Making a case for business-to-business marketing investment

Marketing execs need to provide accountable metrics that contribute to company revenue.

Marketing execs need to provide accountable metrics that contribute to company revenue.

Soft marketing metrics don’t impress the CEO or CFO.

In most business-to-business vertical marketing segments, marketing is viewed as an expense on the balance sheet. One reason for this is that the justification for marketing has relied on soft metrics — awareness levels, brand recognition, website visitor traffic, target audience reach, etc. While these metrics are important and part of the marketing equation, they lack accountability for revenue generation. This reinforces the perception with the CEO, CFO, and COO that marketing is a cost center, not a revenue center.

Moving to a revenue center requires marketing execs to rethink their role and provide accountable metrics that contribute to company revenue.

Moving beyond soft metrics to revenue cycle metrics

Business-to-business marketers have their feet planted in two different worlds. One foot is in the traditional (and comfortable) world of paid media placement, ad campaigns, direct mail, trade shows, and public relations. These tactics yielded soft metrics and worked to exclude marketing from the revenue generation conversation. Because of this, marketing became the stepchild of sales. It was easy to see the expenditures and hard to justify the results.

The other foot is in the digital world. In this world, everything can be measured, tested, and scrutinized. This can be an uncomfortable place because there is nowhere to hide. However, it does present the opportunity for marketing to shift from a cost center to revenue generation center if it is properly planned, executed, and measured.

Where to start

Start small and plan the program with ROI measurement from the beginning. The goal is not backwards measurement to prove ROI but rather forward focused measurement that influences decision-making.

Don’t try to measure all things. Because digital has a lot of moving pieces, select areas to measure that contribute to profitability.

Plan and establish ROI estimates upfront. Consult with management team members that have a negative view of marketing, and build their pessimism into the marketing forecast. Remember, there is nowhere to hide and it’s all about making better marketing decisions that lead to revenue generation.

Success measurement

  • Select 3 to 5 key metrics
  • Measure success versus goals – good, bad or ugly
  • Drill down – measure every campaign, channel, sales rep, and region
  • Track tends over time
  • Create a dashboard that shows what marketing is achieving and contributing to revenue results

Very few small to mid-sized B-to-B brands have a 100% digital customer base. Many marketing automation programs (MAPs) lean heavily on online lead generation as the basis for marketing ROI planning. Small to mid-sized brands may struggle with this due to the size and sophistication of the markets they serve. Therefore, it is incumbent on marketers to identify digital initiatives that lend themselves to ROI measurement and revenue planning.

Additional articles you may find of interest on this topic:

Marketing Automation Platforms (MAPs)

Big data and creativity

People-to-People Marketing and “Small Data”

Please leave your comments or thoughts below.

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Social media: Media channel or purchasing influence?

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The ad revenue model is blurring the lines between social media and advertising

In the early days of social media it was hailed as the replacement for advertising. The interruption model of advertising was so twentieth century and the permission model of social media was the darling of the new millennium.

Brands that were early adopters were especially excited because they viewed social media as a non-commercial marketing channel. Instead of renting space in magazines or commercial time on broadcast networks, social media offered the hope of connecting with purchasers on a one-to-one basis for less cost. Brands flocked to Facebook populating their pages with helpful hints, events and special deals for those who “Like” their brand.

As social media platforms matured, it became apparent that in order to sustain their business they needed a monetization model to pay the bills.  Google figured this out early. Ad Words (the purchase of key word search terms) made Google extremely profitable and allowed the search engine to continue to provide a free service.

Social media platforms such as Facebook, Twitter and LinkedIn had lots of users but struggled with developing a monetization model. The one thing they did have were copious amounts of data about their users. Access to this data was attractive to the advertising community. It held the promise of being able to target advertising to an individual user based on their profile, interest and browsing habits.

Social media channel?

As the social media platforms grew the sheer number of users dictated that brands develop a social media strategy instead of just maintaining a presence.

Social media platforms responded by offering sponsored advertising.  Sponsored advertising solved several problems:

  • Now the social media platforms had a monetization model leveraging their vast proprietary database.
  • Brands could better target their advertising based on the users profile.
  • Digital analytics provided a rear looking ROI measurement.

So what began as a non-commercial peer-to-peer network is transforming into a branded media channel.

Using social media to influence purchasing

The premise of social media is word-of-mouth advertising. Brands understand that a negative comment or a positive review can affect brand perception ultimately influencing the purchasing decision. Many brands have adopted social media as an inbound marketing channel.

For example:

  • Airlines producing their pre-departure safety videos to become branded forms of communication.
  • Firms like GE have dedicated social media pages about locomotive and jet engine engineering and production.
  • Dell computer uses social media to answer customer questions and solve technical problems.

All of these strategies have one thing in a common – to connect, engage and influence the purchasing decision.

Additional articles you may find of interest on this topic:

Using social media to gain customer insight

Finding the sweet spot for social marketing

Social marketing begins with the correct strategy

 Please leave your comments or thoughts below.

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.