The biggest mistake you can make is to evaluate success exclusively on a campaign-by-campaign basis: it costs you a view of the whole (and some ROI). Don’t misunderstand: metrics for every campaign should be scrutinized; you can learn a lot from them. Your principal measure of success, however, should be much broader.

To help clarify this point, take a look at the admittedly oversimplified case studies below. Adjust for the realities of your business, and you’ll still see how you could get more out of your marketing budget.

Situation 1: Campaign-by-Campaign ROI Measurement
Success: generating an ROI of 5 percent on every campaign

Campaign 1
Cost: $10,000
ROI: $500 (5 percent)

Campaign 2
Cost: $10,000
ROI: $500 (5 percent)

Campaign 3
Cost: $10,000
ROI: $500 (5 percent)

Campaign 4
Cost: $10,000
ROI: $500 (5 percent)

Campaign 5
Cost: $10,000
ROI: $500 (5 percent)

Total Cost: $50,000
Total ROI: $2,500 (5 percent)

This is the height of business and marketing conservatism. The results are steady, positive and predictable. The only way to describe this company is as having done nothing wrong … but that’s not the same as doing something right.

There is hidden risk in this approach. In the example I’ve laid out for you, nothing went wrong. Even with the most conservative approaches to marketing, that isn’t always the case. The slightest bump in the road could have prevented this company from attaining a rather reasonable target.

Now, let’s take a look at another situation.

Situation 2: Total ROI Management
Success: attaining an aggregate marketing ROI of 10 percent

Campaign 1
Cost: $10,000
ROI: -$200 (-2 percent)

Campaign 2
Cost: $10,000
ROI: -$500 (-5 percent)

Campaign 3
Cost: $10,000
ROI: $2,000 (20 percent)

Campaign 4
Cost: $10,000
ROI: $1,500 (15 percent)

Campaign 5
Cost: $10,000
ROI: $2,200 (22 percent)

Total Cost: $50,000
Total ROI: $5,000 (10 percent)

This company was considerably more aggressive. Two of the five campaigns wound up as net costs, while the other three were quite successful. The company hit its ROI target – which was twice as high as that of the first hypothetical company – even though 40 percent of its campaigns could be considered failures.

Of course, the risks assumed could have worked out differently, but if you are exercising sound judgment and include both riskier and steadier approaches, you’ll be able to protect your marketing ROI.

The individual campaigns should not be ignored. The marketing team should review each to see what worked and what didn’t – and what could be effective next time. Success should be determined by how effective your marketing budget as a whole has been. Set your target for the year and figure out how to get there. Draw lessons from the campaigns.

Ultimately, you need to know which ROI to watch. The big one, based on your marketing budget, is the one that matters most.

Previous articles in this series:

Swing for the fences: Introduction >>

Swing for the fences: Are you trying hard enough? >>

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