Why is proving ROI on B2B marketing investment the biggest challenge for marketers?
Posted: Thu Dec 05, 2024 9:36 am
Fernanda Donnini
Oct 25, 22 | 6 min read
Royal challenge for marketing specialists
Reading time: 5 minutes
Measuring campaign effectiveness and proving return on investment (ROI) on marketing spend is the biggest challenge facing B2B marketers globally, with 21% identifying this as their top concern, according to new research from LinkedIn .
Last month, LinkedIn conducted its global B2B Marketing Sentiment Survey, which revealed that roughly half of the 1,700 senior marketing professionals who responded said they had experienced budget cuts due to the current economic situation .
In this scenario, proving Marketing ROI becomes increasingly important and is not always easy to measure.
What is ROI in Marketing?
MROI or Marketing ROI is the total profit a company generates by adding up all its marketing activities across multiple channels. Channels can include organic traffic, event sponsorship, social media, and more.
As businesses face increasing customer demand for personalized marketing experiences across all channels, measuring marketing ROI is more important than ever. From channel-specific MROI to overall MROI, the clearer you can measure it and the better you can demonstrate its effectiveness, the easier it will be to justify budget approval.
Why is measuring marketing ROI a challenge for most marketers?
Marketing today is no longer just about getting leads or traffic. It is a complex process involving digital and traditional channels with multiple touchpoints.
It's difficult to prove ROI because it involves suriname email address tracking multiple variables over a long period of time. Because it takes longer to gather accurate data, it's harder to isolate which factors contributed to the increase in sales.
The average B2B sales cycle length is six months. Returns on marketing investments take time to trickle down to the bottom line. In an uncertain situation, there is pressure to prove those returns are on the way, long before they actually arrive.
There are several types of Marketing ROI, just to name a few:
Income/reservations
Cost per acquisition (CPA) ratio
Return on advertising investment
Customer Lifetime Value (CLTV)
It's important to understand the differences between different types of ROI so you can choose the right one. But most of these metrics are calculated in a similar way, regardless of which metric you use.
How is MROI calculated?
Marketing ROI is simply a return on investment calculation. It looks like this:
ROI = (Return – Investment)/Investment
Simple ROI = (Sales – Marketing Cost)/Marketing Cost
The formula for ROI is pretty simple. It's the financial return generated by your marketing efforts, divided by the cost of your marketing investment.
As with any ROI, the goal is to achieve a positive outcome. Ideally, you want to maximize the return on every dollar spent.
How efficient is your investment?
You can track Marketing ROI by looking at cost or efficiency ratios and see how much money was generated for each dollar spent on Marketing.
Cost ratio = Return: Investment
A good marketer will always strive to generate revenue at a lower rate than they spend. An amazing campaign could generate a cost ratio of $8 for every dollar spent (8:1) with a simple marketing ROI of 700%.
Common mistakes when measuring marketing ROI
It may seem easy to measure marketing ROI, but it can be tricky. There is increased pressure on marketers to demonstrate the return on investment of their initiatives. Some companies state that they are unlikely to invest in marketing initiatives with a negative ROI, as the project is harder to justify in financial terms.
The challenge of proving ROI can be even greater for Content Marketing, which often focuses on the awareness and consideration stages of the funnel. Content does its job over the long term and over the course of several sales cycles. Trying to prove ROI too quickly can backfire.
Additionally, marketers say that businesses don’t understand the ROI of B2B marketing. Let’s look at two common challenges and questions that most marketers face.
Focus only on short-term results
We often look at lead generation and revenue when measuring our marketing ROI. Proving demand generation ROI can be challenging, especially for long-term branding investments.
According to the Global B2B Marketing Sentiment Survey, brand building is the area marketers are most interested in investing in over the next half year. The majority of respondents (67%) plan to increase or maintain their brand spend over the next six months, citing its ability to drive long-term sales (52%) and keep a brand top of mind with buyers (42%) as their top reasons for doing so.
However, campaigns focused primarily on driving long- or medium-term initiatives, such as branding or retention, typically don't show their full potential for several months or even years.
Digital marketers often measure ROI too quickly. While the average length of a B2B sales cycle is 6 months, only 4% of marketers measure ROI for 6 months or more, according to other LinkedIn research .
