Proving and measuring return on investment (ROI) remains a challenge for marketers, according to a new survey. The 2016 Planning Report from the Leapfrog Marketing Institute shows a surprising drop in accountability for marketing budgets. Only 10% of C-level executives surveyed said more than 75% of their advertising and marketing budget is accountable to ROI. That’s down from 40% of decision-makers in 2015.
The decline in accountability is at least partly due to increased investment in social media marketing where ROI is still unclear.
“My hypothesis was that in an era of ever-growing data availability, there would be an increase in measurable ROI,” stated David Reibstein, a professor of marketing at the Wharton School and an institute advisory panel member. “But there has been a huge rush to social media, despite the fact that when marketers are asked what it’s doing for them, they don’t know… but feel like they need to be there.”
Everything is Measureable
“The reality is that everything is measurable and there is always a proxy,” stated Allstate Senior Director of Marketing Roger Tye. “Part of the issue may be that proper success measures were not set. As an example for social – what do ‘likes’ represent? Where do they fit into the overall conversion funnel? It is on us as marketers to test and innovate, but measure the right business goals and KPIs.”
Cross-channel marketing poses another challenge to tracking and measuring ROI. “Marketers are asking themselves how to start going into different media channels and connect offline results to online,” Jason Wadler, Leapfrog Marketing Institute chair and Leapfrog Online EVP, told MediaPost. “We know tracking tools are getting better. We also know the C-suite is pushing toward ROI accountability, but we don’t know what’s happening to make marketers feel less accountable and less confident in their ability to deliver this ROI.”
Leapfrog Marketing Institute, the research arm of Leapfrog Online, is a virtual institute focusing on digital marketing research and commentary.
The Ongoing Challenge
The challenge of ROI accountability is especially difficult in social media marketing.
Previous research has also found that marketers struggle to measure social media marketing, even as spending on social media increases. The latest CMO survey reported that only 11.5% of marketing leaders have proven the impact of social media quantitatively. Another 40.6% report having a good qualitative sense, but not a quantitative assessment, and 47.9% are unable to show any impact.
Social media spending is projected to climb to 20.9% of marketing budgets in the next five years, a dramatic increase from 5.6% in 2009. However, just 3.4% of marketing leaders report that social media contributes very highly to firm performance.
Social media marketers are stymied by lack of clear objectives, cross-functional skills and integration with other areas of marketing.
A survey by TrustRadius, a business software review site, found that measuring ROI is the biggest challenge facing social media marketers. Many marketers generally turn to vanity metrics, such as likes and followers to measure success. While easy to report, those metrics can be difficult to link to business objectives.
Although spending on social media marketing continues to increase, social media still lack credible metrics to demonstrate return on investment. Lack of rational metrics and measurement that substantiate the business case may eventually impair growth of social media advertising and marketing.
Bottom Line: Marketers, publishers and owners of social media platforms must quickly address the surprising drop in ROI accountability. The trend can be reversed by abandoning vanity metrics, by developing and embracing meaningful metrics linked to business objectives and results, and by establishing meaningful and measurable social media marketing objectives.
William J. Comcowich founded and served as CEO of CyberAlert LLC, the predecessor of Glean.info. He is currently serving as Interim CEO and member of the Board of Directors. Glean.info provides customized media monitoring, media measurement and analytics solutions across all types of traditional and social media.
