Why is ROI by Channel Important for B2B Marketers?
Last year, in a study that asked B2B marketers what their biggest challenge was in measuring the impact of their marketing efforts, nearly half of them said it was being able to measure impact across channels. What they wanted was a way to accurately measure the ROI across different marketing channels. It seems that this metric is still at the forefront of B2B marketers’ minds.
Recently, a new study found that the metric that marketers want to focus on in the next 12-18 months is ROI by channel. In this study, 56% of the marketers that responded cited this metric as the most important in their immediate future.
Why is the ROI by Channel Metric So Important?
B2B marketers have access to so many different channels, that is can be challenging to decide where marketing dollars should be spent. SEO, pay-per-click ads, email marketing, native advertising, social media, podcasts, and videos are some of the most commonly used digital marketing channels, but there are many others available as well.
With so many different channels, it’s essential that you are able to track and analyze the performance of each channel individually to make the most of your time, energy, and marketing budget. If time and money is spent on channels that don’t perform well, it won’t just be money that is wasted, but also the opportunity to use those marketing dollars for a channel that will help grow your business. In other words, it’s not just money wasted, but also a loss in unrealized revenue.
To put it simply, ROI by marketing channel is important because it’s a way to see what is working for you and what isn’t. You don’t want to spend money on channels that don’t work for your business, and you do want to spend it on those channels that will help your business grow.
Unfortunately, there are some challenges that you may face when it comes to defining and calculating the ROI by Channel metric for your business. Let’s look at why that’s the case.
Why Measuring Marketing ROI by Channel is Challenging
Determining the return on investment uses a deceptively straightforward calculation. Here it is:
(Income Earned – Amount Spent) ÷ Amount Spent
Or, to put it in marketing terms:
(Income Earned from Campaign – Campaign Expenses) ÷ Campaign Expenses
It seems simple, but there are a number of reasons that the ROI by Channel metric is challenging. Here are a few to consider:
- Marketing campaigns are often multi-touch and long. Sometimes it’s hard to know where exactly an impact was made – which investment is paying off – in a marketing campaign because there are multiple points at which parties may be impacted. That makes it hard to know which channel should be attributed with the earned income. Additionally, some campaigns are lengthy. Content that you posted last week may not provide immediate results, but instead, impact someone weeks or months down the road.
- Variables can be defined in different ways. For any metric to be useful, it must be calculated based on distinct, clear variables. Unfortunately, the variables used in calculating marketing ROI can be defined differently. For example, campaign expenses may be defined as just direct costs like advertising. Or, it could be defined using supplementary costs like marketing software implementation, website overhead, labor costs, etc. You can see how the two methods would produce very different figures.
- External factors can affect your campaigns. Is the sales spike you’re experiencing due to the effectiveness of your campaign, or is it due to an improvement in the economy? It can be hard to determine which factor influenced the spike.
The thing to remember when you are determining your marketing ROI by Channel is that your variables need to be well-defined and consistent to be able to compare your results over time.
If you are eager to make better use of the ROI by Channel metric, you are not alone. B2B marketers agree that it’s an important measurement to use, though not always easy to determine. Hopefully, the above information helps as you look at how your marketing channels are performing. But, if you are still having trouble connecting the dots of how to do it, give us a call at Reliable Acorn, we can help with marketing ROI and your other marketing needs.