December 16, 2016

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Where is my ROI – The Digital Marketing Conundrum

Co-author: Maniappan Rajagopalan

The core challenge for most organizations undertaking an analytics project, is quantifying the return on investment (RoI). A number of methodologies are used for other projects such as feasibility analysis, payback time etc., however, it becomes very difficult to pick the right methodology for an analytics project.

Traditionally, projects related to BI have seen a fair degree of success, but only by looking at the data based on various KPIs defined by the clients alone. The costs involved are of two types, in building the system and in running it.

When it comes to digital marketing, it becomes harder to justify the costs invested versus gains associated with it. Moreover, there is always the difficult question to answer, whether the gains are really attributed to digital marketing. We will discuss this and more in this blog.

Digital Analytics Process

Digital marketing can be defined as marketing products or services that involve electronic devices/ media.

Although it is a simple definition of digital marketing, it may comprise of handling various channels such as Internet, Mobile, TV, Emails and various Social Media Channels that have emerged or are emerging. Add to that the complexity of designing systems which can promote and track the efforts related to digital marketing, and suddenly we are looking at an unprecedented volume of data and complexity.

As with other projects, budget and cost are important factors in a digital marketing project too. Out of the above channels, the following are the activities associated with doing a Digital Marketing project for promoting a product on social media and their associated budgets and costs. This will require the following things:

  1. Availability of a portal where the product is sold
  2. Making the above portal ready for Digital Analytics (Capturing the relevant data.)
  3. Design promotions
  4. Apply promotions/campaigns on social media channels in pilot mode
  5. Evaluate the effectiveness of the campaign/ promotion
  6. Apply the most effective campaign(s) on a larger scale
  7. Keep monitoring the promotions and go through the steps 3-7 periodically

Challenges of Digital Marketing Campaigns

From a customer’s perspective, all of the above seven activities, barring the first one is a cost that goes under the head “Digital Analytics”. For the service provider, it becomes difficult to justify the cost and the ROI from it. Based on the continuous evaluation, the campaign will have to be tweaked to increase the effectiveness. This will increase the cost further. Sometimes, the estimated budget runs out mid-way and the campaign and its effectiveness is lost.

The success of digital marketing depends upon a number of factors as mentioned above. For example, the design of a portal may not be so user-friendly or there might be a bug which prevents the transaction from being completed. Here, the total effort spent on digital marketing is brought to nothing at one point, which is outside of its control.

The second thing is scale. There are times when the value obtained from digital marketing becomes significant at a larger scale. That means that every activity done towards digital marketing is itself a complex project and for a successful outcome, all of these projects work toward a common goal. So a digital marketing project becomes a huge, complex machinery whose every part should be in optimum working condition for the entire machinery to move.

A good example of this is the Customer Analytics Case study - T Mobile, Austria where customer churn was reduced by 2.4%. Percentage wise, this figure does not look impressive, but applying the economies of scale, this has been a worthwhile investment.

Addressing Challenges

Educating the end user

Effective ROI on digital marketing can be achieved by educating the client regarding the outcomes of various factors, their risks associated, and the unique challenges that may be involved in that exercise, apart from the patience required to complete the entire campaign. Even with the cost and time commitment from the client, many of the campaigns do not produce the expected result for them and a detailed analysis of them indicate inefficient data gathering, analysis, and reporting.

Acquisition of right skills

An effective digital marketing project encompasses data gathering that is closer to reality, Big Data and Data Science skills to interpret the data and the UX to present the data effectively to tweak the campaign in progress appropriately to get the right ROI.

Planning and involvement

Planning is essential for all aspects of Digital marketing. Once the campaign is rolled out, there has to be a plan to collect data from various medium(s) and ensure that appropriate actions taken for the data received. If one thread is left out, it may turn out to be a poor strategy. It is an inclusive exercise where everyone in the client organization is involved in the action part of the digital marketing while the data scientist, analyst, and the UX personnel are in charge of interpreting the data and monitoring the effectiveness.

Using data science wisely

There is also a belief of “too much data science” in this context. There are lots of instances where using Data Science have increased the effectiveness of the campaigns. Techniques such as customer segmentation have been effective in this regard, as mentioned in the article “How to empower digital marketing with data science”.

Conclusion

You build a Ferrari to win a race in Formula 1 championship as well as make people to buy it for the resilience the car has, to withstand that tough fight. Ferraris were not built in a day, they required vision, strategy, planning, patience, and perseverance, with appropriate technology and resources. Here, in the case of Digital Analytics too, using data science and advanced analytics techniques along with careful planning and execution will be the recipe for success. You need to partner with a team that has gone through the entire cycle of this approach, to get the best ROI for the Digital Marketing Campaigns.

References

  1. Read about HCL Offering on Digital Marketing, Analytics and Experience Services
  2. How to empower digital marketing with data science
  3. Valuable Lessons From 5 Shockingly Bad Social Media Fails