Make Me an Offer — But Set My Expectations

What’s the ideal offer expiration date? Any good direct marketer knows that you have to test and learn what works for your brand, but in the early days of direct mail the rule of thumb was six to eight weeks (long enough for the recipient to receive the offer in the mail, write a check and mail it back).

What’s the ideal offer expiration date? Any good direct marketer knows that you have to test and learn what works for your brand, but in the early days of direct mail the rule of thumb was six to eight weeks (long enough for the recipient to receive the offer in the mail, write a check and mail it back).

But now that brands can communicate with customers instantly via email, text, Instagram and Facebook, offer windows can be shortened to a hours. And, when positioned appropriately, can drive a quick hit of revenue.

But here’s a case of what NOT to do …

On Friday, September 4, I received an email offer from Travelocity to click the link which would reveal how much I’d save (with the promise that it would range from 10 percent — 75 percent off on hotels). Given that I travel a lot, and I often book with Travelocity, it was an offer worth my click time. Plus, the button was kind of fun with a “Surprise Me” action message.

Naturally I was disappointed when I learned I had only earned 10 percent off and with another click had deleted the email message from my desktop and my memory bank.

But two days later, on Sunday, September 6 at 6:50 pm, I received another Travelocity email. This time the subject line was “Don’t Forget to Click. Reveal. Redeem.”

Given that it was a long weekend I didn’t check my emails until Monday, Sept 7 and, since I had completely forgotten about the earlier Travelocity email (since my inbox is filled with hundreds of email exchanges a day), I clicked the link in this email too. Only this time I got the message “Sorry! The Coupon is no longer valid” with a little clock icon reinforcing that time had run out.

My first reaction was that somebody at Travelocity had screwed up. Surely any email offer was going to last more than a day or two.

First, I found the original email offer in my deleted folder and it told me the offer expired on September 7. But instead of telling me I only had a few days or 72 hours, the email just gave me a calendar date — which, at the time, seemed like the distant future.

The September 6 email also noted that the offer expired on September 7 … but it should have said “24 hours” which would have given it the sense of urgency it deserved.

Instead, this Travelocity customer had a negative experience with the brand — and all over a potential 10 percent savings.

The point is, it’s critical that you think carefully about your offers, their activation windows and how you position it in your communication. Travelocity could have created a lot more interest and excitement if their original subject line had said “72 hour sale” in it … and their follow up email had “Final 24 hours of our sale.”

Motivating your target to act is one of the many challenges facing marketers today, so if you’re going to include an offer, make sure you give it the urgency it deserves.

What Type of Google AdWords Campaign Is Best for You?

If you are new to Google AdWords, you might be completely unaware of all the different types of AdWords campaigns from which you can choose. Most people think solely of the ads that appear in Google search results.

If you are new to Google AdWords, you might be completely unaware of all the different types of AdWords campaigns from which you can choose. Most people think solely of the ads that appear in Google search results. This makes sense, because anytime you run a Google search, the list of ads is easy to see. Yet this is just a fraction of what Google AdWords has to offer. Choosing which type of AdWords campaign to use depends largely on exactly what you sell and who makes up your target market.

The Search Network

The search network is where I recommend most businesses start. After all, people who see your ads in search are actively looking for whatever it is you sell. In many ways, the search network is the new Yellow Pages. In the “old days,” people looked up what they wanted under a category heading in the phone book. Now they do the same thing in Google. Plus, if you target the Search Partners in your ad campaign, then your ads will display not only in Google search, but also other Google partners such as Amazon, AOL, and Ask.

The Display Network
The display network consists of over a million news sites, blogs, articles, and other websites that accept text ads, banner ads, and video ads from Google AdWords.  This type of advertising is often called “interruption marketing,” because it interrupts what the viewer is doing rather than showing up when that person is actively searching. That means to be successful with display network advertising, your ads and landing pages need to be carefully crafted to this specific purpose, rather than simply reusing your search network ads.

