Posted by Jeff Adelson-Yan (@jeffadelsonyan)
For a CEO, determining return on investment is crucial. It’s not enough to make decisions based on gut feelings or to continue doing something just because that’s how it’s always been done in the past. That’s where ROI analysis comes in. Because CEOs understand where the business stands financially, they know how important it is to hold marketing dollars accountable, measuring the effectiveness of campaigns to determine which of them are worth an ongoing investment and which of them should be dropped.
According to a recent study, however, CEOs say their marketing teams are not on the same page, reporting a serious lack of ROI analysis when measuring campaigns and developing a marketing budget. In fact, three out of four CEOs feel their marketing teams do not focus enough on return on investment. In addition, researchers found that eight of every ten CEOs feel their marketing teams are out of touch with the company’s financial realities. Around the same number feel that marketers do not understand the true meaning of words like “ROI,” “results” and “performance.”
As marketers whose core belief is that all business decisions should be made based on data and bottom line impact, we are knocked a little off balance by these stats. We devote our time, energy and brain power to ensure clients see a return on investment. Unfortunately, many of these CEOs have a reason to be concerned about the way their teams are tying (or not tying) marketing initiatives to financial metrics. According to this study, 57% of marketers claimed they do not base marketing budgets off of any sort of ROI data or analysis. More concerning is that 27% of teams established their marketing budgets based on gut instincts. And most shocking of all: 7% of teams are making decisions on marketing budget void of any data or metrics.
Lastly, the study collected and analyzed the CEOs’ sentiment toward their own digital marketing budgets. It found most senior marketers are unaware of how to analyze the ROI of a client’s digital channels, and CEOs are taking notice. 78% of CEOs feel marketers are losing sight of what their real job is and, instead, are getting lost in convenience metrics such as tweets, likes, shares, followers, etc.
As one of the founders of a data-driven marketing solutions firm, I cannot imagine creating a marketing budget or implementing a campaign without extensive consumer research and data analysis. It is important for marketers to be aware of CEO expectations, and plan accordingly. It is more important for CEOs to be sure their marketing firm or internal marketing team utilizes ROI analysis as a basic best practice. In the end, it will not only save you time and money, but allow your business to function more effectively – with your bottom line in mind.
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