UniFida to present at the DCA Annual Summit

“One marketing budget, many channels – how omnichannel attribution optimises these.”

That’s the subject of an insightful presentation by UniFida and Wentworth Puzzles at the 2022 Direct Commerce Association (DCA) Annual Summit*.

With marketing budgets being heavily scrutinised, there is a constant pressure to prove marketing return and tighten up on waste. In this presentation – by UniFida’s Client Director, Jo Young – visitors to the Summit can learn how omnichannel marketing attribution measures the way that channels work together (whether they are trackable or non-trackable) and helps optimise precious marketing budgets.

“Companies who use a range of marketing channels can find it challenging to understand how those channels interact, and what the optimal mix of marketing is,” said Jo Young. “Measurement can be difficult enough with trackable channels such as paid search, display and email, but adding press, TV or poster advertising to the mix rapidly complicates evaluation. We look at how to tackle this.”

She added:

“Every channel has a different role to play in the sales funnel – one seemingly low-performing channel may be necessary to support the role of other channels that can close the sale. More will be revealed in our presentation.”

Jo Young, Client Director, UniFida
Jo Young, Client Director, UniFida will present at the DCA summit

 

*The DCA Annual Summit takes place on Tuesday October 18th, 2022 at the Millennium Hotel, Gloucester Rd, London SW7. More information on the DCA Annual Summit event website >

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.

UniFida Customer Data Basics: Session One – What is a Single Customer View (SCV)?

In this first video in the series, UniFida’s Client Director Jo Young talks about Single Customer Views (SCV).

What are they? Why do we have them? Why are they important?
How do you create them? And what benefits can you expect?

Play Video
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.

Selecting a CDP — the questions mid-sized companies need to ask

As a mid-sized company, there will be many areas where a Customer Data Platform (CDP) may add value to your business.

Your company will most likely have an existing range of marketing technology solutions, such as an email service provider (ESP), an ecommerce platform linked to your website, Google Analytics, and an offline order processing system which maintains a history of all product sales through different fulfilment channels.

where does a CDP fit in diagram

Before deciding on whether a CDP can improve on what you already have, there are some key questions you need to ask.

What actual value will we gain by adding in a CDP to our normal configuration of tools?

A CDP will normally provide additional core functions including:

  • Ingesting data from your website, email service provider, ecommerce system and order processing
  • Identity resolution to pull together all known data about every customer or prospect sourced online or offline
  • Data integration, often via API, with other existing martech tools
  • Building a single customer view to include a mix of raw data received and derived data variables
  • Capability to automate trigger or batch marketing campaign selections
  • Provision of dashboards based on the data received
  • Campaign results reporting or even multichannel marketing attribution

What is the role of a CDP in supporting our marketing and business planning decisions?

A CDP will be able to answer a wide range of planning questions, including:

What longer term customer value (LTV) can we expect when we recruit customers from various sources, or through different offers?
Invariably different recruitment channels will provide customers with varying LTV and understanding these enables the business to set realistic CPA targets by channel.

What proportion of my existing customers reorder each year and how much is that worth?
This key question allows a marketer to plan forward knowing broadly how much demand is to be expected before new customer recruitment is added in. It also enables a company to measure how well their overall customer marketing is doing. If the percentage of existing customers reordering is growing, then customer marketing is doing a good job, but if it’s falling something needs fixing.

What value am I getting back from my marketing investments?
Because the CDP can track customer journeys, both online and offline, it can measure the contribution made by specific campaigns or channels to these, and hence their value provided. No longer should a marketer simply take a list of people contacted by a campaign and find out which of these have ordered in a specific time period, because this will ignore all the other components of the customer journeys that led up to a sale.

Are there areas of my marketing spend that should be cut back or removed?
Most companies hang on to some campaigns that should be modified, but often lack the analytical tools to identify them. A frequently found example is spend on PPC where GA is reporting a much-exaggerated contribution, but without the capability to look at all the other elements in the customer journey, the PPC spend is maintained. Another example is where data is purchased to run cold campaigns. A cold list needs to be integrated into the CDP to support the full evaluation of the campaign just as contacts made with existing customers do.

On a much wider basis companies need dashboards to show them the direction of travel across a whole range of KPIs. These can look at anything from how different customer segments are performing, to the proportion of successful vs. unsuccessful website visits. The data in the single customer view, particularly because it combines both online and offline activities, can provide a very rich feed for dashboard reporting using tools like Power BI or Tableau.

