Why ROI measurement for inbound marketing fails

ROI measurement fails to consider the shelf life of inbound marketing content

ROI measurement fails to consider the shelf life of inbound marketing content

Simple ROI measurement for inbound marketing fail to consider the shelf life of content

Here we are in the age of “Big Data” where everything can be tracked and scrutinized. For aviation marketers is means one more hurtle to jump when trying to justify investment of marketing funds for inbound marketing programs.

Traditional RIO measurement seems very simple – take the gain of the investment, subtract the cost of the investment, and divide the total by the cost of the investment.

ROI = (Gains-Cost)/Cost

This simple calculation comes up short in several areas:

  • How can you determine the value of a follower?
  • What’s the value of a blog response?
  • Is the content presented in such a way that it has an evergreen shelf life?

The value of a follower

What is a follower of your inbound marketing worth? Monetizing the value of a follower is subjective because we get into grey areas of determining worth. Does the content present the social face of the corporation? If so what is the value of good will towards the corporation? Does the follower reference the content in their social media network? If so, how do you calculate the value of reach from linked content?

Content shelf life

I like to think of inbound marketing content- blogs, white papers, e-books, videos and infographics as a conduit that provides a way to gain insight into the brand.  Produced correctly the content can influence purchasing behavior and have a very long shelf life.  This also throws a wrench in the traditional ROI measurement because the cost of producing the content needs to be measured over the time that the content remains relevant. For example, a video is produced about a new avionics component. The marketing expense to produce the video was $10,000. The video is placed on the corporate website and syndicated on various video sharing sites.  First year sales for the new component were $100,000 with gross profit of $40,000.

Traditional ROI measurement would look like this.

ROI = ($40,000 – $10,000)/$10,000 = 300% ROI

Now consider year two of the video investment with component gross profit of $30,000 and a marketing expense of $1,500 for website maintenance and syndication cost.

ROI =($30,000 – $1,500)/$1,500 = 1900% ROI

Inbound marketing measurement – ROI or VOI (Value of Investment)

As the examples above show ROI measurement can be can be modified to suit the situation -it all depends on what you include as returns and costs. Granted this a very simplistic view of ROI and there are more robust financial models available. That said, I’d recommend that a more accurate measurement: VOI = (Value-Cost)/Time

Another way to look at value of investment would be not to invest at all

This is another approach to determine the value of content. The internet is a crowed place with brands fighting for the attention of an over caffeinated, 140-character challenged audience. Their purchasing decision is neither entirely rational nor based on the lowest price. It can be influenced by website functionality, peer reviews, blogs, leadership papers and content that helps them select the product that is best suited to their need. If the brand is not active in this environment then it virtually invites the competition to gain the share-of-voice and increased exposure.

Additional Articles on this topic you may find of interest.

Big data and creativity

Big brother and marketing ROI

Why content development will drive the future of aviation marketing

Measuring Digital Display Advertising ROI

Please leave your comments or thoughts below.

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