The Shopping Network

Do you remember the old department store catalogs? Sears still puts out a particularly nice one known as the Wish Book for the holiday season, though it’s also digital now. Anyway, the shopping network is the online equivalent of a catalog that stretches across not just a single company, but thousands.

If you sell products rather than services, and you have an online storefront for customers to complete their purchases, Google Shopping might be an ideal choice for you. Your ads will appear not only when users specifically search within Google Shopping, but also when a regular search triggers Google Shopping results. Just be careful. You are only allowed a product image, price, and name, without the text that accompanies a search ad. Make sure your ad speaks for itself.

The Video Network

If you have spent much time watching YouTube videos, you are probably aware of the pre-roll videos, which look much like traditional TV commercials. However, unlike a traditional television commercial, you do not have to pay every time an ad begins. Instead, the video network uses a pay per view (PPV) advertising model. Pre-roll ads give viewers the option to skip through the ad. If a viewer clicks the Skip button, you are not charged for that display. In addition, a regular commercial requires the user to make a phone call or type in a URL to take action. In a pre-roll video ad, all the user needs to do is click on the video to visit your website.

The App Network

The app network focuses specifically on getting prospects to download your mobile app or digital content, or to engage more fully with your app. The ads are displayed only on smartphones or tablets, and redirect the user to the appropriate download site or spot within your app.  The app network is geared toward those targeting the younger generation or trying to build a robust market for their apps.

Managing Multiple Networks
If you’re just getting started and you know potential customers are searching for your products or services in Google, then I recommend setting up a search network campaign.  If you have an e-commerce business, then the shopping network is another opportunity to gain additional exposure.

Once your search and/or shopping campaign is working well, then expand to the display network to get in front of potential customers while they are surfing the internet.  Also, if you have the resources to create a pre-roll video ad, then the video network is a great opportunity because there is still very little competition, which means lower ad costs.

Regardless of which networks you choose, be sure to test different ads and landing pages for each campaign.  Just because one ad and landing page combination works well in the search network doesn’t mean it will work well in the display network, and vice versa.

Want more Google AdWords tips? Get my Ultimate Google AdWords Checklist.

 

Better Together: Pair Google Analytics With Google AdWords for Stronger Campaigns

If you have not yet linked your AdWords campaign with Google Analytics, you are missing out on some much deeper tracking possibilities that can ultimately help you build a stronger campaign. Here are a few things you can do with Google Analytics.

If you have had a Google AdWords campaign up and running for a while, you are probably already familiar with the various AdWords tracking tools. With a simple bit of code, you can track every conversion that takes place on a particular “thank you” or receipt page. You can also import offline conversions, which are a bit more complicated to set up, but very much worth the effort. If you have not yet linked your AdWords campaign with Google Analytics, however, you are missing out on some much deeper tracking possibilities that can ultimately help you build a stronger campaign. Here are a few things you can do with Google Analytics.

User Behavior Tracking
Google AdWords lets you track conversions. However, it doesn’t give you much insight about the visitors who did not convert. Learning more about their behavior on your site can help you identify areas that you can improve, ultimately increasing your conversion rate.

For example, Google Analytics will tell you how many pages the prospect visited, the amount of time they spent on your website, and whether or not they immediately bounced away. In other words, you can track the user behavior of your AdWords traffic to see what those prospects are doing.

Think of AdWords conversion tracking like a light switch. It’s either on or off. You either have conversions or don’t. And when you don’t, then excuse the pun, but you’re in the dark about why the AdWords visitors are not converting. This is why Google Analytics is such a great tool to add as you analyze your advertising performance.

E-commerce and Funnel Tracking
Google Analytics allows you to go deeper than Google AdWords conversion tracking does. If you sell products online, you can use Google Analytics’ e-commerce tracking to monitor specific information about product revenues, transaction details, and length of time from initial interest through completed sale.

Multichannel funnels in Google Analytics allow you to see each incremental step that buyers go through on their way to a completed sale. For example, your AdWords campaign may be driving 100 sales per month, but your AdWords reports do not tell you if those customers interacted with any other marketing campaign. By using the Multichannel funnels reports, you’ll see if organic search, referrals, email marketing, or another channel is playing an important role in your AdWords conversions.

