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Is ROI Really What You’re Looking For?


There’s a lot of talk about return on investment as a marketing metric … but ROI is inherently flawed for campaign-based marketing. A new look at ROI might be just the remedy we need to build a case for content marketing.

I’ve been on a journey over the last few months, exploring the history of marketing and measurement. I feel a bit like Indiana Jones. The books I’ve bought are long out of print and when they arrive from remote booksellers across the world – sometimes tattered and worn – it feels like I’m discovering artifacts from a lost world.

Marketing-performance measurement is not a new challenge. It’s not as if we lost something we once had in the 1960s. Marketers have been talking about the struggle to measure marketing’s performance for as long as it’s been around. Mercantilist John Wannamaker famously said in the late 1800s, “I know half my advertising is wasted; the trouble is I don’t know which half.”

Consider the last line from a 1964 article, The Concept of the Marketing Mix, by Neil Borden, then-professor emeritus of marketing and advertising at Harvard Business School. He was discussing the highly desired but unfulfilled quest for the “science of marketing” and concluded with:

We hope for a gradual formulation of clearly defined and helpful marketing laws. Until then, and even then, marketing and the building of marketing mixes will largely lie in the realm of art.

I very much appreciate the “even then” part of that last sentence. I suspect Professor Borden knew that looking for “laws” would be a frustrating journey.

Skip ahead almost 25 years and consider a comment in the book Marketing Performance Assessment from 1988. In the opening chapter, called “The Philosopher’s Stone,” the authors write:

The assessment of marketing performance, often called marketing productivity analysis, remains a seductive but elusive concept for scholars and practitioners alike. It is elusive because for as long as marketers have practiced their craft they have looked unsuccessfully for clear, present, and reliable signals of performance by which marketing merit could be judged.

In other words, throughout the last 100 years, we have felt this compelling need to tilt the scales from art toward science; we have held up business laws that, if obeyed, would guarantee success. We really want the algorithm. And the truth is, we never get there.

In varying degrees over the last century, this “science” has been reduced to three little letters: ROI.

From the Mad Men era forward, we’ve been exploring ways to extract a return from the investment of marketing. Whether called simple ROI (return on investment), ROMI (return on marketing investment), or even ROC (return on customer – thank you Dr. Martha Rogers and Don Peppers), the goal has been the same: Maximize the profitable return on the investment in marketing effort.

But there’s a problem.

Maximizing ROI has been, and always will be, the wrong goal for campaign-oriented marketing. Yet ironically, focusing on ROI just might be the right approach for content marketing. Let’s take a look at why.

What are we really asking?

First, why is ROI the wrong metric for campaign-oriented marketing? Ask yourself: Are you trying to understand if the effort did work or whether it will work? If the former, you must capture measurements that quantify whether you met your goal. But let’s be clear, goals such as incremental sales revenue, cost per lead generated, cost per sale generated, and cost of a new customer are not returns on an investment; neither are they even goals. These are accountability metrics toward a particular business goal (e.g., higher revenue, decreased costs).

Thinking of these things as return on investment is a bit like thinking of how your investment in gasoline produces a return on your job. Gasoline, like many marketing tactics, is ultimately a cost, not an investment; its fluctuating price has no bearing on how it may boost performance in the short term (e.g., gets you to work faster than walking). And it inherently only generates a short-term benefit.

Each marketing campaign is a new tank of gas, a project executed in a short time frame that we evaluate as a one-time return on that effort. Stack enough of those together and you can create a smart strategy.

Campaign-focused marketing is a recognized cost of improving the short-term performance of our business. We can talk much more about this point, but for now let’s move to the second question we need to ask: Will it work?

This question is more common for those focused on content marketing because its practice as a marketing function is new to so many. When ROI comes up, it’s usually because content marketers are being asked to make a case for success.

This brings us right back to the first problem. Our only frame of reference to make that case is our past performance. This is a Catch-22. In short: You’re being asked to “tell me what you know” to prove “how certain are you about this new thing you want to do?” Yeah, it’s a guess.

But here’s the larger problem with ROI. It encourages us to underperform.

If marketing’s mandate is to maximize ROI, you have every incentive to never do anything new at all. Look at it this way. Let’s pretend your mandate is to maximize marketing’s ROI percentage. If I spend $200 in marketing to get to $250 in revenue – then technically my ROI is 25 percent. But if I spend nothing to make $100 – my ROI is 100 percent (really it’s infinite). To maximize my marketing ROI percentage, it’s actually smarter for me to spend NO money and hope for one sale than to spend some money and hope for many sales.

This is an extreme example but it holds true over time. As you increase market penetration, the rate at which you win new customers slows. Plus, because you’re spending a portion of your marketing budget on return sales, your marketing ROI – because it’s a ratio – will eventually decrease. That’s why applying ROI to a process that is ultimately a cost, not a long-term asset, can be treacherous at best.

So, if ROI isn’t the answer for campaign-based marketing, why might it be the answer for content marketing?

Think like a product, not a campaign

We must take a different approach to content marketing from the beginning. As we discussed, a traditional marketing campaign is a project – the success of which we will measure once it is complete.

But content marketing is a different model. The assets we create should support multiple fronts. A blog, a print magazine, a white-paper program, a webinar series, a television series – these are assets that can generate many different types of company value over time.

Let’s take some different content marketing initiatives we might want to deploy. As we think about building a business case, we may ask a number of simultaneous questions:

  • How does this new influencer white paper and accompanying video add value to the spring direct-marketing campaign, but also the value of the Y product release and Z customer relationship community?
  • What’s the value per subscribed audience member, including the rich data derived from each individual? How does that value increase over time as the audience and the amount of data become larger and richer?
  • How does the value of each content asset increase or decrease over time? How does our resource library value increase as we add the 25th evergreen white paper? How does the addition of the 25th white paper add value to those that preceded it?
  • How does the creation of media-related products increase the value of our company over time by establishing us as a differentiated brand?

That last question is the most important. In the most extreme example, we can ask how valuable is Red Bull with Red Bull Media and without. As of May, Red Bull was the 76th most valuable brand in the world according to Forbes. I contend it’s a fundamentally more valuable company with its massive media asset. How much value do the HubSpot blog and accompanying Inbound event add to HubSpot’s overall business? On their own, as media properties they would generate millions of dollars. I contend these are valuable, long-term assets of the company.

Campaigns are a cost that provides value at a moment in time. Content marketing is an investment that, if done well, provides increasing value over time.

Don’t cross the streams

To measure effectively, we must know what we’re solving for. If our thought leadership asset (e.g., a white paper) is simply a supporting creative asset in a direct-marketing model, then measure it as such. It is a short-term, campaign-focused investment built to provide short-term benefit. And there’s nothing wrong with that.

But content marketing is different. If done right, it looks much more like a product than a campaign. It deserves its own investment model … and yes, it might finally be time to measure content marketing based on a true ROI model.

This changes the entire conversation about measuring content marketing. We still will answer the questions “Will it work?” and “Did it work?”, but the answers will be based on a much different premise. The former will be based on our ability to treat content as a long-term asset that builds value over time. The latter will be based on our ability to get beyond ROI and simply measure our progress toward meeting business objectives in time.

The simple truth is: Content marketing is not advertising. Despite whichever half might be working best.

This article originally appeared in the August issue of Chief Content Officer. Sign up to receive your free subscription to our bi-monthly print magazine.

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Cover image by Joseph Kalinowski/Content Marketing Institute