Provocateur:

On the surface, determining ROI follows a straightforward formula: dollars earned need to justify dollars spent. However, without context, lump sums only reveal so much about marketers’ efforts. If marketers are only measuring success in terms of overall brand revenue, they may be missing major opportunities to fine-tune their tactics, devise campaigns that yield maximum profit, and even communicate to their organization’s leadership the value their efforts are driving. 

It’s standard that marketers have data to back up their strategies. Especially with global markets so disrupted, marketers need every assurance that their dollars are being used effectively. And yet, according to Nielsen research, it’s estimated that brands are capable of measuring ROI only for less than half of their total media investment—meaning they could be spending their budgets without knowing whether they achieved their campaign goals.

To improve their strategies’ yield, marketers must understand how to establish ROI measurements and map them to larger brand goals, so they can secure reliable and actionable insights into their campaigns’ performance. Here are the best practices for marketers looking to deliver better outcomes from their efforts:

Take a full-funnel approach to measuring ROI

While revenue is an obvious indicator of an organization’s success, it doesn’t show how marketers’ efforts are performing on a granular level. As a result, marketers may be missing opportunities to make a bigger impact on audiences. Further, while the end-goal of a campaign may be to drive revenue, not every marketing activity leading up to it may be explicitly pursuing a bottom-funnel outcome. After all, before marketers can persuade consumers to make a purchase, they often must first inspire some level of engagement from target audiences, such as joining an email list. 

Therefore, instead of looking only at end results, marketers need to measure the ROI of their efforts at all levels of the customer journey—and in specific terms—to achieve a robust understanding of how their dollars are being spent.  Without quantifying the effectiveness of these initial efforts, marketers won’t have a tangible idea of which tactics are working and which ones are falling short.

Having these step-by-step measurements enables marketers to identify areas that are falling short and proactively correct them to mitigate the impact on overall success. For example, if a top-funnel initiative geared towards brand awareness is attracting fewer prospects than anticipated, then all subsequent activities have a decreased likelihood of working. The consequences are sizable: Nielsen research uncovered that brands have an 80 percent increased average error rate in forecasting ability if they neglect to consider all sales drivers within a campaign. This shortsightedness can lead to 47 percent inflated incremental outcomes and 68 percent misattributed ROIs. By defining metrics for each stage of a campaign—and having processes in place for measuring them—marketers can better ensure that those steps align with the campaign’s end goal and work towards achieving it. 

Standardize measurements, at scale

Standardizing success metrics empowers organization-wide collaboration and mitigates the chance of marketers working in divergent directions. These metrics must also be scalable so that multi-market or multi-country organizations can collaborate successfully. If marketers are assessing their efforts based on disagreeing metrics (e.g., should marketers assess for profit ROI or retail ROI?), then they can’t constructively assess how their offerings are performing in one region compared to another. Further, without shared value and data sets, teams can’t arrive at a universal brand value—which, according to analysis conducted by the Marketing Accountability Standards Board, accounts for an average of nearly one-fifth of corporate value, though businesses typically don’t measure or report it.

Having a common way of reporting ROI also helps teams better communicate their efforts with their organization. Beyond helping media planning (e.g., teams working within different geographies can use one another’s campaign results to inform their own), having standardized measurements offers marketers a tangible way to articulate their success to leadership. Especially in the current climate, when some organizations may be feeling uncertain about the effectiveness of marketing approaches, marketers will be able to affirm their department’s value to the company in understandable terms.

Detailed metrics promote agility—and strengthens ROI

As the events of 2020 have demonstrated, market pressures and audience behaviors can change overnight, rendering a brand’s promotional efforts useless if marketers aren’t capable of updating them in stride. Having granular metrics in place empowers marketers to pinpoint areas for adjustment (e.g., is it the messaging that isn’t resonating or the platform the campaign is being shared on unpopular?) and quickly adapt to change. Instead of stopping or dropping entire campaigns in the face of uncertainty, marketers can use the data at their disposal to identify opportunities for improvement and operate more resourcefully, ultimately maximizing the ROI of their efforts.

About the Author

Tina Wilson ​is Nielsen’s EVP, media analytics and marketing effectiveness, in the U.S. A 25-year Nielsen veteran, she leads teams that are the epicenter of media consulting, leveraging Nielsen’s data assets to inform clients’ decisioning on reaching audiences, acquiring and distributing content, and understanding media outcomes. Wilson has held progressive leadership roles at Nielsen. She is a member of the Marketing Advisory Board at PLNU, the steering committee for the World Economic Forum’s Media, Entertainment, and Culture initiative, and the LA Board of Governors for Paley’s.