Why All the Resistance to ROI Evaluation?

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. 

Posted on August 18, 2014 and filed under Direct Marketing Strategy, Multichannel Marketing.