Measuring Marketing ROI in a B2B World (2 of 4): More Challenges

This is part two of a four-part post that will explore the challenges of measuring marketing return on investment (MROI) in a high-ASP B2B business. 

Why is Measuring MROI Difficult?

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The first post in this series identified several challenges facing the marketing analyst when trying to evaluate marketing ROI. This post will discuss the following additional challenges:

• The Delayed Return Problem: purchase cycles can easily exceed six months after initial marketing engagement
• The Relevant Investment Problem: some marketing is 'the cost of doing business' and other marketing is incremental, optional investment
• The Campaign Definition Problem: campaign definition is inconsistent, making it difficult to evaluate campaign MROI

The Delayed Return Problem

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The buying process for a $1M piece of technology is typically months long, frequently well over a year. Let's say you want to base the return of your MROI calculation on sales revenue. That sale likely takes place two to four months after the opportunity was identified. That opportunity is identified months after the prospect account interacted with your marketing campaign. And that campaign interaction took place months after your campaign was planned.

This long delay between campaign planning (i.e. investment) and campaign return (pipeline or revenue) severely limits how MROI calculations can be used to guide marketing decision making. For instance, it makes no sense to use MROI to optimize an existing campaign to maximize ROI because of the delay between optimization changes and subsequent effects.

The Relevant Investment Problem

Frequently in marketing performance measurement, the focus of the computation is just the incremental program spend, like the cost of a media buy. Or maybe you include the costs of an external agency to develop creative for that ad run. But you typically don't include the cost of your internal staff that manages paid media.

But in the high-ASP B2B multitouch world, which investments are considered part of the 'campaign' under evaluation, and which touches are baseline execution to even be in a market? For instance, you're not really a business if you don't have a website, and websites aren't free. But some components of your website are specific to a campaign, not just the baseline web presence to show you're in business, and the cost of those components are an incremental cost associated with the campaign.

Deciding which costs to include and exclude from a given MROI calculation, and uniquely identifying those costs, are some of the most difficult steps in MROI measurement.

The Campaign Definition Problem

What is a marketing campaign? To many folks not involved in marketing, they probably think they have a good idea of what one is because they have been subjected to advertising campaigns their entire lives. Why does the definition of a campaign matter? It matters if you intend to use MROI to evaluate campaigns as compared to each other. You need a consistent basis for campaign definition to ensure you're fairly evaluating campaigns by this metric.

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Mateusz Makosiewicz' recent blog post gives an excellent list of many different types of marketing campaigns. A former CMO of mine asserted that a marketing campaign is a large-scale, multiyear program. Her definition didn't match any of the eight examples in the article, although it comes closest to the eighth, the 360° campaign. 

Two of Mateusz' examples are an SEO and an email campaign. Those typically don't have incremental associated costs because your SEO and email infrastructures (staff, agencies, martech) are part of your baseline marketing function. Contrast that to the brand campaign he also mentions. Brand campaigns are typically executed with large media buys, and frequently leverage creative developed by marketing agencies that specialize in brand programs. 

Applying MROI to 'free' campaigns, like SEO and email, would yield infinite ROI, as compared to the finite returns of the brand campaign (ignoring, for the moment, how you would even measure the return of a brand campaign). This extreme example highlights the need to have a consistent definition of 'campaign' if you want to apply MROI to the evaluation of those activities.

Lots of Challenges; Where to From Here?

I have identified many challenges associated with measuring and using MROI in your marketing performance evaluation. But they are just challenges, not complete roadblocks. In the next post, I'll discuss the importance of multitouch and pipeline attribution in this effort, and the final post will provide a framework for evaluating MROI in high-ASP B2B businesses.