If I had a dollar for every online article or blog post that talked about how to measure ROI for a specific communication channel, I'd be writing this from a sun lounge on my own private island.
You know the sort of article I'm talking about. More often than not, they're penned by representatives of software providers or agencies that specialise in said channels. They're generally pretty vague and they bang on about things like how to directly attribute likes and comments to awareness and brand advocacy. I get it, they have a vested interest in convincing marketers that their platform or agency is the silver bullet, and they need to be able to justify their claims.
They're missing the bigger picture, though. If you want to measure awareness, then you need to quantitatively measure it amongst a representative sample of the market, both pre and post campaign. You can't rely on social media impressions and engagement to give you a wholistic view.
Likewise, there are plenty of channel attribution models available that attempt to assign attribution weighting to specific channels. There's first click, last click, last non direct click, linear, time decay and a whole lot of other models that sit somewhere in between. None of them are entirely accurate though, most are heavily skewed toward online marketing activities, and the very fact that there are so many to choose from should sound warning bells as to their ultimate reliability.
While these attribution models are getting much more scientific as the prevalence and quality of data continues to increase, the problem is that most of them will be far too complex for most small to medium businesses to understand, let alone implement.
What's missing in all of this is the impact of synergy between the different channels. How they each complement each other and create a stronger combined effort. The old 'whole is greater than the sum of the parts' philosophy. It's been proven time and again (most recently in Optimove's 2017 study into the effectiveness of multichannel campaigns), that a well chosen combination of integrated marketing communications, that supports a chosen segment, position, objective and budget, will almost always result in greater output than applying the same budget to any one of the channels in isolation.
It makes sense then, that trying to attribute neat conversion percentages to each channel in isolation misses the intangible impact that one channel has on one or more of the others.
So, if your business doesn't employ a floor of data scientists, how should you measure the effectiveness of your marketing? In a word, objectives. Broaden your outlook and measure instead, the overall return on your objectives.
SMART marketing objectives should be Specific, Measurable, Ambitious, Realistic and bound by a certain Time period. Most importantly though, they should be tied to a business specific sales funnel, enabling a tangible link to ultimate return on investment.
Here's an example. Let's say a particular business sells computer software via subscription. A basic sales funnel for one of their target segments might look like this.
In the dark grey boxes are percentages of the total market that this software company holds at each stage of the funnel (half of the total market are aware of this company etc). In the light grey circles are the company's internal conversion rates from one step to the next. So, for every hundred potential customers in the market, 10 of them are subscribing to the software and 7 of those are being retained for at least 12 months.
In this example, an obvious objective would be to convince more customers to upgrade from the trial, to a subscription, a conversion rate which currently sits at only 33%.
The company would then go about designing an integrated campaign to do just that and, if successful, the new sales funnel for segment X would look like this, assuming all other conversion rates stayed the same.
Now for every hundred customers in the market, they're converting 18 and retaining 12. From there, it's very easy to calculate increased revenue, market share and ultimate ROI for the campaign.
Don't get me wrong, I'm not suggesting for a minute that the performance of individual communications channels should be overlooked. Far from it. Clearly we want to be getting the most from each channel and there are a number of methods and great tools available to benchmark this performance and continually improve upon it.
The point here is this. Unless your business employs some very savvy data experts to develop and test customised attribution models, or you're willing to accept the inherent inaccuracies of some of the more basic modelling approaches, don't get bogged down trying to tie every action you make to an individual ROI.
Measure ROI more broadly, in terms of SMART objectives that can be tied back to tangible business outcomes. You'll be able to impress your boss with some real numbers (without the vagary), and you'll sleep better at night as a result.