Prospect Segmentation and Retargeting
Retargeting, or displaying your ads to prospects who have recently visited your site, is an important part of a solid Google AdWords strategy. Google Analytics can streamline this process for you by automatically segmenting your visitors and creating lists of people who are likely to buy. If you prefer to create your own segmented lists manually, Google Analytics helps you drill down to find your prospects’ demographics, location and online interests.

Split Testing Landing Pages
Success with AdWords advertising is not just about correctly setting up and optimizing your campaigns within Google AdWords. You must also properly setup and optimize your landing pages to maximize your sales. That means split testing your landing pages to find the best copy and layout for your target market.

Luckily, Google Analytics provides a simple and free tool called “Experiments” to split test your landing pages. By using Experiments within Google Analytics you can test two different landing pages to see which one converts more visitors into sales.

Layer New Dimensions onto Reports
The power of the Google Analytics and Google AdWords pairing is even more evident when you run reports within Google Analytics. For example, you can review ad performance for per ad placement on the page, mobile user behavior per keyword, and many other reports to learn more about your ads performance.

Of course, these techniques are just the tip of the iceberg. Both Google AdWords and Google Analytics provide strong, dynamic tools for monitoring your website and ad campaigns. When paired together, they allow you to sift through the data in whole new ways. Think outside the box, play around with the tools, and find your own preferred tracking combinations.

Marketing Awards: What Are They Good For?

When I first started in this business, I remember that our new business pitch at Ogilvy & Mather Direct always included a page about the many awards the agency had won — and the DMA ECHO Award was always front and center.

When I first started in this business, I remember that our new business pitch at Ogilvy & Mather Direct always included a page about the many awards the agency had won — and the DMA ECHO Award was always front and center.

Considering we spent all our energy trying to methodically figure out how to stimulate response among a target audience, the ECHO Award was worth bragging about as it celebrated the equal weighting of strategy, creative and results. And after all, if you got that trifecta right, the client was celebrating right along with you.

Today it’s no different. The Direct Marketing Association ECHO Award still recognizes and rewards those individuals who have figured out how to successfully achieve (or exceed!) a desired marketing objective — whether it’s to increase new lead volume, increase average order size, achieve a specific sales goal, retain customers or improve brand perception.

These are all goals established by the most senior of company management as part of overall business objectives, and they then leave it up to sales and marketing to figure out how to meet them. For most, it takes planning, research, strategic thinking, ingenuity, design and copy skill and, sometimes, a whole lot of luck, to create a marketing effort that explodes with success.

How many people can claim that they’ve been on that team?

Often, the DMA and the ECHO Awards are viewed as “old fashioned” or “the people who do direct mail” — but that’s far from reality. The techniques that were carefully cultivated over years of testing and re-testing, are now being applied across the digital landscape, from email to landing pages, in games and on Facebook.

Despite Millenials believing that they are the ones who invented targeting, retargeting, video, and the ability to track, collect and share data insights, direct marketers have been mastering and refining these tools for decades.

Some have complained that awards are worthless — that they don’t consider effectiveness (which is the point of advertising), or that they are merely a way of patting ourselves on the back, or that the high cost of entry precludes smaller agencies.

But effectiveness is one of the key judging metrics for the ECHOs — because what’s the point of designing creative marketing solutions if they’re not effective in helping the client achieve their goals?

And while every awards program needs to charge an entry fee as it takes staff to organize and administrate, the ECHOs are reasonably priced — especially if you get your act together and enter by the early-bird deadline.

And yes, as a winner, it is a way of patting ourselves on the shoulder, but when you create a campaign that helps meet or exceed a sales objective, we should all be shouting from the rooftops!

This year I’m honored to be the Judging Chair of the 2015 ECHO Awards. Our Judging Committee (comprised of volunteers) has worked hard to recruit over 150 senior judges from every corner of the globe. Our current past Chair of the ECHO Board of Governors took over an Ambassador role this year and has been busy working with other associations from dozens of domestic and international marketing organizations to encourage participation from every member — whether as an entrant or a Judge. If you think you’d qualify as a judge, we invite you to apply before June 1, 2015.

