Why is Return on Investment ROI challenging for marketers?

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    Measuring campaign performance and demonstrating Return on Investment ROI on marketing spending is the biggest challenge facing B2B marketers globally. According to new research from LinkedIn, about 21% identify this as their top concern. Last month, LinkedIn conducted a Global B2B Marketing Survey, revealing that about half of its 1,700 senior marketers said they had had a budget cut due to the current economic situation. In that case, demonstrating marketing ROI is becoming increasingly important and difficult to measure.

    What is Return on Investment ROI in marketing?

    Return on Investment
    What is Return on Investment ROI in marketing?

    Return on Investment ROI is the company’s total profit from all marketing activities from different marketing channels. Channels can include organic traffic, social media, PPC, etc.

    As businesses face increasing customer demand for personalized marketing experiences across every channel, measuring return on marketing investment (MROI) is more important than ever. From channel-specific MrOI to overall MrOI, the clearer the ROI measurement and the better proven its performance, the easier it is for you to continue using and approving budgets.

    Why is measuring Return on Investment ROI a challenge for most marketers?

    Marketing today is not just about attracting leads or traffic any more. It is a complex process involving digital and traditional channels with multiple touchpoints.

    It is difficult to prove ROI because it involves tracking many variables over a long period. Because it takes longer to collect accurate data, it becomes more difficult to isolate factors that contribute to increased sales.

    The average length of a B2B sales cycle is 6 months. Profits from marketing investments take time to reach the bottom line. There are several types of marketing ROI, just to cite a few:

    • Marketing/booking attribution revenue
    • Marketing attribution created
    • Cost-per-acquisition (CPA) ratio
    • Return on ad spend
    • Customer Lifetime Value (CLTV)

    It’s important to understand the difference between the different types of ROI so you can choose the right one. However, most of these metrics are calculated similarly regardless of which metric you use.

    How do you calculate ROI?

    Return on Investment
    Calculate Return on Investment ROI

    Return on Investment ROI in marketing is simply a return on investment calculation. It looks like this:

    ROI = (Profit – Investment)/Investment

    Simple ROI = (Revenue – Marketing Cost)/Marketing Cost

    The formula for ROI is quite simple. It is the financial return generated by your Marketing efforts, divided by the cost of your marketing investment. As with any ROI, the goal is to achieve a positive outcome.

    Common mistakes when measuring marketing Return on Investment  ROI

    Measuring marketing ROI seems easy, but it can be complicated. There is increasing pressure on marketers to demonstrate a return on investment in their initiatives. Some companies determined that they could not afford to invest in marketing initiatives with negative ROI, because the project was difficult to prove on financial terms.

    The challenge of proving ROI can be even greater for content marketing which often centers around the consideration and awareness-building stages of the funnel. Content does its job over the long haul and a number of sales cycles. Trying to demonstrate ROI too quickly can short-sell your strategy.

    Focus only on short-term results

    Proving the ROI of demand generation can be challenging, especially for long-term branding investments.

    According to global B2B marketing survey research, branding is the area that marketers want to invest the most in the next half year. The majority of respondents (67%) plan to increase or maintain spending on their brand over the next six months, citing its ability to drive long-term sales (52%) and keep consumers engaged. brand recall (42%) was their top reason for doing so.

    However, campaigns that focus primarily on driving long- or mid-term initiatives like branding or retention often don’t realize their full potential for months or even years.

    Digital marketers often measure ROI too quickly. Although the average length of a B2B sales cycle is 6 months, only 4% of marketers measure ROI for 6 months or longer (according to another LinkedIn study). It is important to understand and consider the overall goals and duration of the campaign when measuring ROI.

    ROI and attribution models

    Return on Investment
    ROI model of return on investment

    You want to attribute revenue to your marketing channels to determine what ROI you get from those channels.

    A common mistake marketers make is not thinking enough about their attribution method, which will depend heavily on their business model, sales cycle, and marketing strategy.

    Often, multiple touchpoints will be needed before a consumer makes a purchase decision. Most marketing campaigns will include several touchpoints across online and even offline channels.

    The custom attribution model is often the best and most complex. The Full Road Marketing attribution model is a suitable second choice because it will help you understand which channels are performing best at the top and bottom of your marketing funnel.

    We hope this article has helped you in your challenge of measuring your return on investment (ROI). Earn the trust of senior stakeholders. Mastering the language of Return on Investment (ROI) is certainly not easy, but it is increasingly important to most marketers today. Remember, creating data-driven content will help you capture the right metrics to measure ROI for the entire buyer journey.

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