MDG Solutions

ROI is still the marketing end goal!

Article Highlights

  1. ROI in marketing should evolve toward frameworks that assess impact over longer timeframes and account for both immediate conversions and sustained brand equity.
  2. It’s vital that both brand and performance metrics are taken into account to calculate ROI.
  3. Strong brands exhibit lower price sensitivity, higher loyalty among their customer base, sustained organic traffic, and faster recovery. 
  4. A dashboard translates measurement into clear visibility and actionable decisions.
  5. The transformation from marketing as cost center to marketing as profit center begins with demonstrating clear returns on investment

Does ROI reporting make marketers uncomfortable? Maybe? Sometimes it can feel as if marketing metrics focus exclusively on “awareness” “brand building” and “engagement” and shy away from ROI accountability. Unfortunately, the minute marketers shy away from ROI, the minute they lose credibility. The way to make ROI work in marketing is to build frameworks that clearly show both immediate conversions and longer-term brand value, so the insights can be used to optimize marketing investments across the entire conversion funnel. This is especially valuable for businesses with long sales cycles or high customer acquisition costs. Let’s dive into what marketing ROI reporting should look like and how to get there. 

Why have marketers moved away from ROI?

While there are many reasons why some marketers have moved away from ROI, from complexity issues and attribution complications to the difficulty of tracking brand building, we often forget that all of those things are measurable. The shift that needs to happen now is not a further retreat from ROI measurement, but rather an evolution toward frameworks that assess impact over longer timeframes and account for both immediate conversions and sustained brand equity.

Defining ROI in marketing

There are a few acronyms that need clarification when talking about ROI in digital marketing:

  • Return on Investment (ROI) is the classic financial metric and the marketing ROI formula looks like this: (Revenue Attributable to Marketing – Marketing Costs) / Marketing Costs. 
  • Return on Ad Spend (ROAS) measures revenue generated per dollar of advertising spend: Revenue / Ad Spend.
  • Return on Marketing Investment (ROMI) is sometimes used interchangeably with ROI, but technically refers to incremental returns attributable to marketing. 

However, even for the most comprehensive ROI formula, marketing value is still understated, which is where brand equity and Customer Lifetime Value come in. Adding those additional values enables teams to paint a more holistic picture of financial outcomes from marketing and the potential of the brand as equity is directly tied to strength. 

Channel-specific ROI measurements

More than likely, your brand is marketing in more than one channel. Since different marketing channels serve different purposes, they each require different metrics:

  • Measuring ROI in paid advertising includes looking at: Cost per click, conversion rate, cost per conversion, return on ad spend
  • Paid social media ROI may include: engagement rate, cost per click, conversion rate, return on ad spend, views, and impressions
  • Organic search and SEO – keywords rankings, estimated value of traffic if it was paid search, conversion value from organic traffic, traffic from content
  • Email marketing ROI looks at open rates, CTR, conversions from email, button clicks, traffic, and revenue per subscriber
  • How to track social media ROI depends on if you want to track organic or paid. 

Balancing brand and performance metrics in marketing ROI tracking

These two categories of metrics depend on one another. One is required for the other to do well, and vice versa. Which is why it’s vital that both brand and performance metrics are taken into account to calculate ROI. To make it easier to understand the impacts of both, it’s helpful to break out the lead funnel into its respective parts and showcase the metrics important at each stage. For example, awareness metrics will often include share of search, social media reach and engagement, brand awareness rankings, and market share. Whereas conversion metrics will focus on leads, conversion rates, revenue, and customer lifetime value, and qualified leads.

The complete marketing ROI picture is drawn from tracking metrics across all stages. A brand awareness campaign shouldn’t be judged purely on immediate conversions; it should be measured on awareness lift, consideration increases, and downstream impact on conversion efficiency. Another advantage to measuring ROI based on the stages of the funnel is that when markets shift, as they always do, the brands that invest in all stages of marketing are less likely to be subject to the whims of the market or increasing competition. Strong brands exhibit lower price sensitivity, higher loyalty among their customer base, sustained organic traffic, and faster recovery. 

Making ROI visible and actionable

If the results are only visible to the marketing team, it might as well not have happened. A dashboard translates measurement into clear visibility and actionable decisions. Executive audiences need concise, strategic metrics, not operational detail. The marketing ROI dashboard should answer questions such as: Are we getting adequate returns on marketing investment? Where should we increase or decrease investment? How does marketing performance trend over time?

The goal with a dashboard is to connect marketing activities with business outcomes! If you’re looking for metrics to include, we suggest these for a comprehensive overview: 

  • Total marketing investment (all channels, all costs)
  • New customers acquired
  • Customer acquisition cost (CAC)
  • Customer lifetime value (LTV)
  • LTV:CAC ratio (primary ROI indicator)

Channel performance summary:

  • Investment by channel
  • Customers acquired by channel
  • CAC by channel
  • Channel ROI
  • Trend indicators (improving, stable, declining)

Pipeline and conversion metrics:

  • Marketing qualified leads generated
  • Lead-to-customer conversion rate
  • Pipeline value influenced by marketing
  • Marketing-attributed revenue
  • Marketing-attributed margin

Brand health indicators:

  • Brand awareness trends
  • Net Promoter Score
  • Review rating and volume
  • Share of voice vs. competitors

The transformation from marketing as a cost center to marketing as a profit center begins with demonstrating clear returns on investment. It’s going to get a little complicated, and it might take time to get it just right, but the ROI on ROI in marketing is worth it. And remember, it doesn’t have to be perfect, you just have to be able to distinguish good decisions from bad decisions and continuously improve. After all, not one business function is ever going to get it right all the time.