How to Calculate ROI for Marketing

When I first entered the field of marketing 20 years ago, one of the old adages I often heard was that 50% of an advertising budget is effective, and it is impossible to understand which 50%.

My colleague, Marshall England, and I went to Brand ManageCamp last week to listen to some marketing luminaries, and frankly, to solicit some customers.  One of the things I learned is that this adage is still true in many cases today…with many forms of digital marketing obviously being the exception.

There were two speeches which really went after the heart of this issue.  The first was presented by Don Schultz.  Don focused on the critical thinking and analytic tools required to get one’s head around the issue.  This was geeky stuff which I loved like using IRR, Customer Lifetime Value, Chiad Trees to frame decisions on how to best acquire customers.  The other speaker who addressed this was David Meerman Scott who argues in his new book Real-Time Marketing and PR that marketers need to be equipped with the same kinds of systems that he encountered in his first job sitting on the bond desk of an investment bank.  Only by have having real-time systems to research opportunities and perform the analytics can the marketer have the ability to decipher which dollars are being spent wisely.

Many of these tools exist today.  Tools like Salesforce.com, Hubspot, ZenDesk are giving marketers a full view of the customer.  We, at GutCheck, are doing our part by providing marketers with real-time access to their target market to ensure that campaigns conceived on Madison Avenue will have the desired effect.  I suspect there are many other tools out there today or which are being conceived which will make David’s vision a reality in the near term.

What tools are you using to get your head around this issue?