Why email and digital activity is not always the greener option

When it comes to measuring the carbon footprint of quantifiable marketing activities, such as advertising in newspapers or catalogue production, it’s relatively easy. Most marketers have experience of the production process, from tree to paper and from print to post, and instinctively try not to waste paper and recycle where possible.

At UniFida we talk to many marketers about this subject and find that most are uncertain about the relative carbon footprint of digital media channels. And for those with no way of measuring it, there is a common misconception that digital marketing is greener and more efficient than non-digital (offline) channels.

Sending one direct mail letter does arguably have a larger carbon footprint than sending one email. However, since email is seen as a cheap and effective channel, the volumes of emails being sent are rising significantly – whereas companies tend to be more cautious about ramping up costly direct mail.

Budgets shifting

Nevertheless, with marketing budgets shifting from offline media (such as TV and radio) to email and digital marketing, there will come a point when the carbon footprint of increasing volumes of online activity exceeds the footprint of offline spend.

Making digital and email activity the biggest part of the marketing footprint is likely to create some surprises. This is illustrated in the case study below.

C02 Carbon Count for marketing activity graph

In this example, offline spend such as TV, Press and Radio, although still significant, has dropped to 45% of the marketing budget. Digital spend (across mainly Display, PPC and Social) is 52% of the budget and the remaining 3% is split 2.5% to direct mail and door drops and 0.5% to email.  In terms of efficiency, typically offline media has a higher Cost per Sale, followed by printed direct marketing and digital activity, with the lowest cost per sale being email.

However, driven by the sheer volume of email activity, the carbon footprint per sale for email (Kg CO2 per Sale) is more than the printed direct marketing activity.  More surprisingly, for digital activity (driven by the volume of impressions, PPC bidding and social posts), the carbon footprint per sale is much higher than all other channels.

Where do emissions come from?

Some of the digital footprint comes from CO2 emitted on customer devices and their Wi-Fi networks, but most of the footprint is from the data centres and vast servers creating, storing and distributing the content.

Let’s think about this. A single printed direct mail piece does have a higher carbon footprint than an email.  But as there are so many emails being sent out, when we look at the sales coming in through email, the CO2 per sale through email is greater than the CO2 through direct mail.  Although the cost per sale is good, the high CO2 per sale is an indicator that many emails are being sent that are not generating sales.

So, for a channel where it is possible to target by individual and even predict response, shouldn’t we be aiming for less wastage from email?

In our example, for each sale through digital activity, we see the carbon footprint is very high and exceeds even offline activity – warning again that there is likely to be wasted effort, both in the marketing budget and in carbon.  Focused analysis of the customer journey attribution paths will be able to confirm where the wasted effort is, so that something can be done about reducing the carbon footprint and, in turn, improving cost per sale further.

As budget custodians we are right to focus on a lower cost of sale but, as our case study indicates, it may be that our carbon footprint can help to point out further wastage across channels.

So, apart from the obvious reason of saving the planet, carbon counting our marketing activity is a win for the budget too. If we are more targeted and more probing of our marketing results, we can eliminate more wastage in the budget – and reduce the carbon footprint.

UniFida CO2 Counter

In January this year UniFida launched a CO2 Counter so that companies can measure and understand the sustainability of their marketing activities.  It provides an understanding of the carbon footprint of each activity and helps businesses reduce carbon emissions from their marketing.

Find out more >

 


UniFida logo

UniFida is the trading name of Marketing Planning Services Ltd, a London based technology and data science company set up in 2014. Our overall aim is to help organisations build more customer value at less marketing cost.

Our technology focus has been to develop UniFida. Data science business comes both from existing users of UniFida, and from clients looking to us to solve their more complex data related marketing questions.

Marketing is changing at an explosive speed. Our ambition is to help our clients stay empowered and ahead in this challenging environment.


What Is ROMI & How Is It Measured?

Return on marketing investment, or ROMI, is really the end goal of any marketing campaign. But what exactly is ROMI, and how do you measure your marketing return when there is such a vast chunk of data to sift through?

Automating marketing metrics and extracting accurate ROMI data can be a real challenge – it’s a well-known fact that marketers often struggle with quantifying it.

There are two key reasons for this: firstly, the lack of an agreed definition of ROMI (or indeed a methodology), and secondly, the absence of data and technology to extract and report on it accurately.

