Why Brand ROI is Important

Brand ROI: Discover the Untapped Benefits of Your Brand

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Have you ever invested in a brand without knowing its return on investment (ROI)? If so, did you see any positive outcomes from that investment? The truth is, investing in a brand without considering its ROI can be a costly mistake.

Brand ROI is a metric that measures the return on investment of a brand's marketing efforts. It's a crucial factor that helps businesses determine the effectiveness of their branding strategies. Yet, many companies overlook its significance and focus solely on building their brand image.

In today's competitive market, businesses need to understand the importance of brand ROI. It not only helps them track their marketing efforts but also enables them to make informed decisions about their future branding investments.

In this article, we'll explore why brand ROI is crucial for businesses and how it can impact their overall success.

Brand ROI

The ROI of branding is that a strong brand attracts more customers, at a lower cost per acquisition, who are happy to pay a little more and will buy a little more often.

What is the ROI of Branding?

The ROI of branding can be seen in the fact that a strong brand has the power to attract more customers at a lower cost per acquisition. Not only are these customers happy to pay a little more, but they also tend to buy more frequently. This is true for both B2C and B2B brands, as multiple studies have shown.

While short-term marketing initiatives may yield results in some cases, ignoring long-term branding can be detrimental to a company's growth. Companies that have seen above-average profitable growth have invested heavily in building their brand.

A strong brand not only generates more revenue and profit more efficiently year after year but also creates a legal monopoly by acting as a barrier to entry for future competitors.

A strong brand also attracts, motivates, and retains employees, making it the second most valuable asset for a company after its brand. The best candidates will always want to work for the best employer brands.

How is Marketing ROI Used by Companies?

Calculating the return on marketing investment (ROI) can be extremely beneficial for companies, as it can guide business decisions and optimize marketing efforts at an organizational level.

By understanding the ROI generated by a campaign, marketers can take several steps to improve their marketing strategies.

For marketers, understanding the ROI generated by a campaign helps:

Justify Marketing Spend

One important way that marketing ROI is used by companies is to justify marketing spend.

CMOs often prioritize allocating resources and budget for marketing efforts but to secure budget and resources for future campaigns, current marketing spending and budget need to be justified at the executive level. This is where accurately calculating the ROI generated by marketing efforts becomes crucial for marketers.

For instance, they should have a clear understanding of whether native ads are driving conversions and ROI, while display ads may not be as effective. By knowing this, marketers can allocate budgets more effectively to maximize their returns.

Distribute Marketing Budgets

Marketing budgets are a crucial resource for any organization. With so many possible marketing mix combinations, it can be challenging to allocate budgets effectively. However, understanding which online and offline efforts drive the most revenue is essential for properly distributing the marketing budget.

By calculating the ROI of different marketing channels, marketers can gain insights into which channels are delivering the most value for the organization.

For example, they may discover that social media campaigns are generating a higher ROI than print advertisements. Armed with this information, marketers can make informed decisions about how to allocate their budgets to maximize ROI and overall revenue growth.

Effective budget distribution is particularly critical in today's digital age, where the number of potential marketing channels has exploded. Understanding which channels are most effective is essential for making sure marketing budgets are being used most efficiently and effectively possible.

Measure Campaign Success and Establish Baselines

One crucial part of any successful marketing team is the ability to measure campaign success and establish baselines that can serve as a reference for future efforts. Accurately measuring ROI helps marketers to achieve both objectives.

By understanding the impact of individual campaigns on overall revenue growth, marketers can identify the right mix of offline and online campaign efforts. Consistently measuring ROI also allows marketers to establish baselines that can help them quickly gauge their success and adjust their efforts to maximize their impact.

Competitive Analysis

One of the benefits of calculating marketing ROI is that it enables marketers to track the performance of their organization within their specific industry. By tracking the marketing ROI of competitors, marketers can gain valuable insights into how they are faring against their peers.

For instance, by analyzing publicly available financial data, marketers can estimate the ROI of their competitors and use this information to adjust their baselines to stay consistently competitive.

