How many marketers can identify with the following scenario? A colleague tells you about an amazing new digital technology that could boost your company’s marketing operations; you wrangle the budgetâ€¦only to be shot down by a manager or senior executive.
Why? Because somebody on high argues that measuring the ROI of this new service or tool is too difficult, no matter its capacity to revolutionize your marketing efforts.
Or this: You make your case, outlining exactly the ways in which this martech can actually boost revenue, only to be told, â€œMarketing doesn’t drive revenue, sales does.â€
Anything sound familiar?
Every marketer struggles with the â€˜ROI humpâ€ on a regular basis, particularly in the digital age,Opens a new window when new martech opportunities are being released at a breakneck pace. Proof point: The number of unique martech solutions available has increased sevenfold since 2014.
The majority of C-suite executives simply fail to grasp how these myriad digital strategies can contribute to revenue. As such, ability to prove martech ROI has fast become pivotal for marketing teams that want to sit at the forefront of the digital wave, where global spending is approaching $100 billion.Opens a new window
Indeed, the marketing landscape progressively has become more revenue-driven in response to this trend. For example, a recent Duke University study found that four of every five CMOs feel significant pressure to deliver ROI, revenue and growth.
Marketers are increasingly using customer and consumer data created by their company’s content, as well as their tech stacks, to prove to their CMOs that martech is a worthwhile investment.
And yet, while just over half of marketers agree that â€œproving the ROI of content marketingâ€ is one of the biggest roadblocks to their success, 57% of marketing organizations admit to lacking a system that measures their marketing ROI.
To a large extent, the new accountability demanded of marketers by their leadership results from a digital revolution that has been growing too fast.Opens a new window Too much investment has been poured into martech solutions in recent years without enough clarity as to what problems those new tools are meant to solve.
In many ways, martech has become a victim of its own rapid development.
Consequently, executives now compare the significant investment requested by their marketing departments to the revenue that often has failed to match previous similar investments. And that leads to predictable results.
The ROI challenge
ROI is the digital marketer’s most important KPI and his biggest challenge.
Crucially, the major question that marketers can’t seem to answer is this: What’s the best way to measure this key metric? More specifically, there is little agreement as to which activities contribute most to the ROI of martech.
One report found that less than one-fifth of marketers agree on how to best gauge the ROI of martech â€“ an issue compounded by the nearly 7,000 unique martech solutions on offer.
How, then, can marketers overcome this lack of consensus and ensure the martech tools they install offer a measurable ROI?
To start, new marketing technologies are increasingly designed to provide the necessary data. Take recent developments in machine learning and artificial intelligenceOpens a new window which are enabling marketing automation technologies to help better analyze customer preferences, and even gauge the extent to which specific consumer behaviors lead to improved revenue.
New martech solutions in the realms of digital customer engagement, advanced customer analytics and targeting and location-based analytics, among others, are already capable of driving revenue growth.
Yet, many companies’ approach to martech is characterized by a lack of strategy and inefficient execution.
The importance of a martech strategy
First, as you evaluate why your martech stack is not producing real revenue dollars, start by uncovering the source of that problem. As Apple CEO Tim Cook put it, â€œCompanies that get confused, that think their goal is revenue or stock price or something â€” you have to focus on the things that lead to those.â€
It is all too common for marketing leaders to invest in martech while failing to explore why those technologies may fail to deliver.
Marketers should assess their marketing stack much as they do their actual content. In the same way that content marketing requires an in-depth editorial strategy, a detailed martech strategy is fundamental to making sure the digital marketing stack is successful in its mission â€“ and leads to measurable ROI.
First and foremost, this strategy should identify the objectives for a specific martech solution.
Then, it will be easier to find answers to the many relevant diagnostics questions you should ask about your martech stack, including how ROI is measured, how each element was chosen and implemented, what other departments should be involved, and, crucially, how it is specifically expected to complete each of those identified objectives.
Ultimately, data is at the heart of the martech revolution.
It’s up to marketers to design and implement a strategy that effectively and efficiently uses that data, ensuring that those digital marketing tools contribute to growing the top line â€“ from strengthening the brand, to targeting customers and, most important, to improving conversions.