It is important to understand and consider the overall goals and duration of the campaign when measuring ROI.
Oct 25, 22 | 6 min read
Royal challenge for marketing specialists
Reading time: 5 minutes
Measuring campaign effectiveness and proving return on investment (ROI) on marketing spend is the biggest challenge facing B2B marketers globally, with 21% identifying this as their top concern, according to new research from LinkedIn .
Last month, LinkedIn conducted its global B2B Marketing Sentiment Survey, which revealed that roughly half of the 1,700 senior marketing professionals who responded said they had experienced budget cuts due to the current economic situation .
In this scenario, proving Marketing ROI becomes increasingly important and is not always easy to measure.
What is ROI in Marketing?
MROI or Marketing ROI is the total profit a company generates by adding up all its marketing activities across multiple channels. Channels can include organic traffic, event sponsorship, social media, and more.
As businesses face increasing customer demand for personalized marketing experiences across all channels, measuring marketing ROI is more important than ever. From channel-specific MROI to overall MROI, the clearer you can measure it and the better you can demonstrate its effectiveness, the easier it will be to justify budget approval.
Why is measuring marketing ROI a challenge for most marketers?
Marketing today is no longer just about getting leads or traffic. It is a complex process involving digital and traditional channels with multiple touchpoints.
It's difficult to prove ROI because it involves suriname email address tracking multiple variables over a long period of time. Because it takes longer to gather accurate data, it's harder to isolate which factors contributed to the increase in sales.
The average B2B sales cycle length is six months. Returns on marketing investments take time to trickle down to the bottom line. In an uncertain situation, there is pressure to prove those returns are on the way, long before they actually arrive.
There are several types of Marketing ROI, just to name a few:
Income/reservations
Cost per acquisition (CPA) ratio
Return on advertising investment
Customer Lifetime Value (CLTV)
It's important to understand the differences between different types of ROI so you can choose the right one. But most of these metrics are calculated in a similar way, regardless of which metric you use.
How is MROI calculated?
Marketing ROI is simply a return on investment calculation. It looks like this:
ROI = (Return – Investment)/Investment
Simple ROI = (Sales – Marketing Cost)/Marketing Cost
The formula for ROI is pretty simple. It's the financial return generated by your marketing efforts, divided by the cost of your marketing investment.
As with any ROI, the goal is to achieve a positive outcome. Ideally, you want to maximize the return on every dollar spent.
How efficient is your investment?
You can track Marketing ROI by looking at cost or efficiency ratios and see how much money was generated for each dollar spent on Marketing.
Cost ratio = Return: Investment
A good marketer will always strive to generate revenue at a lower rate than they spend. An amazing campaign could generate a cost ratio of $8 for every dollar spent (8:1) with a simple marketing ROI of 700%.
Common mistakes when measuring marketing ROI
It may seem easy to measure marketing ROI, but it can be tricky. There is increased pressure on marketers to demonstrate the return on investment of their initiatives. Some companies state that they are unlikely to invest in marketing initiatives with a negative ROI, as the project is harder to justify in financial terms.
The challenge of proving ROI can be even greater for Content Marketing, which often focuses on the awareness and consideration stages of the funnel. Content does its job over the long term and over the course of several sales cycles. Trying to prove ROI too quickly can backfire.
Additionally, marketers say that businesses don’t understand the ROI of B2B marketing. Let’s look at two common challenges and questions that most marketers face.
Focus only on short-term results
We often look at lead generation and revenue when measuring our marketing ROI. Proving demand generation ROI can be challenging, especially for long-term branding investments.
According to the Global B2B Marketing Sentiment Survey, brand building is the area marketers are most interested in investing in over the next half year. The majority of respondents (67%) plan to increase or maintain their brand spend over the next six months, citing its ability to drive long-term sales (52%) and keep a brand top of mind with buyers (42%) as their top reasons for doing so.
However, campaigns focused primarily on driving long- or medium-term initiatives, such as branding or retention, typically don't show their full potential for several months or even years.
Digital marketers often measure ROI too quickly. While the average length of a B2B sales cycle is 6 months, only 4% of marketers measure ROI for 6 months or more, according to other LinkedIn research .
It is important to understand and consider the overall goals and duration of the campaign when measuring ROI.