The CDP can be seen as a rich historical data store that holds a persistent record of the activities of each customer. From an analytical perspective this is invaluable as the data can be mined by data-scientists to answer every conceivable question relating to sales, customers, marketing performance and even where profit ultimately comes from.

And finally, the CDP allows for the democratisation of data and information. CDPs are normally cloud based, and hence open to anyone with access rights. This means not only access to dashboards, and existing metrics reports, but also the ability to extract data and undertake further analysis as required.

How can we generate more value from existing customers or prospects?

There are many ways in which the CDP can improve cross-channel communications, and hence improve value received from customers.

  • The capability to respond to triggers is critical to delivering the right communication at the right time. There is some capability to do this embedded inside many of the ESP platforms, but because they lack the richness of data contained in the SCV, they can on the whole only respond to short-term signals like dropped baskets. A CDP will be able to take the wider view, for instance understanding the longer-term value of the individual customer, whether they are becoming more or less loyal to the brand, whether they have missed their usual anniversary of making a purchase, the kind of merchandise they are likely to buy based on their affluence, the behaviour of other customers in their household, and so on. The list of potential trigger activities based on a CDP is huge and a brainstorm to surface these can be invaluable.
  • In a related way the CDP can target batch campaigns in a very sophisticated manner. For instance, not only can overall response propensity models be built that are far more powerful than RFM (recency, frequency, monetary value) selections, but also these can be used to determine which categories of product an individual customer is more likely to be more interested in.
  • We often find companies ignoring large swathes of customers who have not ordered for a while, which, when using RFM selection methodologies, they are not able to target economically. However, once a reactivation propensity model has been built, groups of these individuals can be identified that are very profitable to reactivate.
  • Introducing customer segmentations to determine the types of propositions to make to individuals. Take a very basic segmentation based on age and affluence and it becomes immediately clear how useful is a tool like this. It can be applied to the SCV and used to differentiate the content being used for different groups so that the affluent older generation can be treated differently to impoverished students.
  • The CDP can be used to manage customer contact density across all outbound channels and to coordinate the messaging. When they are operating in different silos the ESP can send message A and the direct mail campaign can contradict it with message B. The CDP can remove these kinds of contradictions and also manage the overall level of communications sent to individuals. Send out too much and you are not only wasting money, but also drowning the customer, whilst sending too little means that you will be missing potential demand and leaving the customer curious about what they have not been offered. Our testing has also found that different customer segments, particularly those based on different propensities to buy, will respond better to varying levels of contact density.
  • Lastly, there is the crucial question of using testing and setting up control groups. A CDP can be used to set up control groups who, for instance, are not exposed to any marketing communications from any channel and contrast these with those that are. Testing also provides the knowledge base from which every kind of improvement in customer communications can be derived. But tests need to be selected from, and recorded in, the SCV to avoid cross-channel confusion and provide the ability to measure the longer-term consequences of the tests, rather than just the short-term response from a particular offer.

 

How do we reduce the time spent on managing campaigns and pulling reports?

The CDP will create one version of the truth for the business, from which consistent compliant selections and reliable automated reports can be produced.

  • There is a huge amount of drudgery in managing marketing communications if you don’t have the right tools. With a well-designed CDP, and using drop down menus, setting up a new campaign should be a matter of minutes, compared with what many hours if different data sets need to be combined, manual selections made, seed lists added in, and source codes applied, etc.
  • If your CDP is linked to a suppression house you can also, with a click, send your selection to have the goneaways and deceased flagged in seconds.
  • At the same time as setting up the campaign you will be able to organise how its results are reported and choose the right metadata to describe it. After that reporting and test results comparisons should be automated.
  • Ad hoc reporting is normally the elephant in the room when it comes to workload and much of this can be eliminated by having in place the right set of dashboards, plus automated customer and campaign metrics.
  • Some CDPs will automate many aspects of GDPR requirements, including the coordination of consents and automating the production of Subject Access Requests. Consent coordination is vital for campaign management and again can avoid considerable manual effort.
  • When looking at the benefits from introducing a CDP, the financial value of marketers’ time saved may seem small compared with the other benefits, but the improvement in accuracy, creativity and job satisfaction released by the removal of boring manual tasks can be very important.

 

How do we make a decision about whether to introduce a CDP?

There are a large number of areas where a CDP may be able to add value to your business. However, there is no substitute for brainstorming, and then listing, all the potential use cases and working out the value you will expect to get back from each of them. The benefits usually take the form of increased customer value, reduced marketing costs and saving of staff time.

