Marketing and ROI

Marketing is actually quite a broad catch-all of various types of marketing, but in simple terms there are two schools of marketing Branding, and performance, and its easy to think of them as in opposition, but in reality they cover different stages of the marketing journey for the customer.

The issue is that generally brand marketers tend to focus on brand assets such as logos and TV campaigns and creative, most of the time marketers from these roots tend to be more resistant to demonstrating that marketing has an ROI. 

The reality is that all marketing should have an ROI, it might not be as direct as generating sales. But at the end of the we need to agree, the role and very existence of marketing efforts is to grow the business, and for most businesses that either means growth in users or growth in revenues, so following that logic, any marketing that doesn’t influence growth in users or growth in revenues, can be said to have failed.

 Understanding that therefore all marketing needs to justify its existence, and all marketing has a cost, what matters more in the debate between marketing and ROI is how can we create a link between marketing efforts and Return even if that link is distant. For example how do we determine the revenue impact of a change in logo? 

Theres definitely a cost to a change in logo, we have to hire artists and designers to reproduce it, we have to re-do all PPT templates, packaging needs to be redo, website’s need to be changed, so we have to assume that whatever the cost of a logo change, the belief (of the business) is that the expenditure of this money on this endeavour will be returned by a multiple in the future.

So we can expect the return to take two forms – either growth in revenues or a reduction in costs. So using this example of a logo change lets explore each of the two expected returns.

Starting with the easier, a reduction in costs – a simpler logo might use less in, or require less custom printing molds, it might be easier to change and roll out on materials, might reduce the amount of customisation for a website, etc. – so a simpler logo (for example) could also mean a reduction in some of the production costs.

Turning to the growth in revenues – this is less direct, but we can assume that a change in a brands logo, would couple with some PR press releases, increasing the news coverage, we might expect that the logo is designed with an aim to attract a new customer audience, so we expect that with the logo change we should see an increase in purchases from this new profile of customer, and therefore increases in revenues from increased coverage to this new profile of customer.

As you can see, a logo change doesn’t have a direct impact on revenues, but we expect that we should see measurable changes to the conversions through the funnel as a result of this change in logo. And therefore we can attribute a value-cost to the logo change.

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