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ROI in Marketing
The Design Thinking Approach to Measure, Prove, and Improve the Value of Marketing
- Read in 12 minutes
- Audio & text available
- Contains 7 key ideas
ROI in Marketing (2020) lays out a framework for planning and running effective marketing initiatives that deliver good financial results. Using design thinking principles, ROI in Marketing breaks down how to create chains of impact in marketing campaigns and monitor their effectiveness to ensure positive returns on investment.
Key idea 1 of 7
Marketers struggle to demonstrate the effectiveness and financial value of their initiatives.
Meet David, an ambitious chief marketing officer who’s worked hard to launch several marketing campaigns for his company in the last few years.
When a new CEO is appointed, David is asked to give a presentation on recent marketing initiatives, and he excitedly highlights all the different activities he’s spearheaded. Whether they’re TV and radio ads or community events designed to promote brand awareness, all of David’s initiatives have garnered positive reactions from colleagues and customers.
But the new CEO isn’t so enthusiastic. Although the campaigns were creative and well-received, his main interest is how much value they created for the company.
The key message here is: Marketers struggle to demonstrate the effectiveness and financial value of their initiatives.
Many marketing professionals are under pressure from executives to show clearly their projects’ return on investment. And this is understandable, since corporate America allocates almost $300 billion to advertising each year. Despite this, however, seven out of ten CEOs feel that funds are wasted on marketing, according to a 2014 Forbes study.
With so much money on the line, marketers who can’t demonstrate exactly how their campaigns benefit the business may have their budgets cut – or even lose their jobs. A 2017 CNBC.com article even coined a phrase for this situation: “grow or go.”
So here’s the billion-dollar question: Why is it so difficult for marketing professionals to prove the financial returns of their work? Well, the answer is that the models used for marketing return on investment, or ROI, are limited in a number of ways. They simply don’t meet the expectations of executives who are focused solely on the bottom line.
For instance, existing models don’t clearly connect marketing efforts with the value they create. And without this chain of evidence, CEOs and chief financial officers can easily question the effectiveness of a marketing campaign. Additionally, current models have a narrow definition of value, and don’t consider non-financial factors like customer perspectives or internal business processes. These are essential in today’s competitive business environment.
To address these challenges and deliver the results that executives are after, the marketing world needs a fresh way to evaluate ROI.