The ECHOs are not merely about recognizing ideas or expensive and elaborate creative solutions that only the biggest clients could afford. The ECHOs are carefully reviewed by a jury of marketing peers who carefully review the business challenges you faced, your objectives, your strategic brilliance, how you brought that brilliance to life creatively and the measurable results you achieved. If one of those dimensions falls flat, then your ability to win an ECHO diminishes dramatically.

The bottom line is that the ECHOs are about celebrating business success. And for that reason alone, those that enter and win should be prime targets for recruiters, because these are the people who have figured out how to move the needle. And trust me, that is no small feat.

Benchmarking: There’s No Such Thing as an Average 2% Response Rate

It seems easy enough to answer the question: How to know if a marketing campaign measures up? But managing client expectations (whether they’re internal or external) is sometimes more fuzzy

It seems easy enough to answer the question: How to know if a marketing campaign measures up?

Often enough, there are predefined business objectives, acceptable margins for profit and cost, and a marketing return on investment that is straightforward enough to calculate. If one is able to know any and all of these markers, then one can know if a marketing campaign, or even a single tactic, is making the grade.

But managing client expectations (whether they’re internal or external) is sometimes more fuzzy. And a marketing execution doesn’t always go according to plan, prompting investigations on what might have gone wrong. (I’m still surprised how testing is underutilized, for example.)

On the happier end of the spectrum, stellar results might prompt a whole other set of questions: “Did we really beat the long-standing control? This campaign performed gang-busters, how does it measure up to efforts of our industry peers? Is this campaign award-worthy?”

As a public relations professional in the world of direct response, I’ve often been asked to help an agency or marketing client understand how good or bad a particular marketing result might be. When the question is about results that are less than expected, there is often internal wrangling about the creative, the list and/or the strategy — any of which might be the culprit. When the results are fantastic, clients often want to know, are we beating whatever the competition may be up to.

In both scenarios, among go-to options are various industry research sources. Anyone who has a subscription to Who’s Mailing What! archive (direct mail, email), or taps eMarketer or Econsultancy (digital and mobile information), or steps up to Gartner, Forrester and the like for subscriptions to qualitative reporting, certainly has access to great data and idea stores.

I personally keep a copy of “DMA Statistical Fact Book” (annually published) and “DMA Response Rate Report” close at hand. The “DMA Response Rate Report’s” 2015 version is recently published, and is available at the DMA Bookstore. Both are understandably Direct Marketing Association top-sellers.

The “DMA Response Rate Report” aggregates data from respondents — providing a true benchmarking resource. And it breaks response data out by media, and by industry (selling cars is not selling clothes) which gives marketers a helpful guide of what to shoot for and expect. It’s worth a whole other post to delve into its insights, but IWCO Direct and SeQuel Response recently offered some. A quick inspection of the report can let marketers know what they might expect from an otherwise well-executed campaign.

And I’m happy to say to some clients, too, as another benchmark, that they should enter the International ECHO Awards. It’s perhaps the best way to be recognized for achievement (beyond the paycheck). With judges inspecting the world’s best in data-driven advertising, an ECHO trophy says that a marketing team, agency or organization knows its stuff. This year’s competition deadline for entering is July 10, and DMA is offering a Webinar on May 19 to give tips and insights from the judges themselves (speaking will be yours truly, joined by fellow Target Marketing blogger Carolyn Goodman of Goodman Marketing Partners and Smithsonian’s Karen Rice Gardiner). Have only five minutes to spare? You can always hear directly from Carolyn here about the entry process.

Enter early and often! I’d love to point to your campaign as a “benchmark” later this year.

How to Tell If Your Marketing Works

My live Target Marketing Group Webinar yesterday, “How to Tell if Your Marketing Works,” deals with my favorite topic: measuring the results of direct marketing beyond traditional response rate metrics. Direct Marketers are their own worst enemy when it comes to measurement. They often don’t know what’s working and what’s not, because their real ROI is hidden inside their data.

