Marketing ROI

When used as a marketing effectiveness measurement, marketing ROI (MROI) can help CMOs project future marketing productivity, secure and justify marketing budgets, allocate marketing budgets across segments, and gain approval for campaign launches.

(Incremental Financial Value Generated by Marketing - Cost of Marketing Activities)

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Cost of Marketing

A long-standing challenge for marketers is demonstrating the impact of marketing actions on financial outcomes. Marketers want to demonstrate financial impact so they can show accountability for business results, gain the respect of their C-suite peers, and secure the investments they need for future work. Still, measuring marketing impact is often less precise than measuring the impact of other business activities. Based on our research, there are eight steps that can help demonstrate the value of marketing:

• Start with business value. Focus on the ways marketing's efforts affect the bottom line through precise measurement, metrics dashboards, and irrefutable attribution of financial outcomes.
• Understand what business value means to each function. Marketing leaders should be able to translate the value of their efforts and tailor their language to the most relevant metrics for each.
• Know your own metrics. Be thoroughly knowledgeable about how your marketing KPIs are constructed.
• Explain the inherent uncertainties of marketing measurements. Understanding the value of your metrics is important, but so is being able to communicate the uncertainties.
• Emphasize validity over precision. It’s important to communicate that the inherent imprecision in measuring marketing's financial outcomes doesn’t undermine their validity.
• Have a budget strategy. Be sure to show how your marketing spend is aligned with the overall business strategy and key priorities.
• Have a marketing transformation. Additional credibility can be developed by demonstrating the ongoing improvements to effectiveness and efficiency.
• Meet one-on-one. While marketing leaders typically attend monthly senior management team meetings, the real value comes in meeting with peers in person and investing considerable time educating their functional counterparts.