Why the Most Successful Companies Track Marketing ROI
With the increased usage of digital media, businesses are placing more emphasis on tracking their digital marketing ROI. Senior executives now demand their marketing and sales teams to show them specific metrics from their digital initiatives so that they can see how their digital programs are helping their bottom line. Moreover, these metrics allow executives to adjust their marketing budget more soundly. For instance, by correlating the growth of their Twitter community to their revenue, executives can determine if they should allocate more marketing dollars to social media to augment their sales. If the metrics indicate that the improvement in Twitter followership doesn’t enhance their company’s bottom line, senior executives can lessen their digital marketing budget and utilize that money on other areas such as sales training. That said, all these decisions can only be made if the senior executive team is assessing their digital marketing ROI.
Additionally, if a company is outsourcing their digital marketing initiatives to a digital marketing agency, tracking marketing ROI is even more important as it enables the company to assess the agency’s performance. For example, by asking the agency to show sales report of a specific digital channel that they’re managing, a company can determine if they’re making a profit from their digital programs. The company can ask their agency to generate a sales report for their AdWords campaigns to see if they’re making a profit from their digital ads and if they’re growing at a healthy rate. For example, if a company pays $15,000 for 3 months for an agency to manage their AdWords account and they’ve only yielded $15,100, the company can evaluate the capability of their agency and decide if they should continue the partnership.
A myriad of global companies are now tracking their digital marketing ROI for the reasons above. By tracking digital media ROI, companies can enforce accountability, assess profitability, and determine productivity. Companies that are using this approach are seeing magnificent results. According to Business Insider, McKinsey on Marketing and Sales, a branch of the global management and consulting firm, discovered that companies that use metrics increase their digital marketing ROI by 10% to 20%. This translates to $200 billion in revenue globally. Moreover, these companies have 5% higher productivity and 6% greater profits than other businesses.
These stats are certainly a wake-up call for businesses that aren’t actively tracking their digital marketing ROI. Without assessing their digital results, companies can’t determine how their digital programs are helping their bottom line, how their agency is performing, and whether they should continue with their digital programs. And with this lack of knowledge, businesses could end up blindly investing more money into their digital efforts and bleed money profusely. Therefore, companies have to start creating metrics for their digital marketing programs so that they can make wise choices when it comes to evaluating their marketing programs to an external party, marketing team’s performance, and digital programs’ impact to their overall revenue growth.