My live Target Marketing Group Webinar yesterday, “How to Tell if Your Marketing Works,” deals with my favorite topic: measuring the results of direct marketing beyond traditional response rate metrics. If you missed it, you can access it on-demand here.

Direct Marketers are their own worst enemy when it comes to measurement. They often don’t know what’s working and what’s not, because their real ROI is hidden inside their data.

Analyzing direct marketing campaigns was a lot easier before the advent of the multichannel consumer. Sure, there were a certain number of orders that we couldn’t attribute to a specific promotion, but for the most part response rates ruled. Now, people check out products in stores and then buy online to get a better deal (think flat screen TVs). Or they shop online, decide what they want based on features and product reviews, and then buy in-person (think cars).

And they do all of this on multiple devices: their home computers, their work computers and their mobile phones and tablets. So it’s hard to track them.

Even though consumers engage with brands on their own terms across multiple platforms, many marketers are stuck measuring the results of individual tactics rather than taking a holistic view of measurement. So when a single email or display ad fails to achieve the target level of attributable sales within a specific period of time, then they consider it a failure. Even though the communication has made an impact on those who didn’t respond, they can’t measure it, so they don’t count it. And while many direct marketing practitioners now embrace the idea that their advertising has a cumulative effect of building a brand over time, most fall short of being able to quantify that ROI with meaningful metrics.

This webinar examines four ways to uncover hidden ROI from your direct marketing promotions:

  1. Using your database to look beyond response rates
  2. Benchmarking your brand awareness and tying increases in awareness to sales
  3. Creating an engagement score to measure the cumulative effect of various promotions over time
  4. Measuring the value of your social media

If you’re interested, check it out here.

5 Types of Google AdWords Conversion Tracking

When I first started using Google AdWords in 2006, conversion tracking was in its infancy. There was only one type of conversion pixel code and there was no option to customize anything. Oh boy, have the times changed

When I first started using Google AdWords in 2006, conversion tracking was in its infancy. There was only one type of conversion pixel code and there was no option to customize anything.

Oh boy, have the times changed. AdWords now gives advertisers five different conversion types, along with options to customize exactly how conversions are tracking in your account. For example, you can now track all conversions or you can track only unique conversions to exclude the instances when prospects complete multiple forms on your website.

In this article, I’m going to bring you up to speed on all five different conversion types:

  1. Webform Submissions
  2. Online Sales with Revenue
  3. Calls from Website
  4. Calls from Ads [Call Extensions]
  5. Offline Sales [Import]

1. Webform Submissions:
Again, this was the only option for me back in 2006. Webform submissions like quote requests, demo requests, or any other key action on your website should be tracked as a conversion in your AdWords campaign. This can be easily set up by adding the conversion code to the “thank you” page of all your webforms.

2. Online Sales with Revenue:
Eventually, Google introduced the ability to assign a value to your conversions, which revolutionized campaign management. If your business sells anything online, then you absolutely must set up revenue tracking for your shopping cart. Once set up, you’ll start to see revenue data in AdWords so you can calculate your profit per keyword, placement or ad.

3. Calls from Website:
Just last year website call tracking was launched so that advertisers can see how many phone calls are generated from the AdWords ads. This code is fairly technical so I recommend assigning this task to your webmaster to get set up. Once installed you’ll start to see conversions in your AdWords account any time a prospect calls after clicking on one of your ads.

4. Calls from Ads:
Most people do not call directly from the phone number listed in an ad, but some do. In AdWords you can track these calls by using a Call Extension, which is one of the many Ad Extensions available in AdWords. When you set up your Call Extension, make sure to click on the advanced options and check the box to track phone calls using a Google forwarding number.

