There is an interesting disconnect developing in digital marketing.  On the one hand is the notion that if your marketing is effective then holding the marketing department to a budget is not the best way to run a business.  On the other there has been a lot written over the past couple of weeks about how most marketers cannot or do not measure ROI, so how are we to know if the marketing is effective.

Peter Simmonds wrote on the dotMailer blog that if your marketing makes more money than it costs (e.g. has a positive ROI) then "a marketing budget is just a way to restrict how much money you can make."  Jack Woolfe takes this a step further in his Hunter's Tale column in the January issue of Precision Marketing; arguing that marketing budgets should be expanding because:

1. Prices are dropping so the same marketing spend goes much, much further.
2. Marketing will be a key tool to rebuild consumer confidence which will pull us out of this economic malaise
3. If all of your competitors are cutting their marketing then there is a land grab opportunity for you.  The worst case is that you force your competitors to match your marketing spend forcing them to cut elsewhere.

The same issue of Precision also quotes a Coremetrics study that found that 74% of retailers are not measuring the ROI from multiple channels, which is not surprising because this is quite difficult.  What was surprising was that only 66% measure the ROI of paid search and 80% measure it on organic search.  Even more concerning is that in last year's DMA National Client Survey, only 59% of respondants can measure the revenue generated by their email programs.

What does this mean for the average email marketer?  The sooner you develop a way to measure the return on your email programs – the sooner you will be able to justify the marketing budget that pays for your program (and your salary) and the sooner you will not have to worry about a P-45.

Skip Fidura
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