Why ROI is important in marketing

Marketing is a crucial aspect of any business, but it's important to measure the return on investment (ROI) to ensure that your marketing efforts are effective and worth the investment.

From making data-driven decisions to optimizing your budget, here are 13 reasons why ROI is important in marketing:

1. Marks marketing success (in numbers)

As marketers, we often focus on the creative aspects of our work and overlook the importance of measuring the effectiveness of our efforts. We can get carried away with new and exciting graphics, or be too enamoured with our own words. However, it is crucial to determine whether our marketing activities are generating revenue and adding value to the business.

This is where ROI comes in, allowing us to calculate the worth of our marketing activities regardless of their aesthetic appeal. Measuring marketing success in cold, hard cash not only helps us identify what is working and what is not but also enables us to do more of what is generating revenue while avoiding activities that only serve to boost our ego without contributing to the bottom line.

2. Aids data-driven decision making

In marketing, we have been emphasizing the importance of data-driven decision-making for quite some time now. We all know that using historical data is critical in supporting our actions and shaping our strategies, but incorporating ROI metrics into the equation takes data-driven teams to the next level.

There's no better data to refer to than the actual revenue generated by marketing activity. After all, what could be a more compelling metric than the amount of solid, shiny sterling you receive in return for your marketing efforts?

Calculating ROI provides a near-certain guarantee that future investments will pay off, making it an effective way to justify marketing expenses. Hence, determining ROI proves to be valuable for departments that feel undervalued or scrutinized internally, with marketing often being one of them.

3. Balances your marketing budget

Measuring ROI is crucial to balancing your marketing budget. If you've been unsure about how much to allocate to your marketing campaigns, ROI can give you the data you need to make informed decisions.

With the right results in hand, balancing your marketing budget becomes a matter of common sense. If a campaign was successful and generated a high ROI, then it makes sense to invest more in similar campaigns in the future. On the other hand, if a campaign didn't perform well, it's best to cut back on spending and allocate resources elsewhere.

Having a clear understanding of ROI allows you to be more flexible with your marketing budget. During lean times, you can cut back on spending and focus on the most critical campaigns. Conversely, if you have more resources available, you can invest in new initiatives or increase your spending on high-performing campaigns.

4. Streamlines your marketing strategy

When it comes to streamlining your marketing strategy, ROI metrics can make the process a lot smoother. By dividing your strategy into sections and eliminating ineffective campaigns or activities, you can make more informed decisions about where to invest your resources.

For example, instead of continuing to fund a PPC campaign that isn't generating results, you can reallocate that budget to a more profitable channel. You can also save time by optimizing existing content rather than creating new content from scratch. Additionally, by cutting unnecessary expenses such as software that doesn't add value to your team, you can free up resources for more impactful projects.

Knowing your ROI also makes strategic decision-making more efficient. By focusing on campaigns and activities that have a proven return on investment, you can make data-driven decisions about where to allocate your resources. This approach can help you achieve more consistent results and ultimately increase your bottom line.

While there may be intangible benefits to certain content strategies, having ROI as a priority can speed up decision-making and help you produce profitable campaigns. By prioritizing ROI, you can create a more streamlined, effective marketing strategy that drives results for your business.

5. Makes omnichannel less overwhelming

Measuring ROI has another benefit for marketers - it can make the concept of omnichannel marketing less overwhelming. With the increasing complexity of the marketing landscape, with as many as 11 touchpoints required to make a sale, breaking down the success of a campaign into different channels can help to clarify which strategies are most effective.

By being focused on ROI, marketers can better understand the buyer's journey, and determine which channels are most effective for reaching their target audience. This approach also allows for a clearer understanding of the number of touchpoints required to move a prospect from awareness to purchase, and which channels are most effective at each stage of the journey.

By tracking ROI alongside other data streams, marketers can gain a better understanding of where their customers are coming from and which actions are most likely to lead to conversions. This information can be used to optimize marketing strategies, ensure that budgets are being allocated to the most effective channels, and ultimately drive better results for the business.

6. Sets the stage for competitor analysis

When it comes to analyzing competitors, it's important to approach them objectively and with a clear mind. Understanding ROI can help you achieve this.

