Wednesday, July 9, 2008

ROI: Reality Or Insanity?

I wrote my first article on ROI about 28 years ago.  As I recall it had to do with the return on investment to cable system operators of an Oak Communications cable system... or maybe it had to do with the return on investment to Midwest farmers of NaChurs liquid fertilizer.

What's old is new again.  The only constant in life is change.  ROI is everything.

Denny Hatch wrote/ran a very interesting story yesterday about SEO/SEM. Referencing an SEM seminar he attended in Philadelphia a few weeks ago, he said this: "Harry Brooks and the new generation of Internet marketers are brilliant and absolutely fixated on ROI. He probably used the term ROI 50 times in the course of the three hour presentation."

In point of fact, the entire marketing industry is obsessed with ROI.  Story after story in blogs and magazines and newsletters.  Apparently it is all about the analytics and metrics (by the way, it is my personal theory that any time an industry or organization starts creating idioms as an alternative to using plain English, they are absolutely hiding something) and the desire or need to justify expenditures.

Doesn't matter what you are doing – advertising, direct mail, publicity, Web site, newsletter, e-mail, blogging, special events, sponsorship, video, customer service training, research – it always comes back to ROI.

Really?  Or does it all come down to cost and commitment.

Here's a thought:  medicine is a science. Still, it is almost always a crapshoot. Dr. Goodfellow gives a diagnosis based on what she sees and what the tests reveal. But she can be wrong. She may even suggest radical surgery to correct the problem.  But she can be wrong.  And the patient can die.  Where's the ROI in that?

Marketing – in all its forms and flavors – is also a science (when performed properly; there are quacks in every profession).  We conduct research, we analyze situations, we strategize actions based on desired outcomes, then we operate.  Hopefully we get it right... just like Dr. Goodfellow.

The truth is sometimes difficult to accept.  But to do otherwise – to close your eyes to it – is insanity.  There are no guarantees, not in any venture.  Rocket science is a rocket science, but rockets still fail; just ask the poor scientists who were responsible for Columbia's re-entry from a mission in 2003.  And who knows more about money and investments than Bear Stearns? Oops.

As a matter of standard practice, every marketer should document deliverables, measure and analyze results, then attempt to determine the tangible return on the overall investment made. But be real.

[closing music: From my heart and from my hand, Why dont people understand, My intentions . . . . oooh, weird . . . .Weird science!!]

1 comment:

  1. I would like to see more doing and less talking about ROI. So many companies - big and small - don't take the time to actually monitor the results, let alone actually determine what their return on investment was.