ROI no matter what the cost
Since the start of the pandemic, we’ve noticed an intensification of requests that produce immediate results and aggressive return on investment from our clients.
While expectations of digital performance have always been very high, it was common practice to divide digital marketing budgets between a company’s strategic, structural projects and those that aimed at quickly generating sales. The goal of this strategy was to generate immediate returns for the company while promoting a long-term vision for its digital assets.
For several months, many companies have been undergoing restructuring that has had a direct impact on their internal capabilities. This restructuring has also led to slowdowns in the development of longer term marketing assets. Since these projects would normally develop slowly over time, it’s taking longer for the effects on these companies’ gross revenue and net results to be perceptible.
The truth is that, in many cases, there’s a huge amount of internal pressure to develop initiatives the deliver results quickly. The companies that decide to change their strategy are taking on mandates that aim to generate revenue immediately to the detriment of more long-term projects like CRO (conversion rate optimization) programs or content strategies and SEO optimization. They’re replacing website revamps with quick fixes that change their appearance, but have no effect on their site’s hierarchical structure or content discoverability by search engines.
In the current context, many companies have put aside annual planning for make room for a quarterly or eve monthly planning approach. The unpredictability of the economy is a fact of life for many. Many businesses are in survival mode, relying on certain instincts to stay afloat, but some of their decisions are putting their longevity at risk.
So how can you continue to deliver expected goods while not falling into the trap of chasing immediate returns at any price?
In my old life as a media planner, my boss would force me to “risk” 20 percent of my budgeted amounts on some type of innovation, like a new partnership or format. In other words, something iffy—a long shot. This exercise forced me to choose sure bets for 80 percent of my plan and riskier options for the remaining 20 percent.
That way of doing things often created some pleasant surprises. By optimizing during the campaign, we would discover that one of the three new tactics overperformed when compared with our other sure bets. After one or two campaigns, those tactics became part of the 80 percent considered low risk.
You also need to ask yourself the following question: Do you collect enough data to calculate the real ROI of your marketing activities? All too often, after a bit of digging, we realize that performance tracking ends after generating a lead or information request, or even sometimes a website visit.
We are for the most part accustomed to calculating an ROAS (return on ad spend), but what about adding up media overinvestment caused by a badly optimized website? What about those requests you compensate for with (paid) SEM that you could respond to by optimizing your SEO?
Take the following (simplified) example below, based on an “always-on” lead generation campaign:
- You invest $100,000 annually in media:
- The cost per visit generated is $5, which means 20,000 visits annually
- Your conversion rate is 4%, which isn’t bad, but not really optimal—this gives 800 leads annually
- This leads to a cost per lead of $125 in relation to media costs
- Investing $20,000 of the $100,000 that you invested in media into a CRO program would enable you to:
- Invest $80,000 in media and generate visits for a lower cost while optimizing the most expensive terms, say $4—this leads to 20,000 visits annually
- Optimize your conversion rate from 4% to 4.5%—this would mean 900 leads annually
- Bring your cost per lead to $88 with media costs (-30%)
- Or, to $111 including CRO program costs
Improvements made to the website will benefit all of your digital marketing, not just your presence on paid media.
It is therefore important to question some of your practices, and the idea of risk. In my opinion, it’s more dangerous not to risk anything than to take a chance.
The goal of marketing campaigns, now and in the future, is the generation of positive returns. So a vision centred solely on the short term will have a negative effect on the results of your media investments and ROI. The objective of this blog post is not to encourage massive investment in CRO, SEO or other areas, but to promote the idea of taking a step back and analyzing your marketing initiatives with a long-term view. The pandemic came without warning and took us by surprise. Take the time to look at what you’ve done so far and think about how you can improve your ROI today… and into the future.