The choice of the right marketing technology provider for each business depends on many factors. Return on investment (ROI) is one of the most important ones.
The rise of marketing technology is bringing up the challenge of finding the best provider to meet your business goals. One of the most popular factors that affect a martech investment is the measurement of its ROI.
Every purchasing decision from marketers has to be justified. The return on investment can tell whether the technology can meet their expectations, bringing them closer to their goals.
As more marketing technology vendors show up though, the choice becomes harder on picking the right solution. As the criteria are subjective, ROI becomes even more important for each company.
Marketers’ focus on ROI for martech investment
According to the recent Marketing Technology ROI survey by Ascend2, the increase of marketing ROI is the first objective for a marketing technology strategy.
69% of the respondents view ROI as their primary objective, while 48% focus on marketing efficiency. This means that it becomes imperative for a marketing technology solution to be able to help a company with the set goals, improving the way they are measured and achieved.
Return on investment seems to be a key factor when searching for a new marketing technology. In fact, its evaluation tends to be among the biggest challenges for marketers.
It is estimated that 44% of marketers believe that forecasting ROI is one of the biggest challenges when acquiring new marketing technology. This can be interpreted in two ways:
- They are interested in learning the ROI of the technology they are planning to use. We are shifting from the age of using new “shiny toys” because everyone does so, to the time when every decision needs to be based on data that (Read more...) it.
- It is still challenging to measure the actual ROI in the marketing technology landscape. As marketing technology solutions are still new, it is still hard to be able to evaluate the ROI and we’re expecting this to become a priority for marketers in the next quarters.
Setting a timeframe for ROI
Another common question when looking for a new marketing technology is, “when should I expect a return on investment?”
Every business has different ways to measure the ROI, but they all set their own timeframe on when to expect the first results from the implementation of technology.
According to Ascend2’s survey, 39% of marketers expect to achieve ROI in 4 to 6 months. Moreover, 29% wait longer, aiming for 6 to 12 months.
Other marketers seem to be more impatient as they want to see a return on investment in less than 3 months. Only 7% of marketers believe that ROI is achieved in more than a year.
As with the evaluation of ROI, the timeframe is subjective. The timeline depends on the goals of each company, the marketing angle that they’ll use the technology for and also the resources they have for its implementation.
For example, it’s not unrealistic to expect ROI in less than 3 months as part of a well-prepared marketing team that already has a strategy and want to accelerate the key results.
On the other hand, if a small company is still at an early stage in updating their marketing strategy, their investment may require a longer period of time to see the results of it.
How to evaluate ROI
The challenge of measuring ROI in marketing technology starts from the confusion in trying to define it.
The return on investment may be different for each product and each company that uses it, but there is still a general definition of it.
In every investment, ROI is calculated by dividing the benefits with the cost. More specifically, marketers evaluate ROI in marketing technology by assessing the possible impact of the technology and its cost to achieve it.
For example, if a company is interested in buying a marketing technology focusing on analytics, this would be the initial thinking on evaluating ROI:
“We are looking for a martech solution that will enhance our analytics measurement and we’re examining our options and their possible ROI”
In this scenario, the Investment would involve:
- cost of marketing technology
- time spent learning the new platform
- additional tools required
- resources needed for the team
The ideal Return would be:
- efficient measurement of goals
- enhanced productivity
- improved understanding of analytics
- easier conversions
In every case, the evaluation of ROI should involve realistic targets, while it can also include a stretch goal for additional calculations of increased impact.
When it comes to the functions that make ROI of martech easier, analytics and predictive modelling seem to come first. According to Ascend2’s survey, 50% of marketers place analytics and predictive modelling as the first feature that is most likely to increase their ROI. Data management comes second and marketing management is third.
This means that these functions have more chances to create a clear measurement for marketers, helping them decide on their priorities and their future goals.
Aligning your marketing strategy with martech ROI
The best way to evaluate ROI is to assess it with your existing marketing strategy. When you need to explore the ROI for a new purchase, you can ask if this meets your strategic goals. How will this investment make you meet your goals sooner?
As you start with the marketing strategy, it’s easier to interpret the actual ROI for each tool, as you align it with actual goals and metrics. This way it’s easier to understand how it can help you deliver an improved performance.
It might even be a good idea to involve the strategies of different levels, starting from the business strategy, heading to the marketing strategy and ending up narrowing down your perspective with a marketing technology strategy.
If you’re planning to invest in multiple martech vendors, then this suggestion can help you organise all your goals and how each platform can help you achieve them. This way the measurement of ROI becomes easier, while you’re not missing the focus of your bigger goals.
4 steps to evaluate martech ROI
The assessment of martech ROI can be divided into four main steps:
- Understanding the problem: the first step is to acknowledge that there is a problem that you’re trying to fix. As you’re looking for the best martech provider for your business, you are aware that there is an area that can be improved through a number of features. This is the step that you have to set the goals for such an investment. What are you trying to achieve and how will technology help you?
- Analyse the cost. the next step is to analyse the cost of every choice. A product’s price is not necessarily the main factor when thinking of a purchase, but it’s still an important element of the equation. In fact, it’s the cost benefits that can help you understand if this platform can bring you closer to your goals. If one technology is cheaper but it only meets 30% of your expectations, while another option is more expensive but helps you meet 65% of your goals, then you need to decide if your budget allows you to reach your goals faster.
- Set measurable benefits. Right after the analysis of the cost comes to a key step. It’s the time to organise all the benefits that you’re expecting from a new investment in marketing technology. This should be a consideration of all the measurable benefits that you could achieve through the new marketing technology. Although it’s not always easy to quantify your goals, the focus on tangible expectations and metrics can make it easier to assess the possible ROI.
- Evaluate impact. As not all goals are tangible, it’s useful to focus on the broader impact the technology could have on your business goals. From daily tasks to a higher level strategy, ROI could be interpreted in multiple ways, but it can still bring different benefits to a company.
Is there a consensus on measure ROI?
There may be a broader attempt to evaluate ROI, but it still depends on each company’s goals and the priorities that go along with them.
As with every new technology, marketers are encouraged to explore the best way to benefit from a possible purchase, while assessing the cost and the team needs that are also required.
ROI tends to be one of the most important factors when considering a martech purchase and this means that we cannot ignore the benefits of a platform.
Just because martech is trending, doesn’t mean that we shouldn’t seek for ROI on each product. And this is the right time to start evaluating it.