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Digital Marketing ROI Often Underestimated

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In the nascent days of the digital marketing industry, site sponsorships were one of the very first models to emerge.

As banner ads and other more intrusive forms of advertising began to emerge online, web users became desensitized to those forms of blatant advertising, while sponsorship performance continued to deliver results. This really has to do with the fundamental nature of how people use the web.

Buyers have always used the web for researching prior to making a major offline purchase. This is particularly true for big-ticket items that require ample consideration and investigation prior to purchase.

One of the fundamental mistakes that many media buyers and advertisers make when considering the value of a sponsorship opportunity is that they put on their direct marketing goggles and attempt to view the investment as simply as possible:  “We spent $X. How many leads did it generate? How many did our sales team close?”

Rest assured, this is a normal way to quickly look at the basic efficacy of any advertising placement during a post-mortem.

The problem, however, is that calculating the true value of a sponsorship is not quite as simple as “money out, money in” because that methodology ignores other deliverables that support the sales consideration process – clicks, site visitors generated, social media traffic generated, branding and awareness, latent site visits, phone calls the next day, etc.

As an example, say an annual media buy on a site that sells for $10,000.  A simple way to look at whether or not it is worth the investment might be to compare what that looks like compared to other places where we might invest our advertising dollars – paid search perhaps, print, an impression-based CPM buy on a targeted ad network or real estate site, etc.

But a sponsorship opportunity is more than just lead delivery.  Particularly in a high-ticket sale or long sales cycle, there are inherently more factors that influence a buyer than a form fill on the first visit, and thus these factors must be included when we’re calculating the potential value or return on investment of any advertising sponsorship.

The inherent problem with simply taking  $10,000 and dividing by X sales leads is that while it does provide a simple view of possible ROI, it does not take into account two very critical value factors:

  • The value of anything other than a lead (i.e. clicks, impressions, traffic to your Facebook page, blog and other social media)
  • Latent or post-click / post-impression interest and activity

If we are to really examine the true value of any advertising sponsorship we must take into account everything we are receiving.

The reality is that every pre-qualified visitor to your sponsorship page has value.

And when they engage further to click through to your site, that’s a higher value, even if they do not fill out a lead form. If you value traffic to your website at $X  per click – you fill in the number – XXX  clicks from the media buy does have tangible value.  In other words, if we weren’t receiving it as bonus value from this sponsorship placement, we’d have to go out and buy traffic and impressions.

The Bottom Line

In absence of proper channel attribution tracking, as advertisers we’re often either too busy or too overwhelmed to try to calculate the true value inherent to a sponsorship, so we focus on the quick evaluation or bottom line: “Is this generating leads and sales for us?”

As someone with over 18 years experience agency-side and client-side, I would also be asking additional questions:

  • “Have we put in place the technical capability for us to determine where inbound phone calls are coming from?
  • “What is the additional value of a click worth to us?”
  • “What is the additional value of each impression worth to us?”
  • “If we are generating leads that are not converting, where is the weak link? Is it in our sales process? Whose job is it to convert inbound leads?”

Over the years, I’ve purchased millions of dollars worth of leads for my clients. I’ve created affiliate programs from scratch and built channel attribution models. More than anyone else I think I empathize with and understand the lamentations of advertisers who are looking to generate leads because there is such a vast spectrum of lead quality out there.

The stark reality is that there  are a great deal of sites and networks all vying for advertising dollars.  But there are only a few that can put your community in front of your precise target market audience.

Adam Boettiger
Adam Boettiger is a digital marketing strategist based in Portland Oregon. He is considered one of the Top 100 Influential people in the digital marketing sector. www.AdamBoettiger.com