Tag Archives: Relationship Marketing

ROI of Branding

Analytics Education, Customer Experience, DataBase Marketing, Driller Q & A, Measuring Engagement, ,

Jim answers questions from fellow Drillers

Topic Overview

Hi again folks, Jim Novo here.

Speaking of questions, you folks are starting to toss in some real zingers. We’ve moved on from the “How do I calculate Lifetime Value” type of stuff to some real mind benders, and this month’s featured question is a heck of an example. Speaking of questions, I always hide the identities of any organizations or people involved, so don’t be afraid to send them on in. Help yourself, and help others as well!

Branding is a much misunderstood topic and it’s beat to death in the forums and trades. I pretty much run in the other direction when it comes up, because I’m a numbers kind of guy and the branders out there never seem to have any numbers to back up their position. That said, there are ways to numerically quantify the value of branding …

Q. Jim, I send a monthly corporate custom-published magazine (content mix of product and broader lifestyle interests) via email to my house e-mail list – how do I measure ROI on what is a purely brand loyalty vehicle?

A: Thanks for sending in such an easy question – Geesh Louise, doesn’t anybody have easy ones any more? I assume you believe over the longer run, those receiving the magazine will either convert to customers, increase their level of business with you, or bring business to you through referrals.

If you have new business “source tracking” in place (where did the business come from?), it should be fairly easy to determine if the business came from someone who is receiving the magazine, or from someone not on the magazine list. Assuming you are also able to track where the non-magazine business comes from, you can look at expenses versus business generated and find out if the magazine is at least as efficient as other ways of generating business.

Hot links to product offers would be a perfect way to do this, and you can test varying offers by Recency to maximize the profit of different customer segments. Under this scenario, the magazine is not only branding, but selling merchandise. So you don’t have to worry about the “ROI of Branding,” the ROI comes from sales and you can easily quantify the ROI using merchandise profit versus the cost of the magazine.

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Marketing to Focus on Customer. Analytics?

DataBase Marketing

It’s been very popular among marketing types to talk about “the customer” but seek metrics for affirmation other than those based on or derived from the customer.  Web analysts have followed their lead, and provided Marketers plenty of awareness, engagement, and campaign metrics.  As I’ve said in the past, this is a huge disconnect.  Does it make sense (analytically) to have discussions about customer centricity,  customer experience, customer service, the social customer, etc.  and measure these effects at the impression or visit level?

Is someone who visits or purchases or comments one time really a customer, for the purposes of analyzing “centricity” ideas and concepts?  I think not.  Visit metrics simply don’t work for understanding these customer concepts, because by definition they unfold over time, not as single events.   Add in the fact most web activity is 1x in nature – even buyers – and you begin to realize that analyzing “traffic” yields very little in the way of “customer” insight.

From a Marketing perspective, hey, happy to have the 1x revenue, but these are interactions I’m not really excited about increasing spend on, knowing they will be a one-night stands.  This is especially true when you also know re-allocating some of the funds spent on the 90% 1x-ers to the other 10% could double company profits!

If you have followed my writings over the past 12 years, none of the above perspective is new.  What might be changing is this: more people in the online world are beginning to think the same way.

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“Missing” Social Media Value

Analytical Culture, DataBase Marketing, Web Analytics
I have no doubt there is some value in social beyond what can be measured, as this has been the case for all marketing since it began ;)  The problem is this value is often situational, not too mention not properly measured using an incremental basis (as you point out).
For example,  to small local businesses who do no other form of advertising, there is a huge amount of relative value to using social media, versus no advertising at all.  Some advertising is much better than none, and since it’s free, the incremental value created by (properly) using social is huge.
On the other hand, I wonder why social analysis seems to forget that people have to be aware of you to “Like” you in the first place.  Further, it seems unlikely a person would “Like” a brand or product if they have not already experienced it, and are already a fan.  If this is not true, if people “Like” a company even thought they do not (paid to Like?), then the problems with social go way beyond analysis…
But if true, , the number of “Likes” doesn’t have as much to do with awareness as it does with size of customer base, and is much more aligned with tracking customer issues (retention, loyalty) than anything to do with awareness / acquisition.
Add the fact many companies are running lots of advertising designed to create awareness, and the incremental value of social as a “media” may be close to zero, or at least less than the cost to analyze the true value of it.
And this last, really, is the core of the issue.  It’s simply not possible to measure “all” the value created by any kind of marketing, and there are hugely diminishing returns as you try to capture the last bits.  I think it’s quite possible the optimism for “value beyond what can be measured” is less than the cost of measuring it *if* people keep looking in the awareness / acquisition field.
Folks who want to find this “missing” social value should start doing customer analysis, and look in the “retention / loyalty” area, where the whole idea of social is a natural, rather than a forced, fit.

Has to be There

I find it really interesting that whenever there is a discussion of measuring the value of social media, there’s such a bias towards believing there is value in social beyond what can be properly measured.  See the comments following this post by Avinash for a good example.  Speculation is fine, but the confidence being expressed that a new tool or method will uncover a treasure trove of social media value seems un-scientific (as in scientific method) at best.

I don’t doubt there is some value in social media beyond what can be measured, as this has been the case for all marketing since marketing measurement began.  These measurement problems are not new to social either:  Marketing value created is often situational, it depends on the business model and environment.  What works in one situation may not work in another.

For example:

To small local businesses who do no other form of advertising, there is a huge amount of relative value to using social media versus no advertising at all.  Social advertising is much better than none, and since it’s free, the incremental value created by (properly) using social is huge.  It’s also really easy to measure the impact and true value, since the baseline control is “no advertising”.  Lift, or actual net marketing performance, can be pretty obvious in his case.

On the other hand, many companies are running lots of advertising designed to create awareness, and the incremental value of social as a “media” may be close to zero for these companies, or at least less than the cost to analyze the true value of it.  Possible explanation:  Social events such as “Likes” or comments are simply representations or affirmations of awareness already created by other media, so by themselves, create little value.  In other words, events such as Likes might track the value of other media spending, but may not create much additional marketing value.

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