Rather than being envious of a competitor's success, you can examine their strategies and learn from them. Are they doing something different? Is it working for them? How much would it cost for you to invest in a similar strategy?

Competitive analysis is a crucial skill for marketers to have, but it's often not given the attention it deserves. Many marketers approach it haphazardly, without a clear plan or understanding of what they hope to achieve.

However, when done well, competitor analysis can yield valuable insights and help you stay ahead of the game. And having a solid understanding of ROI is a key part of this process, allowing you to make data-driven decisions and invest wisely in your marketing efforts.

7. Holds creatives accountable

The accountability of creatives is a crucial aspect of managing a marketing campaign. Creative individuals, who are typically shy and sensitive, take immense pride in their work's final product.

However, their enthusiasm can sometimes cause them to meander through tasks, consuming more time than necessary to perfect their work, which can result in budget overruns for the marketing department.

In such situations, having a laser focus on ROI can be a valuable tool for balancing the head and heart of a marketing department. It can enable the department to identify whether it is cost-effective to invest a significant amount of time and resources in perfecting every aspect of a marketing campaign or whether it is better to divide the time based on a task's profitability.

A marketing campaign's success is dependent on both creativity and strategy and holding creatives accountable for their contribution is essential. By using ROI metrics, marketing departments can evaluate how each creative task has contributed to the overall success of a campaign.

This approach allows for better decision-making regarding the allocation of resources, time, and budget.

8. Creates a future-focused team

Having a strong focus on Return on Investment (ROI) in your marketing efforts can create a future-focused team that consistently delivers valuable and evergreen content, generating long-term results for your brand.

For instance, understanding the ROI of a blog post like "How much does AdWords cost?" with 21.2K views and counting can help push it to the top of the priority list for optimization and serve as a template for future content.

The insights from ROI data provide your marketing team with valuable context, enabling them to better comprehend how certain strategies can generate clicks, interest, and revenue over time.

A future-focused approach not only emphasizes the importance of immediate results but also drives the team to plan for future success. While it may be tempting to concentrate solely on present outcomes, a strong focus on ROI encourages the marketing team to think strategically and proactively.

By using ROI data, your team can shape a group of savvy marketers, continually adapting and evolving their tactics to achieve long-term brand growth and success.

9. Gets everyone behind the same goal

Calculating ROI is an important step in achieving success in marketing campaigns. It involves attributing marketing value to specific actions, which helps to segment the success of a campaign. With marketing becoming more complex, ROI can help to make omnichannel less overwhelming. By understanding the buyer's journey and the actions that lead to more than just brand awareness, you can allocate resources effectively.

ROI is also useful for competitor analysis. By comparing your strategy with that of your competitors, you can learn from their successes and mistakes. It's important to approach this part of your workload seriously, as having a real grasp on ROI is key to performing competitive analysis well.

In addition to competitor analysis, ROI can also help to hold creatives accountable. With a focus on ROI, you can avoid going over budget on marketing campaigns that aren't cost-effective. It can also help to create a future-focused team by understanding how certain actions generate revenue over time. This allows for more effective prioritization and optimization of evergreen content and continually converting pages.

Moreover, calculating ROI can get everyone behind the same goal. It's important to decide what ROI means to you and your team and to make sure it aligns with your financial goals. By having a clear goal in mind, every piece of work can be aligned and everyone can be on the same page. This can help to rally the troops and raise morale, as well as contribute to your company's business objectives.

10. Improves forecasting accuracy

Understanding what constitutes successful marketing is crucial in accurate forecasting when to expect it in the future. While viral content often comes out of nowhere, most marketing can be predicted, as audiences tend to be more receptive to certain formats over others.

We have found that top-of-the-funnel blogs that provide expert information always perform well and generate more revenue than we spend on them. However, more sales-centred decision-style blogs can be hit or miss.

By investing in both types of content and prioritizing the format we rely on, we have been able to create a steady stream of traffic. Accurate forecasting, which comes from understanding what works and what doesn't, helps us to fight for our right to market and achieve long-term success.