5. Offline Sales [Import]:
Up to this point all the conversion tracking options sound great, but they don’t solve the major problem for non-eCommerce businesses, which is tracking sales generated off of the internet.Luckily Google recognized this problem and introduce the Offline Sales Import conversion option. This is the most technical of them all, but it’s well worth the effort to have your webmaster set this up. Here’s how it works:

  • Your webmaster will have to edit all the forms on your website to add a hidden field called “GCLID” (stands for “Google Click ID”)
  • Your webmaster will set the value of this hidden field using the URL parameter called “gclid”. For example, when someone clicks on one of your ads, Google automatically ads the “gclid” URL parameter, which looks like this 123ABC567DEF. This is the unique tracking code you’ll use to track sales back to your ads.
  • You’ll need to send the GCLID code to your sales team and/or your customer relationship management (CRM) tool like Salesforce.
  • On a monthly basis, you’ll need to find all the sales that have a corresponding GCLID code and import those codes, along with the sales revenue, into Google AdWords.
  • AdWords will automatically match the GCLID codes to the keywords, placements and ads that the customers originally clicked on before ultimately making a purchase off of the internet.

If that didn’t make sense, then just send your webmaster this page and he or she will be able to help. Trust me, it sounds more complicated than it is.

Go through the 5 conversion types again and make sure you have them all set up in your AdWord campaign. These are all critical to maximize the performance of your campaigns.

Want more free Google AdWords tips? Click here to get my Google AdWords checklist.

Sex and the Schoolboy: Predictive Modeling – Who’s Doing It? Who’s Doing it Right?

Forgive the borrowed interest, but predictive modeling is to marketers as sex is to schoolboys. They’re all talking about it, but few are doing it. And among those who are, fewer are doing it right. In customer relationship marketing (CRM), predictive modeling uses data to predict the likelihood of a customer taking a specific action. It’s a three-step process.

Forgive the borrowed interest, but predictive modeling is to marketers as sex is to schoolboys.

They’re all talking about it, but few are doing it. And among those who are, fewer are doing it right.

In customer relationship marketing (CRM), predictive modeling uses data to predict the likelihood of a customer taking a specific action. It’s a three-step process:

1. Examine the characteristics of the customers who took a desired action

2. Compare them against the characteristics of customers who didn’t take that action

3. Determine which characteristics are most predictive of the customer taking the action and the value or degree to which each variable is predictive

Predictive modeling is useful in allocating CRM resources efficiently. If a model predicts that certain customers are less likely respond to a specific offer, then fewer resources can be allocated to those customers, allowing more resources to be allocated to those who are more likely to respond.

Data Inputs
A predictive model will only be as good as the input data that’s used in the modeling process. You need the data that define the dependent variable; that is, the outcome the model is trying to predict (such as response to a particular offer). You’ll also need the data that define the independent variables, or the characteristics that will be predictive of the desired outcome (such as age, income, purchase history, etc.). Attitudinal and behavioral data may also be predictive, such as an expressed interest in weight loss, fitness, healthy eating, etc.

The more variables that are fed into the model at the beginning, the more likely the modeling process will identify relevant predictors. Modeling is an iterative process, and those variables that are not at all predictive will fall out in the early iterations, leaving those that are most predictive for more precise analysis in later iterations. The danger in not having enough independent variables to model is that the resultant model will only explain a portion of the desired outcome.

For example, a predictive model created to determine the factors affecting physician prescribing of a particular brand was inconclusive, because there weren’t enough dependent variables to explain the outcome fully. In a standard regression analysis, the number of RXs written in a specific timeframe was set as the dependent variable. There were only three independent variables available: sales calls, physician samples and direct mail promotions to physicians. And while each of the three variables turned out to have a positive effect on prescriptions written, the “Multiple R” value of the regression equation was high at 0.44, meaning that these variables only explained 44 percent of the variance in RXs. The other 56 percent of the variance is from factors that were not included in the model input.

Sample Size
Larger samples will produce more robust models than smaller ones. Some modelers recommend a minimum data set of 10,000 records, 500 of those with the desired outcome. Others report acceptable results with as few as 100 records with the desired outcome. But in general, size matters.

Regardless, it is important to hold out a validation sample from the modeling process. That allows the model to be applied to the hold-out sample to validate its ability to predict the desired outcome.

