Marketing can be done through many different vehicles and mediums. Not every medium will have the same result or cost. As such mediums need to be compared and evaluated to learn what is best for your business. So we are going to look at a report from Neilsen Research which analyses which mediums are most effective for marketing: 

• Paid online advertising
• Promotions/Price Discounts
• Magazines
• TV advertising
• Outdoor ads
• Newspapers

The chart below lists the major marketing methods that the vast majority of businesses will consider utilizing. We have also added the following mediums to review:

• Search engine optimisation
• Email marketing
• Direct mail marketing
• Trade shows
• LinkedIn Ad

Comparing Marketing Methods

The Nielsen Company has done a great deal of research comparing different marketing methods about the ROI that can be expected from them. 

Search engine optimisation is not included (it is unique from online ads). For many companies, you can Google, and monitor the ROI of our SEO services every week to ensure clients are getting the best value for their marketing budget.

The average for SEO services is £2.75 ROI, which means that for every £1 spent, the company generates £3.75 (for a profit of £2.75). In percentage terms, this would be a 275% return on investment. When looking at the chart above you can see that Email marketing, SEO, and direct mail all have a much higher ROI.

How to Measure the ROI of Your Marketing Activities

The first step to calculating the ROI of your marketing activities is to start attributing a marketing method to each sale. This can be done by giving customers a choice of marketing methods at the checkout page or if you don’t sell online it can be done by asking the customer how they found you and why they decided to buy at the time of purchase. Once you have this information you can calculate the sales and contribution margin attributed to each marketing method and calculate the return on investment for each method. To complete this calculation, you can use the formula below. 

Marketing ROI = (Additional Profit From Marketing – Cost of Marketing)/Cost Of Marketing

Where Additional profit From marketing = Revenue from marketing – Variable costs of that marketing

And where Variable costs of that marketing = Revenue x Contribution Margin or Revenue – variable costs

For example:

If we assume that £10,000 in sales were brought from magazine advertising and that the company has contribution margins of 40%, that gives an ROI of [(10,000 x 40%)-500]/500 = 700% (Every £1 spent returned 7 pounds in profit after the cost of the marketing).  

Different marketing methods excel in different campaign lengths. Some methods will take a few months to reach peak effectiveness while others will hit a peak immediately. Ensure you run and measure the campaigns for the right length of time, erroring on the side of measuring for too long a period.

Increasing the ROI of Existing Plans

The same Nielsen report found that marketing effectiveness could be increased by 30-40% by taking a closer look at the specifics of each marketing method and adapting the strategy to focus on strengths and minimize weaknesses. Their guiding principles for maximizing ROI are:

1. Consider both the short and long-term impact of a marketing campaign
   Different marketing methods excel in different campaign lengths. Some methods will take a few months to reach peak effectiveness while others will hit a peak immediately. Ensure you run and measure the campaigns for the right length of time, erroring on the side of measuring for too long a period.
2. Choose the right portals and campaigns for online success
   Understand your target market on the web and focus on creating content and advertising to attract that specific demographic to your site.
3. Influence target groups with magazine advertising
   Magazines have a segmented target group (unlike newspapers, which are read by a wide range of readers). If a magazine’s target group overlaps with your business’s target group consider advertising with that magazine.
4. Focus on campaigns that generate the greatest halo effect
   Marketing methods that increase sales are what matter at the end of the day. Focus on methods that increase sales the most across the highest number of product lines.
5. Drive brand loyalty with TV advertising
   TV/video ads are the best way to communicate brand information and build brand loyalty. For small or very targeted budgets try Youtube video ads.
6. Create synergies across media to produce additional uplift
   The messages that your marketing is deploying must be consistent across all mediums. Implementing multiple media at the same time can cause a higher ROI.
7. Create brand awareness through in-store advertisements
   An excess of discounts and promotions erodes a brand’s quality over time. Focus on advertising your brand within your store or website to continue to grow brand awareness instead of using discounts to drive sales
8. Invest in your customers with premium gift packs
   Investing in your most valued customers has a short-term cost but can have a long-term gain. Increasing the perceived value of your services to your long-term customers is essential to keeping those customers. This can be done easily by offering additional services for free with a purchase or just giving them a small gift like a box of chocolates just to say thanks for being a customer.

The Marketing Method with the Best ROI: Email Marketing

In the Neilson study, email marketing has the highest ROI of 675% when compared with any of the other major marketing methods. An email marketing campaign with a business’s website can be utilised to great success to increase sales and profits.

With this as a baseline, remember this number is the highest compared to everything else. Thereafter within email marketing as a stand-alone science, there are entirely different applications to consider, which achieve varying degrees of success, starting at the lower end – all be it – of the highest returning sector.

Within these, by a country mile hyper-personalisation dominates marketing ROI. Published last month, email hyper-personalisation technology offers supporting verification that it not only obliterates all other forms of email marketing, specifically variants such as triggered email marketing – (if the customer does this, they get an appropriate email etc overtaken by a ratio of 5:1.) and omnichannel variants by 3:1