There is also the important question of what impact this will have on your internal IT resources. The answer to this is relatively simple. Assuming that all the data feeds can be automated, once these have been set up to run your internal IT team will have done their job, assuming you are buying a fully serviced CDP.

If you are buying a platform that you will need to configure yourselves, then there is an additional layer of work which may be substantial. It is critical to find out from the vendor exactly how much support you can expect to get.

Research has shown that most companies who introduce a CDP get considerable value from them, but that this augments over time. As the users learn how to get more and more value from the CDP, so the returns grow. So, it is worth lowering expectations for year one, and augmenting them for subsequent years.

UniFida can help with use cases for a CDP:

Request a no-cost Proof of Concept

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.

Marketing Metrics – Why Do They Matter?

When it come to measuring marketing success, there’s no doubt that marketing metrics are crucial.

Every company will have its own specific marketing metrics requirements. Analysing what these should be, and then having them delivered in a timely and reliable fashion, is vital for the success of every marketing department – and ultimately the company that it is serving.

To show the value of marketing metrics, let’s compare the fortunes of two different companies. Company A had a good set of accurate marketing metrics and used them well, while Company B had some faulty metrics and decided to be guided by them, with unfortunate consequences.

Metrics of Marketing: Key Takeaways

  • The right marketing metrics enable businesses to manage demand, control spend and maximise return on marketing investment (ROMI).
  • Historic, accurate metrics help forecast sales from existing customers and determine the level of new customer recruitment required.
  • Faulty marketing metrics, such as duplicate records or inaccurate match-back, can significantly understate campaign performance.
  • Using the wrong metric (e.g. absolute orders instead of customer order rate) can hide declining performance.
  • Accurate analysis of marketing metrics directly impacts profitability and long-term business success.

Company A’s Metrics of Marketing

This company makes its own products and sells them directly to consumers globally. When the Covid pandemic hit they found that there was a massive upsurge in demand. By the end of 2020 they had sold 2.09 times more than the previous year. By the end of 2021 that had risen to 2.24 times.

However, their top priority was to manage supply and demand to keep the time lag between orders and delivery as tight as possible. This meant managing the amount spent on recruiting new customers and on communicating with existing ones.

Fortunately, they had historic marketing metrics that went back five years. These reported month-on-month sales from existing customers compared to new recruits, and which previous years those customers had come from. Once they knew how much the effects of Covid-19 was uplifting existing customer sales compared to previous periods, they could accurately forecast demand from existing customers for the rest of the year. This gave them a clear indication of the level of new recruits required to fill the factory capacity.

The net result? They were able to fill the factory whilst minimising their marketing spend and achieve a very strong ROMI (return on marketing investment).

Company B’s Metrics of Marketing

This company also manages their own production, but they had a faulty metric. This was the sales value they were getting from customers to whom they had sent a catalogue. There were two reasons for this:

  • the lack of an accurate single customer view, which led to multiple duplicate records
  • an inaccurate match-back of those mailed to people ordering.

The result was that their metrics were reporting a much lower return – in fact, one-third of what it should have been on catalogue campaigns.

This led to a decision being made to abandon catalogues in favour of email communications. However, the company had not been particularly successful at collecting email addresses, and as a result there were only 14% of active customers for whom they had email addresses and who had not opted out.

Despite a very high volume of emails being despatched, the overall order rate in each year, from existing customers began to decline. Over a five-year period, it had sunk to a half of what it had been at the start.

However, because they were successfully recruiting new customers, the actual order value from existing customers kept going up, so nothing was noticed. In other words, instead of using the right metric – i.e. what proportion of the customers you start the year with go on to order in that year – they used the wrong metric, which was simply the absolute number of existing customer orders.

The net result was that Company B lost several million pounds worth of potential sales from existing customers, whilst not even understanding that this opportunity had been missed.

So, the value of accurate marketing metrics is clear. Analysis of those metrics is crucial to the success of your marketing activities – and your bottom line.

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.

Marketing effectiveness – measuring the long-term impact of direct mail and other channels

In our previous blog post on return on marketing investment (ROMI) and seeing the bigger picture in terms of measuring the effectiveness of all marketing channels together, we explained why it is important to not only calculate return, but also track it over time.

The question is: what do you do if a marketing channel shows a declining trend, or if its ROI is less than other channels?