We’re going to explore these challenges and provide some helpful tips for measuring ROMI effectively.

What is Return on Marketing Investment?

In terms of definition, ROMI is a metric used to measure the contribution to business value of a marketing campaign or strategy. It represents the return on investment (ROI) specifically for the marketing efforts.

What is the Difference Between ROI & ROMI?

  • ROI = Return on investment. This is a general measure of profitability for any type of investment, not just marketing.
  • ROMI = Return on Marketing Investment. This specifically measures the return on investment for marketing efforts.

This distinction is important because it allows marketers to isolate and analyse the impact of their marketing efforts rather than lumping them in with overall business profits.

This evaluation can be done in the short or long term…

  • Short-term ROMI measures the return from immediate sales that you can associate with specific marketing activities
  • Long-term ROMI also takes account of the longer-term customer value derived from those sales and the brand impact of advertising, which can be monetised over a much longer period.

In this blog, we’re focusing on short-term ROMI, specifically measurable results within a 90-day timeframe after online or offline direct marketing activities have taken place.

(These are activities targeted at individuals, as opposed to indirect marketing activities, such as TV or press advertising).

What are the 2 Types of Short-Term ROMI?

For short-term ROMI, there are two different ways of calculating effectiveness:

Type 1) Investment ROMI

This is the return that takes into account the full costs of marketing campaigns and includes all the measurable results within a 90-day period.

We count the measurable benefit as the value accruing to all the events in any customer journey leading to a sale that can be attributed to a marketing activity.

For example, a sale of £X value after events such as responding to a social media advert, opening a follow-up email, and visiting an e-commerce website via Google PPC.

We allocate the £X value across these three events according to the significance each has in contributing to the sale. The social media advert will receive its share of £X and this goes into the ROMI calculation for this particular activity.

Example of Investment ROMI

The table below shows a calculation of Investment ROMI.

Marketing campaigns A, B, and C launched in January cost £30,000 total, however they impacted customer journeys that carried on until March. Campaign A contributed to a number of sales events that amounted to a combined value of £12,000 in January.

The overall Investment ROMI calculation of 2.17 shows the combined return from all January campaigns.

Type 2) Sales ROMI

Sales ROMI looks at the return from the costs of the customer journey sales events that led to sales in a particular period.

Example of Sales ROMI

So, from the table below, sales in January amounted to £40,000, but the campaigns that caused the sales events that led up to these sales may have launched at any point in the 90-day window before each sale.

Following this approach, we look at the individual customer journeys that precede each sale in January and add up the costs associated with each journey’s sales events.

These events may have been caused by a mix of online and offline campaigns that also impacted sales in other months, such as December and February.

In the case of January, the sales events were all caused by campaigns A, B and C.

Campaign A contributed 500 sales events, campaign B 2000 and campaign C 250. In terms of cost per sales event, campaign A contributed to a total of 2,700 events in this example and, if the campaign cost was £5,200, the cost per sales event is £2.

The value of sales of £40,000, divided by the combined sales events costs of £4,000 that caused it, produces the Sales ROMI calculation of x10 for January.

How to Calculate Return on Marketing Investment Using CDP

Expertise and technology are needed to automate the ROMI evaluation process, knitting together all the different types of sales events and linking them to actual orders.

The types of data required will normally include website browsing, e-commerce, emails, offline contact history, and order processing.

UniFida’s automated approach involves using a Customer Data Platform (CDP) for data integration processes, but alternative platforms can deliver similar results.

Top 8 Ways a CDP Can Make You a Better Customer Marketer

It’s worth noting that for accurate evaluation, you will need 100% browsing activity data and not just the sample that Google Analytics provides (unless you buy the very expensive GA versions at around $150,000 pa).

With the data assembled, there are four key steps:

1) Build a Table of Orders

The first step is to build out a table of orders connected to all the associated prior sales journey events.

Each sales journey event should also link to a campaign or a channel to be measured.

2) Apply a Weighting to Each Sales Journey Event

Applying a weighted credit to each sales journey event allows you to fairly attribute the value of the sale to each channel or campaign that contributed to it (also known as marketing attribution).

We find that, on average, there are around three or four sales journey events before each order, and these can come from several channels.

There is a huge amount of online information about weighting systems, much of which is not based on any science.