Important First Steps

1. Define Your Outcome. What do you want the model to do for your business? Predict likelihood to opt-in? Predict likelihood to respond to a particular offer? Your objective will drive the data set that you need to define the dependent variable. For example, if you’re looking to predict likelihood to respond to a particular offer, you’ll need to have prospects who responded and prospects who didn’t in order to discriminate between them.

2. Gather the Data to Model. This requires tapping into several data sources, including your CRM database, as well as external sources where you can get data appended (see below).

3. Set the Timeframe. Determine the time period for the data you will analyze. For example, if you’re looking to model likelihood to respond, the start and end points for the data should be far enough in the past that you have a sufficient sample of responders and non-responders.

4. Examine Variables Individually. Some variables will not be correlated with the outcome, and these can be eliminated prior to building the model.

Data Sources
Independent variable data
may include

  • In-house database fields
  • Data overlays (demographics, HH income, lifestyle interests, presence of children,
    marital status, etc.) from a data provider such as Experian, Epsilon or Acxiom.

Don’t Try This at Home
While you can do regression analysis in Microsoft Excel, if you’re going to invest a lot of promotion budget in the outcome, you should definitely leave the number crunching to the professionals. Expert modelers know how to analyze modeling results and make adjustments where necessary.

How Do You Spell ROI?

Return on Investment: Everybody’s talking about ROI, but not everyone agrees on what it is. Given the various ways that I’ve heard marketers bandy about the term ROI, I wonder how many of them really understand the concept, and how many just use the term as a buzzword. There’s certainly a disconnect between the way many marketers use of the term and the traditional definition embraced by CEOs and CFOs.

Return on Investment: Everybody’s talking about ROI, but not everyone agrees on what it is.

Given the various ways that I’ve heard marketers bandy about the term ROI, I wonder how many of them really understand the concept, and how many just use the term as a buzzword.

There’s certainly a disconnect between the way many marketers use of the term and the traditional definition embraced by CEOs and CFOs.

A study by The Fournaise Group in 2012 revealed that:

  • 75 percent of CEOs think marketers misunderstand (and misuse) the “real business” definition of the words “Results,” “ROI” and “Performance” and, therefore, do not adequately speak the language of their top management.
  • 82 percent of B-to-C CEOs would like B-to-C ROI Marketers to focus on tracking, reporting and, very importantly, boosting four Key Marketing Performance Indicators: Sell-in, Sell-out, Market Share and Marketing ROI (defined as the correlation between marketing spending and the gross profit generated from it).

So CEOs clearly want marketers to get on board with the true definition of marketing ROI. You can calculate marketing ROI in two different ways:

1. Simple ROI:
Revenue attributed to Marketing Programs ÷ Marketing Costs

2. Incremental ROI:
(Revenue attributed to Marketing Programs – Marketing Costs) ÷ Marketing Costs

Either of these definitions is consistent with the classic direct marketing principles of Customer Lifetime Value (the “R”) and Allowable Acquisition Cost (the “I”).

Back in 2004, the Association of National Advertisers, in conjunction with Forrester Research, did a survey on the definition of ROI where respondents could select from a menu of meanings. The results showed that there was no definitive definition of ROI, but rather, that marketers attribute up to five different definitions of the term and many use it to refer to many (or any) marketing metrics.

Member Survey of Association of National Advertisers on meaning of ROI
(multiple responses allowed)

  • 66 percent Incremental sales revenue generated by marketing activities
  • 57 percent Changes in brand awareness
  • 55 percent Total sales revenue generated by marketing activities
  • 55 percent Changes in purchase intention
  • 51 percent Changes in attitudes toward the brand
  • 49 percent Changes in market share
  • 40 percent Number of leads generated
  • 34 percent Ratio of advertising costs to sales revenue
  • 34 percent Cost per lead generated
  • 30 percent Reach and frequency achieved
  • 25 percent Gross rating points delivered
  • 23 percent Cost per sale generated
  • 21 percent Post-buy analysis comparing media plan to actual media delivery
  • 19 percent Changes in the financial value of brand equity
  • 17 percent Increase in customer lifetime value
  • 6 percent Other/none of the above

While I couldn’t find an update of this study, clarity around the definition doesn’t seem to have improved in the last 10 years, given the results of The Fournaise Group survey. And the increased emphasis on digital and social media marketing in the last 10 years has probably made it worse. The Fournaise Group found that 69 percent of B-to-C CEOs believe B-to-C marketers now live too much in their creative and social media bubbles and focus too much on parameters such as “likes,” “tweets,” “feeds” or “followers.”

