What is the ROI of your digital marketing campaigns? – Dr. Douglas Kong

0
81

If you’re a small business, you would probably feel that the money you spent on digital marketing does not quite get the results you thought you would be getting. In fact, for most businesses, the returns they get is likely not exactly spectacular. Just total up the direct and indirect costs for each of your marketing channel, and you divide the profit you obtained from sales attributable to that particular channel and divide by the total cost. That will give you the cost per sale. You can also calculate your cost per sale and number of leads needed to give you a sale (that will be the leads per sale). These numbers tell a story you should note.

And for some small businesses, the cost per sale does not quite give a positive ROI may not quite cover the cost of their digital marketing. It may be the case the cost of leads may be low and affordable, but if this is the case, what will be your conclusion? That means that the sale may well not cover the cost of acquiring leads and subsequent conversion.

A cheat sheet article on digital marketing1 published in August 2018 claimed a cost for sales with Google Ads of $51, and Facebook ads at $4.4. For the latter example, each sale averaged $100 giving a ROI of $23 per dollar ad spent. For email marketing, quoting from Salesforce, the return per dollar spent was $38 which gave a 3800% return. These figures seem too good to be true!

It should be noted that the above figures were obtained from case studies and may not be representative, and secondly, the returns were calculated from ad spent. As Main Street ROI is a marketing agency, I would have thought that the fees the agency charged to their client should be included in the cost calculated. To use the ad spent only neglected the other costs which are a part of the marketing expenses.

The reality in digital marketing

My conversation with small business owners seems to indicate that while they spent a lot of money on digital marketing, the sales generated were not that satisfactory. Most small businesses still survive on traditional modes of marketing/advertising, as well as referrals with or without cold calling.

If as a small business owner, you felt this way, you are certainly not alone. Even big corporations felt that the money spent on digital marketing did not quite give them the return they were seeking. Thus in mid-2017, Proctor and Gamble cut more than $100 million of their budget for digital marketing because of “largely ineffective” digital ads. And P & G was not alone, other MNCs, had similarly trimmed their budget for digital marketing2.

The attraction of digital marketing has been the digital aspect. Being digital, we can now have lots of data, and analytics is the hottest fashion now among marketers. At marketing conferences, much time was spent on analytics and what the data meant. In fact, because digital marketing can now be measured, it was deemed the smartest thing to do and it’s scientific. This is the push of digital marketers to their clients to do place more ads whether on Google or Facebook.

What’s true about digital marketing

Let’s examine some data about digital marketing which had been measured independently. Lumen3 a marketing research company shared that data indicated “only 35% of digital display ads received any views at all. And, of those, only 9% of ads received more than a second’s worth of attention. Only 4% of ads, meanwhile, received more than 2 seconds of engagement.”

In contrast, advertisements in newspapers are likely to be seen by 75% of its readers for at least 2.2 seconds or more. Digital marketing while being the darling of marketers does not seem to have that impact that it is hyped to have.

Unfortunately, because digital marketing generates so much data, there is no end to debate what went wrong. Maybe the targeting was wrong, the wrong market, bad copy, any reasons can be cited, and we continue to A-B test. When we found something, we thought that is the answer. Indeed, I have found some of these hypotheses testing to be so flawed that it would not support the conclusions that were placed on it.

Such a state of affairs has drawn the attention of marketing experts as the above studies cited above indicate. In fact, a marketing guru, Mark Ritson, frustrated with the tactically focussed and tactics-driven digital marketing, asserted that marketers need to be educated about their discipline4!

Heidi Taylor, a B2B marketing expert similarly felt that digital marketing was being executed at the tactical level with little or no strategic direction. She cited the marketing campaigns of Apple and Nike to drive the point home5.

Most people would be familiar with Apple, they market a certain lifestyle and not the features and benefits of the iPhone. Similarly, Nike ads do not highlight the features and benefits of their sports product like other sports manufacturers do but instead feature celebrity sports personalities thus highlighting the kind of values espoused: action (just do it), and excellence (in the achievement of those they feature).

Taylor further asserted that marketing has lost sight of the value that it was supposed to convey and felt a return to value as one of the key ingredients to engage the customer in these days of social media. It means focusing on the “why” and the Value we give to our customers

Unilever is a brand that seeks to unlock the magic of its brand which is the value it seeks to communicate and engage. Enunciated as its marketing strategy by its former VP of Global Marketing, it has the following 4 main principles:

  1. Craft brands for life
  2. Put people first
  3. Build brand love
  4. Unlock the magic

In an article on LinkedIn, Keith Weed, Unilever’s Chief Marketing and Communications Officer (recently retired in December of 2018), explained how they implement it6. The focus of marketing was not technology, impressive though it was, but people. As people generally spent more time on their devices devouring content, we have to meet their need by giving them content. Our marketing must fit into their schedule and integrate with their total experience, online and offline and communicate authentic content. It is not just digital marketing but marketing in a digital world.

This kind of reaching out is not ‘sell, sell, sell’, right in your face, hounding you everywhere you go. In the face of such marketing, it is not surprising that there is a pushback from most people. To reach out is to connect, and we connect by telling a story – your story. Know your customers and get them to know you and you will succeed because people eventually will buy from someone they know and trust. Do your prospects know you at all?

So are you running your next marketing campaign? If your marketing does bring you results, that’s great. But if your marketing like a lot of others is not giving you the result you are expecting, remember: your marketing plan is NOT your marketing strategy.

Perhaps its time you have a marketing strategy. Your would-be customers are people, and like Unilever and a lot of others who got it right, start reaching out to your prospects as people to connect with them

Take Nike. Instead of marketing how great their sportswear were, and compete with their competitors head-on, Nike tell stories about the sports personalities they sponsored. That’s inspiring, causing people to identify somehow, and to root for them. That connects.

 

References:

  1. Marcie Hardy (August 2018): 2018 Small Business Digital Marketing Cheat Sheet.  https://www.mainstreetroi.com/2018-small-business-digital-marketing-cheat-sheet/
  2. Alexandra Bruell and Sharon Terlep (July 2017):  P&G Cuts More Than $100 Million in ‘Largely Ineffective’ Digital Ads. https://www.wsj.com/articles/p-g-cuts-more-than-100-million-in-largely-ineffective-digital-ads-1501191104
  3. Thomas Hobbs (2016):  Marketers continue to ‘waste money’ as only 9% of digital ads are viewed for more than a second. https://www.marketingweek.com/2016/07/26/marketers-continue-to-waste-money-as-only-9-of-digital-ads-are-viewed-for-more-than-a-second/
  4. Mark Ritson (July 2016): Maybe it’s just me, but shouldn’t an ‘expert’ in marketing be trained in marketing? https://www.marketingweek.com/2016/07/12/mark-ritson-maybe-its-just-me-but-shouldnt-an-expert-in-marketing-be-trained-in-marketing/
  5. Heidi Taylor (2018): B2B Marketing Strategy: Differentiate, develop and deliver lasting customer engagement. Kogan Page, London, New York.
  6. Keith Weed (2016): Why I believe it’s never been more important to put people at the heart of marketing. LinkedIn. https://www.linkedin.com/pulse/why-i-believe-its-never-been-more-important-put-people-keith-weed/

LEAVE A REPLY

Please enter your comment!
Please enter your name here