We developed our own weighting algorithms based on sound statistical research and we benefit from the fact they can be applied at an individual order level.

Some people use Markov Chains theory, which is also sound but can only work at the level of a substantial table of data, and so is not suitable for evaluating individual campaigns or tests.

3) Enter the Costs of Each Individual Campaign

These costs are essential and may be problematic where there are large numbers of campaigns, as often happens with emails or Google PPC.

If you are looking at Investment ROMI, you may decide to enter costs at a channel level.

For Sales ROMI, individual campaign costs are required.

At this point, you can follow the logic in the tables above to calculate whichever flavour of ROMI you require.

What Are the Benefits of Measuring ROMI?

There are multiple other measures such as impressions, opens, clicks, etc. which give an indication of the level of interest in a campaign.

However, they all fail to answer the key question: was the marketing expenditure in itself justified?

Justification of Marketing Campaigns

The primary benefit is that ROMI calculations are the only way to fully and accurately justify investment in marketing campaigns.

ROMI provides a yardstick by which marketers can evaluate the performance of different campaigns and channels, and from that, make informed decisions about budget allocation.

We are not suggesting that all budget allocation decisions should be based on ROMI, but where ROMI for a particular activity is low, you need to find other ways to justify the expenditure – for example, an activity may play a small but nevertheless important part in a significant number of sales.

ROMI can show how investment results vary at different times of the year and hence guide you towards spending your budget where you are getting the best returns.

For example, catalogues may do better in the colder months when people have more time indoors to study them.

Construction of Saturation Curves

There is one very important by-product of the ROMI calculations.

If you regard the month-by-month ROMI results as a time series of information, then there will be periods when you have spent more or less in particular channels, with varying ROMI results.

This data –when there is enough of it – will enable you to start constructing saturation curves that can show that, as you spend more in a particular channel, returns will go down, and vice versa.

Saturation curves are critically important for budget optimisation. Unless you know how changes in the level of budget for a channel impact their ROMI, it is simply not possible to plan with any certainty how best to shift the budget between channels.

The Bottom Line

ROMI is a key metric for measuring the success and effectiveness of your marketing strategies. By continuously tracking and analysing your marketing investment return, you can make informed decisions on budget allocation and optimise your campaigns for maximum ROI.

Without understanding the concept of ROMI and how it relates to your marketing efforts, you may be blindly investing in channels that may not yield the best results for your business.

By using tools like saturation curves, you can gain a deeper understanding of how your budget allocation impacts your returns and make data-driven decisions for better ROI.

Enquire About UniFida’s ROMI Proof of Concept

UniFida can deliver the required expertise and technology ‘out of the box’ to help you automate ROMI evaluation. We can start with a low-cost proof of concept to demonstrate how ROMI can be calculated for your business.

For more information, contact us below.

Contact Us

FAQs

Is it Better to Have a High or Low ROMI?

A high ROMI, or Return on Marketing Investment, is always better because it means that for every dollar spent on marketing, the company is receiving a higher return in sales.

However, this can vary depending on the industry and business model. For example, some businesses may have a lower ROMI but still be successful due to higher margins or longer customer lifetimes.

What is the ROMI Formula?

The formula for calculating ROMI is:

  • (Sales growth – sales baseline – marketing cost) / Marketing cost
What Does a Negative ROMI Mean?

Negative ROMI means that the marketing efforts cost more than they generated in sales. This could indicate that the marketing strategy needs to be re-evaluated or adjusted in order to be more effective.

It could also mean that there are other factors, such as economic downturn or changes in consumer behaviour, that are affecting sales.

What is Long-Term ROMI?

Long-term ROMI takes into account the customer’s lifetime value. This means that it considers not just the initial sale but also the potential for repeat purchases and a longer relationship with customers.

This can be particularly relevant for businesses with subscription models or high customer retention rates.


UniFida logo

UniFida is the trading name of Marketing Planning Services Ltd, a London based technology and data science company set up in 2014. Our overall aim is to help organisations build more customer value at less marketing cost.

Our technology focus has been to develop UniFida. Data science business comes both from existing users of UniFida, and from clients looking to us to solve their more complex data related marketing questions.

Marketing is changing at an explosive speed. Our ambition is to help our clients stay empowered and ahead in this challenging environment.