountable for marketing results. Higher accountability and a focus on results can only mean better marketing, right?

Apparently not. Extreme focus on the "show me the money" type of results has its dark side. A strong monetization focus may be destroying customer value.

What's happening in some cases is that "return on every marketing dollar" is being executed literally and at a very granular level. At the recent Canadian Marketing Association conference on Marketing Accountability, some marketers said they were being asked to quantify the ROI of sending a thank-you to customers.

I had some hint of this dark side when I talked with Dave McNab of Exchange Synergism during lunch. Dave was presenting after lunch. I didn't quite understand why his point on measuring "customer value" was a contrarian view about marketing result measurement. So I attended the session by Dave and his panel partner Chris Osborne of Redwood Data Sciences. Ten slides into the presentation, I was still confused why this was "contrarian". I was agreeing with everything they were saying about needing to measure customer value through process measures, etc. Then someone started objecting, with another saying quite strongly that they think a marketer should be able to state the ROI for every activity, including writing a thank-you note to a customer. OK, I finally got the point! Some folks believe that the only results worth measuring are monetary, like ROI, and they're taking that ROI focus down to the marketing activity level. This is why Dave and Chris were asking if accounting was now running marketing (btw, Dave is an accountant). Dave and Chris are raising the flag that extreme focus on ROI is causing easily "ROI-able" marketing activities to be prioritized ahead of relationship-building activities. Activities that do generate customer value but whose benefits are difficult to quantify are being bypassed or dropped. [It's time to resurrect the Balanced Scorecard!]

What does this have to do with Web analytics? It's a warning. More and more analytics applications allow the setting of monetary conversion goals. More and more standard analytics reports have conversion value displayed as a standard column in reports. Just having that column there creates pressure to use this feature. Who wants reports circulating that show a "$0" in the conversion value column? Lots of time can be wasted tinkering with this report, trying to attribute ROI beyond the point where it has any value or makes sense.

I'm definitely for, not against, monetizing results. However, I'm against doing it at such a granular level that ROI makes no sense because synergy between activities is ignored.

Lynn Anderson, who was the closing keynote speaker at the conference, put accountabilty in the proper perspective. Lynn, who is VP Marketing, Alliance & Strategy HP Canada, said that HP does want to measure the impact of every marketing dollar. However, HP doesn't individually measure the impact of every tactic and activity. HP measures the impact of a mix of marketing programs for product lines. Through advanced analysis of inputs from many sources, they optimize the mix.

What's the lesson for Web Analytics? Monetizing is a good thing. Don't be a monetization fanatic. Monetization has to make sense. Monetize mutually-exclusive marketing projects. Where it doesn't make sense to monetize because of interdependencies, or where process measures make more sense, remove that conversion metric column full of $0.

What do you think?

June Li
ClickInsight

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