Why All the Resistance to ROI Evaluation?

Written By Ted Grigg
DMCG Results

A disturbing resistance to evaluating marketing spend based on sales results seems to be infecting social media and other channels related to new media.

I hear things like...

- You can't track social media or brand spend based on response because you can't track sales.

- Use proxies such as unaided product recall, click throughs, likes and so on. These tell you if your campaign is going in the right direction.

- In today's omni channel marketing, how do you determine attribution? All channels contribute to the sales.

As with any complex issue, there is truth in some to these statements. Direct response strategies live or die based on sales results. Multichannel support such as general advertising have always improved the response rates of other channels such as DRTV, radio, print advertising, email and direct mail.

But notice that few non-direct response marketers address the ROI evaluation issue in their strategies with the determination to find a solution. Some of these marketers are abdicating their responsibility to evaluating the cost effectiveness of their efforts.

Is this something that came with the advent of new media? I don't think so.

I heard these same arguments 20 years ago from general and positioning advertisers. They proposed evaluating just about everything except ROI. Again, they couldn't figure out how to do this for the long or short term. Frankly, most of them didn't even try. Were they afraid of what the sales analyses would show?

What many in general advertising, and now in new media, are asking us to focus on how these strategies can increase your likes or brand awareness. Your CEO, on the other hand, wants to see a definite lift in response now and a steady increase within a reasonable period of time.

The answer to the CEO? That's nonsense. Nobody can deliver on this.

Of course, anybody wanting to keep his or her job will address the CEO with this level of directness. But nonetheless, that is what he hears.

With the sophistication of today's database marketing and CRM systems, it is possible to track response by channel and combine the budgets for multichannel tests that demonstrate ROI. Is it perfect? No. But several software companies have done a great job showing sales increase correlations with certain multichannel combinations.

Company leaders should continue to resist the notion that "just trust me" is acceptable and that certain marketing activities get a pass when asked to demonstrate sales results.

What is your take on this issue? Should we simply acquiesce to the popular argument relying on proxies for evaluation purposes? Or should we demand more robust sales evaluation analytics as I propose here. 

Ted Grigg

Ted Grigg is a direct response strategist who helps growth-focused companies reduce risk by identifying weak assumptions before they become costly mistakes.

Over the course of his career, Ted has evaluated several hundred million dollars in direct response testing across direct mail, digital, print, television, telephone, and other channels. His work combines direct response strategy, acquisition economics, customer analysis, creative evaluation, offer development, and disciplined testing.

Ted has worked on both the client and agency sides of the business. That experience gives him a practical understanding of the pressures facing executives, marketing teams, agencies, and service providers—and of the problems that arise when activity, media volume, or creative preference replaces a clear economic objective.

His consulting work helps organizations examine such questions as:

  • Are acquisition goals economically realistic?

  • Is the allowable Cost Per Sale supported by customer value?

  • Are targeting, offers, creative, media, and response paths working together?

  • Are tests structured to produce reliable business decisions?

  • Are unproven assumptions being treated as facts?

  • Is the organization measuring sales outcomes rather than convenient proxies?

Ted’s experience includes the development of direct mail and multichannel acquisition programs for insurance, healthcare, financial services, technology, nonprofit, manufacturing, retail, transportation, communications, government, and business-to-business organizations.

For a national direct-to-consumer insurance company, he developed a direct mail format that defeated established controls and helped expand the productive use of compiled prospect lists from less than 10 percent to more than 30 percent of total direct mail circulation within one year. He also planned Medicare lead-generation programs for more than 60 regional and national HMO and PPO organizations, with some programs exceeding sales projections by as much as 60 percent.

Ted founded Wyse Direct, a direct marketing division of Wyse Advertising in Cleveland, where he developed acquisition programs and helped launch a new technology product for Seiko Instruments by generating a predictable flow of qualified sales leads for its national sales organization. As vice president of new business development for the Grizzard Agency, he helped broaden the agency’s strategic capabilities and pursue new commercial and fundraising opportunities.

He is the author of The HMO/PPO Marketing Plan—A Step-by-Step Guide, published by Executive Enterprises, and has written numerous articles and conducted webinars on direct response strategy, testing, creative development, and marketing economics.

Ted earned a Bachelor of Arts degree from Abilene Christian University and completed two years of graduate study at Texas Tech University. He is the founder of DMCG, LLC.

http://www.dmcgresults.com
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