How to measure the return on your marketing by Creative Bloom
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Stu from Creative Bloom sharing how to measure properly your marketing efforts so you can equate digital efforts to your bottom line.
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How to measure the return on your marketing by Creative Bloom
- 1. Creative Bloom Measuring The Return on your marketing (PROPERLY!) Stuart Davies April 2017
- 3. There was only ROI ROI = Return on investment % profit - costs x 100 costs Great to measure and optimise a strategy. Marketing = an investment @creativebloomUK
- 5. And marketing created ROAS Return on advertising spend Revenue from ad campaign Cost of ad campaign Great to optimise a tactic or channel. Marketing = a cost @creativebloomUK
- 6. Some math(s) CAMPAIGN ROI Profit: £1,200, Costs £1,000 ROI = (1200-1000/1000) x 100 = 20% For every £1 we spend we make 20p profit. CAMPAIGN ROAS Revenue: £10,000, Costs £1,000 ROAS = 5000/1000 = 500% Or for every £1 we spend on advertising we make £5 revenue. @creativebloomUK
- 7. THEN EVERYTHING CHANGED WE CREATED SEARCH ALGORITHMS, SOCIAL MEDIA MARKETING & IT’S DEVIL CHILDREN @creativebloomUK
- 8. & we started measuring everything IMPROPERLY THOUGH THIS IS ALL LAST-BLOODY-CLICK!
- 10. Oh it’s all a bit complex now isn’t it @creativebloomUK
- 11. BUT FEAR NOT - SOME OF US ARE GOOD AT MATH(S) & WANT TO MAKE IT SIMPLE & WORK @creativebloomUK
- 12. BEHOLD: Clv Customer lifetime value =t(52 x s x c x p) t = avg cust lifetime (yrs) s = avg spend per customer per week c = avg visits per week P = avg customer GP% The net profit lifetime value of a future customer Marketing = measuring it’s true value @creativebloomUK
- 13. Some more math(s) SO say my average CLV for a customer is £1,000 over one year I’m not willing to spend more than that to acquire 1 customer over 1 year. @creativebloomUK
- 14. NOW WORK BACK & QUANTIFY THE LIFETIME VALUE OF A LEAD To get one new customer on direct debit for one year worth £1000 CLV Use GA to determine your conversion ratios & work backwards For that customer I need to get 20 people to signup to my newsletter I need to get 500 people to visit & engage with a specific landing page To get 500 engaged people I need to outreach 5000 session hits on the site Soo.. I’ll pay no more than £50 per newsletter signup I’ll pay no more than £2 per person engages with my landing page I’ll pay no more than 20p per session @creativebloomUK
- 15. Couple that with attribution & you can get a true ROI by channel across your customer journey @creativebloomUK
- 16. KEY TAKEAWAY #1: PEOPLE PAY YOU - NOT PAGE VIEWS So learn your clv calculation & MEASURE IT https://blog.kissmetrics.com/how-to-calculate-lifetime-value/ http://www.clv-calculator.com/free-clv-excel-templates/ @creativebloomUK
- 17. KEY TAKEAWAY #2: Increase the average clv value = segmentation & retention strategies @creativebloomUK
- 18. Useful resources Google analytics abc: http://www.simplybusiness.co.uk/microsites/google-analytics-guide/ Creating goals in analytics: https://blog.kissmetrics.com/critical-goal-types/ Creating segments in GA for your brand: https://support.google.com/analytics/answer/3306157?hl=en Using UTM parameters to track your campaign traffic: https://ga-dev-tools.appspot.com/campaign-url-builder/
- 19. Need some help? We love this stuff. www.creativebloomrocks.com @creativebloomUK
Notes de l'éditeur
- ROI optimizes to a strategy while ROAS optimizes to a tactic, yet some marketers use these terms interchangeably. ROI measures the profit generated by ads relative to the cost of those ads. It’s a business-centric metric that is most effective at measuring how ads contribute to an organization’s bottom line.
- In contrast, ROAS measures gross revenue generated for every pound spent on advertising. It is an advertiser-centric metric that gauges the effectiveness of online advertising campaigns. ROAS = revenue from ad campaign / cost of ad campaign With ROAS, marketing is considered a necessary cost of doing business vs. ROI, where marketing is an investment to grow a business’s profits incrementally. While using both metrics in tandem is useful, the pendulum is swinging back from the widespread use of the ROAS-focused model in digital advertising, to a more rigorous ROI-focused model.
- The ROAS model can increase advertising expenses across all channels if marketers treat advertising as a cost while seeking additional market share without the discipline of a defined profit margin target that would keep bids and spending in check. Some ad tech vendors push this metric, but it can lead to advertisers feeling a need to spend budget without truly understanding the incrementality of each additional dollar of media spend. Advertisers are conditioned to be so worried about missing out on an impression that they don’t step back and ask what the impact would be if they had not served that particular impression.
- LAST BLOODY CLICK
- Today, consumers interact with ads and content across multiple channels and devices before converting. We are at the forefront of the transition to linking many of these interactions to conversions and generating directionally accurate metrics. Among people who see and interact with mobile ads, 32% of conversions occur on a different device, Facebook’s Rob Creekmore said recently.
- We are still stuck in an ROAS model, wherein we treat advertising as a cost that is siloed in a specific channel. In reality, much of our advertising is multitouch. ROAS does not measure the true impact of one channel on another, such as display’s impact on search, or offer an understanding of the incrementality of media dollar investment, which the ROI metric provides.
- The rising costs of advertising and the availability of advanced attribution and offline measurement has begun moving the industry toward more business-focused metrics, such as CLV & ROI, and away from ROAS. This will change the dynamic of media agencies and ad tech vendors, forcing them to evolve their business models and pricing to become more transparent and focused on driving business performance, not just advertising performance. As a result, advertising vendors will evolve into stewards of advertisers’ media dollars, with a focus on measuring how advertising impacts clients’ business through ROI, rather than optimizing to ROAS, their own advertising-based metric.