It’s time for marketers to stop using ROI as a buzzword for any marketing metric. You can’t measure and improve something if you don’t clearly define it.

Focus Group of One

If you’re sending your marketing campaigns without benefit of A/B or multi-variant testing—most companies admit to fewer than five tests per month—you are effectively acting as a focus group of one. You are assuming all of your constituents feel the same way about your campaign as you do. Big mistake.

If you’re sending your marketing campaigns without benefit of A/B or multi-variant testing—most companies admit to fewer than five tests per month—you are effectively acting as a focus group of one. You are assuming all of your constituents feel the same way about your campaign as you do. Big mistake.

Most of us have a least a bit of familiarity with A/B testing and have integrated it into some of our deployments. Testing subject line A against subject line B is likely the most common test, but with A/B testing you can go so much further—both simple and complex—for instance:

  • Best time of day for sending each of your email types (e.g., newsletter, offers)
  • Best day for sending each type of email
  • Frequency of sending each type of email
  • Length of subject line
  • Personalization within the subject line
  • Personalization within the message
  • Squeeze page vs. landing page
  • Conversion lift when video, demo or meeting booking are included
  • Diagnosing content errors
  • Challenging long-held behavior assumptions
  • Calls to action
  • Color
  • Format and design
  • Writing style (casual, conversational, sensational, business)
  • From name and email address (business vs. personal)

A/B and multi-variant testing enable you to learn what makes your prospects, leads, subscribers and customers tick. When you adopt a consistent testing process, your accumulative results will provide you with the knowledge to implement dramatic changes producing a measurable impact across campaigns, landing pages, websites and all other inbound and outbound initiatives.

We have a client whose singular call to action in every email is to discount their product, and each offer is more valuable than the last. When I asked how well this worked, they admitted, the bigger the discount, the more they sold. When pressed, however, they could not tell me the ROI of this approach. Sure, they sold more widgets, but at the discount level they offered, they also made far less profit.

I suggested an A/B-laden drip campaign offering no discounts, and instead providing links to testimonials, case studies, demos of their product, book-a-meeting links, and other inbound content. In this way, we were changing their position from asking for the business to earning the business. While I admit this usually lengthens the sales cycle, it also means money is not being left on the table unnecessarily.

For this client, the change in approach was simply too dramatic and they found they couldn’t stick with it long enough to gather the data needed to make long-term business decisions. The limited of data they were able to collect in the first few emails did show, however, an inbound approach deserved strong consideration by their organization.

Not all A/B testing need be this dramatic—we could have started them off with a less-committed approach. My takeaway was: You don’t have to learn it all now; A/B testing can be integrated in a small way. Whether you go all out or an occasional test, A/B data is useless if you do not set measurable goals. Measurable goals mean you will establish:

  • Required return on investment
  • Vehicle (email, direct mail, other)
  • What to test
  • Audience
  • Time frame
  • Testing protocol
  • How to integrate what you’ve learned into future campaigns

If your email application does not support A/B testing, you can use a more automated approach. Simply create two versions of your marketing campaign and divide your list randomly in half—unless, of course, what you’re testing is something within your list, such as gender or locale.

I often am in search of information well beyond opens, clicks and visits, so I turn to Email on Acid for email heat maps and Crazy Egg for landing page and website heat maps. While these are effective on live pages and campaigns, it’s not required you deploy A/B testing to a live audience. Testing can be just as effective with a small focus group, just be sure it’s not a focus group of one.