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Perspectives on Branding and Identity from Franke+Fiorella
Issue No.43

Return on Marketing Investment: Strategies for Effective Measurement


A lot has been written about Return on Marketing Investment (ROMI), but there is little agreement on what constitutes the most effective strategy for measuring those investments. Especially when measuring the intangibles such as brand awareness advertising, brand identity revitalization or package redesigns.


But more and more, and especially in challenging economic times, C-suite executives want to know if their marketing investment is positively impacting the bottom line. And, with budgets under close scrutiny in order to deliver maximum shareholder value, they want to know which initiatives are most effective.

It's no secret that the form of measurement depends upon the initiative. But a common measurement criteria is to "increase sales" by a certain percentage. We believe that while increasing sales is indeed important, it's only one factor impacting the bottom line. What truly matters, as we all know, is profitability. And measuring how marketing initiatives impact profitability while possible, is not always easy and requires sophisticated metrics. Take for instance e-marketing campaigns. We can measure open rates and click-throughs, but it's rare when we can track a sale directly to that initiative, and that initiative alone. As we know, the decision to buy is likely influenced by many factors included in the marketing mix—product, price, place, promotion and, we would like to add a fifth "P", people. The people connected with delivering the brand experience.

Our recommendation for gaining a true understanding of what type of return your marketing investments are delivering is three-fold:

1. Measure the tangibles. Measure the sales, open rates, click-throughs and response rates. You can measure how effective the message is based on these metrics. And if you can track sales to the initiative, build measures into your process to gauge profitability. But don't stop here.

2. Measure brand perceptions. Brand-building initiatives, like logo revitalization, visual identity system development and brand awareness advertising are implemented to improve awareness and perception of the brand. Ultimately, the goal is to increase customer confidence, preference and loyalty. Knowing whether your efforts are advancing you toward your goal requires fielding a benchmark study before initiatives are implemented and then measuring the same criteria repeatedly over time to gauge effectiveness.

3. Calculate the lifetime value of your customers. Research has shown that loyal customers and consumers are actually willing to pay more for products, recommend the preferred brand to others and purchase only their preferred brand, reducing marketing costs over time. This is an enviable position to be in. Developing metrics to calculate the lifetime value of a customer and doing what it takes to keep them coming back can positively impact the bottom line.

By all means, measure sales, response rates, open rates and click-throughs. But measure the "soft" side of your marketing efforts to help you build great relationships with customers and keep them for life. Nothing improves long-term profitability more than growing your base of loyal customers.

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