Show Me ROI!!

For some it is Rate of Interest and for some its Return on Investments. Though both these terminologies have their significance and justification when it comes to making financial or marketing decisions respectively, I would particularly talk about the latter here.

Gone are the days when Managers used to do their best impressions of 1996 classic movie Jerry McGuire, screaming at the top of their lungs its famous dialogue 'Show me the money' in sales and marketing meetings. It was a time when sales and marketing were treated as one. Later with times the marketing and its strategies evolved and it got its own time slot of conference room to have its own separate meeting. With times the marketing became more independent and required due concentration and investment in brand building and recall. This brought about more suaveness in managers and more data crunching for subordinates.

In modern marketing times it has now centered itself upon the most important equation for any marketing or branding decision. Here the equation being 'Return on Investment'. Any proposal or innovative idea to boost the brand presence of any organization is met with a road block question of What's the ROI of the idea. If you are successful in overcoming the roadblock you might as well see your name in organizational hall of fame charts. (Too exaggerated statement!!! Yeah, I agree but I wanted all of you to relate to ROI's utmost significance as far as the marketing of an organization is concerned)

Return on investment in broad perspective is the estimated percentage of revenue generated out of making 'x' amount of investment behind an idea. For example ROI is the percentage of revenue generated by putting up a hoarding on busiest crossroad of a city. Why is it that important to calculate and consider ROI for every marketing or branding decision? Well let's just say the dynamics of the subject and its applications have changed and move on!

Let's take specific marketing and branding tool to understand how ROI equation is calculated and what sort of data crunching is determined to arrive at its solution. Hypothetically we consider Sponsoring a Sport Event as brand enhancement tool for an organization, then a brand manager would need answers to following questions

1. Does the audience profile of the event suit or resemble our brand's target audience profile?
2. Does associating with this event communicate my brand message in most effective manner?
3. What is the marketing plan of the Event?
4. Who are the organizers and what are their credentials?
5. How would the event be publicized?
6. Does it have the potential to interest its prospected target audience?
7. What sort of brand value can my organization extract by associating with the said event?
8. What is the expected turnout of the crowd, how much time will each person be engaged?
9. Are the organizers offering me space to carry out my customized engagement or activation?
10. What is my brand value or sales revenue at the geography in which the event is to take place? Do We have enough sales and marketing support to activate the said geography?

The questions above are asked and answered not in the particular order. Based on the answers the brand manager will have to define the budget for sponsoring the event in order to extract maximum out of its investment and gather as much brand mileage it can gather by the certain association. If the ROI is positive considering the payback period of the investment than the decision is worth taking or else back to the drawing boards. That's how competitive and demanding but worthy the profession has become. Ensuring ROI is the new challenge every marketeer is savoring right now. The best part of it is that it applies to all segments whether its B2B or B2G, whether its ATL marketing or BTL marketing. If there is something new to be done, ROI calculations have become the norm.

So the next time when your branding agency comes up with a great idea, simply ask Show Me the ROI !!!