Dabbling in forecasting as an afterthought isn't enough. Marketing managers need to have a clear understanding of what constitutes success and set realistic goals based on those definitions. This helps to align the team and create a culture where everyone is working towards the same end goal.

By using ROI as a guiding principle, we can make data-driven decisions that lead to successful marketing campaigns, and in turn, greater revenue for the company.

11. Introduces teams to new technologies

When it comes to marketing, technology is constantly advancing, and ROI is a powerful tool to help your team stay up to date.

One of the first things you may do when trying to calculate your ROI is to adopt an analytics platform such as HubSpot. This opens your team up to new opportunities, allowing you to view your marketing efforts from afar as well as up close. By doing so, you can identify what's on the horizon for your team and what's on your immediate agenda.

Beyond that, reviewing ROI more generally can also help you identify additional budget and wiggle room for buying new tools or developing new techniques in specific areas of the business.

For example, if blogging is a booming marketing initiative, it may be worth investing in a tool like Grammarly premium to ensure grammar is perfect or a content optimization tool.

Introducing new technology to your team expands their skillset and marketing knowledge, allowing them to offer more value and create better content over time. By staying on top of new technologies and adopting them where appropriate, you can ensure that your team is always well-equipped to meet the needs of your business.

12. Diffuses departmental tension

ROI can be a powerful tool to help marketing teams diffuse tensions with other departments. It allows you to communicate the value of marketing efforts clearly and objectively, which can be helpful in conversations with senior staff members who may be sceptical of the department's worth.

The use of ROI can be especially important in situations where there is a rivalry between sales and marketing teams. Some experts even describe this tension as a war between the two departments. In today's age of marketing, sales and marketing teams must work together, so anything that can help to align these teams is valuable.

By keeping a close eye on the result of marketing efforts, you can prove that your department is just as deserving of resources and support as any other department in the organization. ROI can help to demystify marketing by providing clear metrics for success that can be easily understood and communicated.

In addition, tracking ROI can provide insight into where there is room for improvement and where resources could be better allocated. This can lead to a more collaborative and effective approach to marketing across the entire organization.

13. Keeps your big boss happy

ROI is important for keeping your boss happy, and it's one of the reasons that it's such a crucial metric to track. Although there are many different ways to measure success in marketing, at the end of the day, your boss is going to be most interested in the bottom line.

While things like brand awareness, social media presence, and high-quality content are certainly important, they don't necessarily translate into direct revenue. As marketers, we understand that they can contribute to revenue in indirect ways, but it can be difficult to communicate this to others.

ROI is a great way to bridge this gap. It provides an easy-to-understand way to show that your campaigns are successful and contributing to the company's bottom line. This can help you keep the peace with your boss and gain recognition for your hard work.

To get started with calculating ROI, try using a conversion calculator to see how your content is currently performing. You can then take the results of your calculations to your next meeting and use them to show your boss just how effective your campaigns are.

By doing so, you'll be well on your way to earning your boss's appreciation and securing your place as a top-notch marketer.

Grow with ROI

In today's competitive market, measuring brand ROI is essential for businesses to ensure that their branding efforts are producing the desired results. By tracking key metrics such as brand awareness, customer loyalty, and market share, businesses can gain valuable insight into how effective their branding strategies are.

However, improving brand ROI requires a holistic approach that involves creating a strong brand identity, developing effective marketing campaigns, and investing in customer experience. By focusing on brand ROI, businesses can drive growth, build customer loyalty, and ultimately increase profitability.

At The Brand Shop, we understand the importance of ROI in branding and can help you develop a comprehensive strategy that aligns with your business goals. Our team of experts can assist you in creating a strong brand identity, developing effective marketing campaigns, and improving customer experience to drive growth and increase profitability.

Don't let your branding efforts go to waste. Contact The Brand Shop today and start growing your business with ROI.

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Tumisang Bogwasi

Tumisang Bogwasi, a 2X award-winning entrepreneur and is the founder of The Brand Shop, specializing in innovative branding strategies that empower businesses to stand out. Outside work, he enjoys community engagement and outdoor adventures.