Answering the ultimate question: "How do I convince my boss of the ROI of new marketing?"

During my keynote presentation kicking off the Inbound Marketing Summit, Brian Halligan, HubSpot CEO asked me "the ultimate question."

A version of this question is asked at almost every one of the 60 or so keynotes I deliver each year. Frequently it is the very first question asked.

The question is usually asked something like this: "At my company we measure sales leads and press clips. So how do I explain to my boss the value to giving up control of my marketing and engaging my customers via social media? How do I measure the ROI of 'new marketing' via social media and creating information of value to my buyers?"

Warning: My answer contains a cynical component as well as a practical component.

Thanks to Bob Collins for formatting this one question into a short video. Direct link to the video here.

Comments

[Ari Herzog]

ROI measurement by pants and leaf blowers. I like it, for I deal with those MBA types frequently.

[@Stephen]

What is the ROI of golfing with clients? What is the ROI of an executive retreat to a spa/resort?

You are correct in that there is a new set of returns to be measured, and the old cliche "50% of our advertising doesn't work, we just don't know what 50% it is" is going to be proven false - as we learn which 50% is effective.

[Simply Mike]

As usual David, you cut thru the gobbledygook and use commin sense.

I actually like the cynical parts too ;-)

[Steve Johnson]

This is a really good video. One rant that I would add is this: measuring leads and clips isn't effective--AND NEVER WAS. We've been measuring the wrong things!!! It's like asking "How much did you enjoy your vacation?" and answering "31 MPH."

[justin]

great stuff as always david. only comment, i clcked on "more" at the end of the video and got nothing! pooey! wanted more! :-) - jl

[Tom Lindstrom]

Good video.

[jacqueline]

I highlighted YOUR blog in my Blogs.com Top 10 Small Business Marketing Rock Stars Blogs! Thank you for what you do!

[Kevin Clancy]

The ROI of putting on your pants...now that's funny.

It's true that there are different motivations/objectives for doing different kind of marketing programs, the cost of which of doing are likely much less than the time, effort (a.k.a., headaches), and cost required to measure them. So like putting on your pants, it may not pay out to track the investment back to a sale--you don't want to be cold when you go outside and everyone else where's pants, it's that simple.

I did cringe a bit, however, that giving this kind of response to senior management would send an implicit message that there just is no way to show new media and different "alternative" marketing communications has a positive effect on sales and brand equity. Not to mention, "Just trust us with the money, we know intuitively that it works" isn't going to fly with CEOs and CFOs who are under the gun--especially now during a recession--to show a profit and are likely eyeing the marketing budget as a place they can save some dough.

You seemed to be getting at this point in your comments, but I thought I'd reiterate that the real problem with measuring isn't the measuring part. With all the technology and sophisticated models out there, you can measure pretty much anything in marketing. Even with new media, there's likely a way to "monetize" it one way or another.

The real problem with most ROI tracking today is you get numbers but no relative basis of comparison to show if they are good or bad or what to do to improve them.

Recall the reason marketers are gravitating to new media is because there was this sense old media--advertising, print, radio--wasn't working. New media with less clutter and a lot of positive buzz seems like a viable alternative, but at the end of the day, the same questions still lurk.

[Brian Anderson]

The major deficiency with MBAs is that they have never been in reality-land - direct sales - so they don't understand how to separate the meaningful from the meaningless.

In general, we are in a state of enormous change and a lot of folks are in denial: why? Because they're no longer in control of the accepted and unquestioned levers of ROI drivers (golf pun?). It's like that old saying about truth with the first of three tenets being that "it is violently opposed."