Pulling customers through the sales funnel

The temptation is to pull back tactically on that particular channel in favour of less expensive, and arguably more effective, channels. Moving the marketing budget to maximise effectiveness can happen frequently – however, most marketers know intuitively that channels can and should work together to pull customers through the sales funnel. This is often difficult to prove because media reporting is usually ‘last click’ only and/or is not granular or complete enough across all channels.

Some channels are more effective at influencing and raising awareness, others are better at converting and some work best in combination to keep the customer in the sales mindset. So, how do you prove this to a board of directors who may be looking for marketing budget cuts and who perhaps only see a sizable difference in cost of sale and ROMI between channels? And how do you know the longer-term impact of pulling back on some channels in favour of others that seem to be more effective?

Direct mail resurgence

Direct mail is a good example of a channel that, on the face of it, can be rather expensive and may be at the top of the list in terms of budget cuts. However, direct mail has seen a resurgence during the global pandemic period and, although it is still seen as expensive, it has some very interesting marketing characteristics.

Interestingly, in our recent blog post on measuring the carbon footprint of various marketing activities, Kg CO2 per sale for email was shown to be higher than for printed direct mail.

At UniFida, we have been studying direct mail results using our unique marketing attribution solution, which provides detailed ROMI over time for different channels. It also shows where in the sales funnel each channel is most effective with particular types of customers – i.e. existing customers, or those new to a brand.

Retail example

One of our retail clients is seeing some interesting results. In the graph below, direct mail in the form of catalogues is seen as most likely to impact sales in combination with another media channel and, by contrast, Search Engine is most likely to act on its own.

marketing channels working together graph

As this client expected, the ROMI for direct mail is lower than a number of other channels, but it is having the strongest influence at the start of the sales funnel – meaning that it is creating awareness, leading to new sales through encouraging steps, such as searching online and creating sales that otherwise would not have happened.

This is illustrated in the chart example below where the strength of direct mail activity is at the Initiator stage (the start of the sales funnel) against other channels. By comparison, for this company email has a stronger influence in the sales Closer stage.

Media influence in the sales funnel graphWhen we looked at the impact of media in converting new customers, the % influence of direct mail (catalogues) at the start of the sales funnel was even more pronounced, but email was less of a Closer and its influence on new sales was more evenly split across the sales funnel.

Quite often companies have individual contact details and permissions for direct mail and not for email, as customers find the former less intrusive. ‘Cold’ direct mail is also an option, with quality data providers offering targeted individuals with permissions to mail.

Speak directly to a targeted audience

Direct mail can work well for even the most complex propositions and, with third-party cookies being phased out, it represents an opportunity to speak directly to new, highly targeted audiences. It is also easy to test – however, it’s important to ensure that your measurement looks at the bigger picture in terms of ROMI.

Direct mail may also be adding to the effectiveness of the entire sales process, so you need to evaluate how it is bringing in more valuable customers than would otherwise be difficult to reach.

So, when looking at your marketing results, the challenge is to step back and examine the long-term impact of the marketing mix. For every channel you should consider the balance between individual channel ROMI, the interactions between channels and the role each is playing in funnelling sales.

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 email [email protected] or call + 44 203 9606472.

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.

Why Email and Digital Activity Are 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.

Digital Activity and Emails Carbon Footprint in Marketing: The Key Points

  • A single direct mail piece has a higher carbon footprint than one email, but the CO₂ per sale through email can be greater than printed direct marketing due to high volumes.
  • In our case study, digital activity (display, PPC, and social) shows the highest carbon footprint per sale across all channels.
  • Most digital emissions come from data centres and vast servers creating, storing, and distributing content, not just customer devices.
  • A low cost per sale does not necessarily mean lower impact. High Kg CO₂ per sale indicates wasted effort in both budget and carbon.
  • Measuring the carbon footprint of each activity helps identify wastage and reduce emissions across marketing channels

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 Digital Activity and Emails’ Carbon Footprint 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.

A Brief Overview of ROMI in Marketing…

  • ROMI (Return on Marketing Investment) measures the contribution of marketing activity by isolating marketing-driven value, rather than overall business ROI.
  • Short-term ROMI focuses on measurable outcomes within a 90-day window, linking sales value to attributable marketing touchpoints across the customer journey.
  • There are two main short-term ROMI models: Investment ROMI (full campaign costs vs attributed value) and Sales ROMI (sales value vs cost of sales events).
  • Accurate ROMI measurement requires full, unified customer data, including online and offline interactions.
  • ROMI enables smarter budget decisions by showing which channels truly drive value and where spend reaches diminishing returns.

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 in Marketing?

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.

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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.

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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.