The Surprising ROI of Marketing

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1 ENERGIZE YOUR MARKETING The Surprising ROI of Marketing Head-Turning Results from Tiny Investments Norma Rickman 2013 N O R M A R I C K M A N. C O M

2 The ROI of Marketing We live in a world that is significantly different from even ten years ago. Nowadays, social media platforms like Facebook, Twitter and Instagram abound. There s even Snap Chat, where your message self destructs like something out of a James Bond espionage tale! Social media platforms seem more modern and sexy than marketing. Some feel that marketing seems a bit oldfashioned and dated in comparison to the real time communication of social media. The notion of marketing being far more profitable than social media seems quaint to some, like the notion of a horse and buggy plodding down the Autobahn.

3 When cost-cutting measures and squeezing expenses out of a marketing budget are de rigueur in today s business world, it seems logical that devoting less time, effort and money to marketing and more instead to social media marketing would make sense. After all, what business worth its salt doesn t have a Facebook page and a Twitter account these days? And isn t content marketing, where the goal is to brand one s business via offering free helpful, entertaining content the real way to get ahead in the 21 st century? Don t you believe it!

4 Marketing is Alive and Well The rumor of the death of marketing has been greatly exaggerated. Despite the allure of social media platforms and the mantra of content marketing being the only thing working these days, the truth is that none of these methods can hold a candle to the power of marketing. There is no better, more cost effective way to build trust, persuade and influence buyers. Yes, even one of the most effective ways to make the sale. Let s look at a few numbers that clearly show the power of marketing in action. According to the Rick Noel from ebiz ROI, Inc., marketing s projected 2012 ROI is a whopping $39.40 per every $1.00 invested. Compare the cost effectiveness of marketing to search marketing ($22.38 ROI/$1spent) or to display marketing ($19.71

5 ROI/$1 spent) or to the measly in comparison $12.90 generated per $1 spent with social media. (Noel, 2013) Want more numbers as proof? Let s look at marketing from the standpoint of its cost-effectiveness against other marketing platforms.

6 The Harvard Business Review Gives Thumbs Up to Marketing In his article, Why Marketing is King, Arthur Middleton Hughes stated that... [c]ompared to other media, messages are dirt cheap to send. With TV you are spending on ad agencies, creative studios, and cable channels. With print ads, you are helping to keep newspapers and magazines alive. Direct mail costs more than $600 per thousand pieces. With , there are almost no costs at all. But its low cost only makes the argument stronger that marketing is the most cost-effective advertising method available today. Hughes cited emarketer s 2012 statistics in this article. From these statistics, Hughes found that U.S. companies spent approximately $64 billion on TV ads, $34 billion on print ads and $39 billion on internet advertising. Based on emarketer s, statistics, the overall

7 expense on marketing was a comparatively tiny $1.5 billion. (Hughes, 2012) In the same article, Hughes produced data from his research involving a retailer with over 900 stores and a customer data base of 105,000 enrolled in its loyalty club. The customer data base was divided into three groups of 35,000 customers for testing purposes: One group received a combination of direct mail and messages; the second group received direct mail messages only; and the last group received messages only. Here are the results from Hughes data: Source: Harvard Business Review, Why Marketing is King. 2012

8 On the surface, it appears that marketing alone is not more effective than a combination of direct mail and marketing at producing sales. But it s when the data is drilled down even further that things really start to get interesting. Kopecky Crunches Hughes Data Down to Find the Real ROI Using Hughes data, Juliette Kopecky of HubSpot crunched the numbers down even further. While Hughes produced some real insights with his data, Kopecky s ROI analysis is startling. For the purposes of Kopecky s comparison, direct mail costs were calculated to be $0.60 per mail piece vs. the cost of $.006/ sent. She determined this cost from Hughes statement that direct mail costs more than $600 per thousand pieces.

9 Next, Kopecky calculated the $.006 cost of sent based on Hughes assertion that direct mail costs about 100 times as much as . Based on this information, Kopecky came up with a formula to calculate the cost of the three specific marketing alternatives as follows: Total spend = (cost/piece of direct mail * total # of prospects) + (cost/ * total # of prospects) Source: HubSpot An Investigation Into the ROI of Direct Mail vs. Marketing [Data] From this data, the ROI of the three marketing vehicles was easily calculated by Kopecky using this formula: ROI=Total revenue/total spend

10 Here s the results: Source: HubSpot An Investigation Into the ROI of Direct Mail vs. Marketing [Data] Marketing: A 95% Greater ROI than Direct Mail! Using the above data, Kopecky calculated the combined ROI of direct mail and at $30 for this campaign. Direct mail alone for this campaign generated an ROI of $27. Sounds good, doesn t it? Compare these results to marketing s ROI of $2600 for this campaign. This translates to an ROI of $2573 more for marketing for this particular campaign than for the ROI of direct mail alone. (Kopecky, 2013).

11 It s clear that those who say that marketing is dead don t understand its power to influence buyers at the cost of just fractions of a penny. marketing returns over three times the ROI of social media marketing. You can Facebook and Tweet that statistic! Easily Measurable Results with Marketing Another huge benefit to marketing is its measurability. opens and clicks leading to sales can be readily tracked. This is in contrast to TV or print ads--there is no easy way to track who has viewed a marketing message. This is even more relevant when you consider the huge cash outlay needed for print and tv ads compared to the miniscule budget required for advertising.

12 It s clear that savvy business owners realize the power of marketing to produce the biggest-roi-bang-for-the-buck possible. Not every business owner is a writer, or has the expertise to mount their own effective marketing campaign. If you want to get the kind of ROI from marketing as shown in this report, contact me to discuss your campaign ideas. Let s get started!

13 Works Cited Hughes, A. M. (2012, August 21). Why Marketing is King. Retrieved March 5, 2013, from Harvard Business Review: Kopecky, J. (2013, January 13). An Investigation Into the ROI of Direct Mail vs. Marketing [DATA]. Retrieved March 5, 2013, from HubSpot's Inbound Marketing Blog: Investigation-Into-the-ROI-of-Direct-Mail-vs- -Marketing-DATA.aspx Noel, R. (2013, January 17). Stodgy Marketing Stomps Social for B2B Priorities, ROI. Retrieved March 5, 2013, from Internet marketing services by ebiz ROI, Inc.: Stomps-Social-for-B2B-Priorities-ROI