Wednesday, March 7, 2007

What exactly is Return?

Return on investment is a relatively new term for marketers. At seminars it appears we are still trying to determine what the relevant indicators should be. But, there are some things we are certain about though.

I have heard marketeers speak of return in terms of:
"Our marketing investment was this amount and our marketing revenues (return) was this amount". Or, if it's a first effort to be accountable just "Our revenues were this amount.".

But, that is not the appropriate measure. It's not even the most relevant measure.
More appropriate would be to report or consider:
  • Our marketing investment was this amount and our profit was this amount.
  • What would our profit be if we had not made this investment?
  • Would our profit be higher or lower had we made the investment in another vehicle?
I know, in a small market the figures might not always be encouraging. But, there lies our challenge. How do we allocate or re-allocate our marketing investments so that the figures become more encouraging?

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