The agency-client relationship revolves around ROI. But marketing challenges including the iOS 14.5 update and the impending removal of third-party cookies are making it more difficult to understand campaign effectiveness and prove ROI.
So, what can your agency do to combat the issue – and prove value to your clients?
In this post, we take a look at:
- What marketing ROI is
- Why it is important for agencies to prove ROI
- Some of the current challenges around proving ROI
- How agencies can effectively report on ROI
What is marketing ROI?
At the most basic level ROI is a measurement of the effectiveness and profitability of your marketing campaigns and activity.
It is about assessing the amount of budget you are spending on marketing campaigns and tying this firmly back to the impact that it is having on revenue.
And ultimately the profitability of your efforts.
However, data from the 13th annual B2B Content Marketing report makes for interesting reading around how marketers chose to measure performance of content.
While 70% of marketers say the metric they most rely on when evaluating content performance is conversions, only 34% said that they measure cost to acquire leads, subscribers or customers.
So, while ROI matters – it’s up for discussion as to how many marketers and agencies are actually prioritising it as a key marketing metric.
Why is it important for agencies to prove ROI?
We think there are a number of reasons that agencies should have a focus on ROI in their work with clients.
Clients are under increasing pressure to prove ROI
The combined impact of recession and the cost-of-living crisis have contributed to a trend which sees 84% of marketers feeling the increased need to prove ROI.
As part of this, marketers are increasingly having to justify spend to stakeholders like the CFO.
And, as their agency partner, you are ideally placed to take that pain away from them with accurate ROI-driven reporting.
Helps ringfence spend for your client (and you)
Research by QueryClick indicates that 68% of marketers say that internal stakeholder pressure is influencing where they spend their money.
Inextricably linking spend to ROI gives you a much better chance of sidestepping the issue.
By making a strong business-led case for not only ringfencing existing spend but pitching for new projects that you can show will impact the bottom line.
Without effective ROI you are driving blind
Without a true assessment of the ROI impact of a client’s current marketing spend then you aren’t really in a position to advise on how to best adjust, and improve, their marketing performance.
An effective assessment of ROI from the outset provides the base on which to build all of your recommendations and plans from.
Helps you build trust
The reality is that the reason your agency is in business is to help client’s run their marketing activity more profitably than they can themselves (and by definition, positively impact their ROI).
Delivering consistently against this objective makes you an invaluable part of their marketing operation. Which builds trust. Not only with your client contacts in marketing, but with other important stakeholders in the business – like finance.
And this creates a differentiator that makes it less likely that they will switch you out for another agency.
What challenges are there in proving ROI?
There are a number of practical issues with proving ROI as follows:
There is no one-size-fits-all approach to proving ROI for agencies
The reality is that the model for establishing and measuring ROI is going to differ greatly from client to client.
The sheer complexity of buying journeys, marketing media mixes – and the nuance associated with the way clients are set up internally – all feed into what is often a complex puzzle to solve.
How you approach calculating ROI for an ecommerce retailer, with a pure online play, is going to differ significantly for a retailer still struggling with the vagaries of bricks and mortar locations and a relatively embryonic online presence.
So, there is no single model that you can lift from client to client: you have to do the hard yards on each.
The data trust and data silo issue
So, let’s assume you have agreement on how you are going to calculate ROI.
The next most important issue is getting access to data to feed your calculations.
And, typically, there are a number of challenges that agencies face here:
- Data silos – Firstly, there can be the issue of the ways that teams are structured along channel lines internally within the client – sometimes all with their own approach to reporting. In fact, Experian say less than 30% of marketers work in fully integrated teams. The resulting data silos can make accessing data problematic with teams effectively marking their own homework from a channel reporting perspective
- Data trust issues – Both brand owners and agencies are also increasingly sceptical about the quality and veracity of the data that is being put in front of them by the big platform providers.
Take the example below for one of our own clients where, incredibly, Facebook was reporting close to £450,000 revenue on a campaign that GA was only tracking around £20,000 for!
In this case, we were able to determine that the actual figure was closer to £250,000 by using Corvidae, our own AI powered attribution platform.
However, imagine the skew on ROI for that campaign as you veer from using either GA or Facebook for your calculation.
In fact, our own work with clients points to the fact that 80% of marketing data is attributed incorrectly in this way – which has huge implications for effective calculation of marketing ROI.
Inability to get a clear view across the customer journey
Calculating ROI effectively also relies on the ability to assess and attribute the impact of each and every touch point along the customer journey.
And in the current omni-channel marketing landscape, with on and offline and multi-device customer journeys, assessing the impact of your media strategy becomes increasingly difficult.
And digital measurement higher up the funnel on media like display can be difficult to pin down using simplistic attribution models like First and Last-Click. Which leave brand owners significantly overvaluing lower funnel activity like retargeting.
Wider tracking and measurement challenges
And as if these issues weren’t enough to contend with right now a privacy-centric landscape means the ability to track and measure media impact – and feed an effective ROI calculation – is getting harder by the day.
Not only did the Apple iOS14.5 update have huge implications for the trackability of media campaigns, and in particular, those on Facebook.
But the impending removal of cookies by Google is removing many of the ‘rails’ that tracking and measurement has been built on previously.
How agencies can effectively report on ROI
So, how do agencies set themselves up to report effectively on ROI?
Establish up front exactly what you are going to measure
This might sound simplistic but it is crucial to your success.
An open and honest discussion with your client upfront around their expectations and what they want to see in your reporting – and how that ties back to their core business and marketing objectives – is foundational.
From there, it is highly likely that you are going to get into the need for ROI and ROAS type reporting followed by key specific metrics by channel and media type that will feed your ROI calculations.
Make your reporting simple for clients to pick up and use
One of the biggest challenges right now is that marketing departments are drowning in data.
Data that is often held in a range of silos including analytics packages, marketing automation tools and advertising and social media platforms.
So, as a partner agency, the last thing you want to do is to make the situation worse for your client.
As you look to report on ROI, keep it simple and easy for your clients to pick up and run with internally.
This is also important to ensure they get the type of stakeholder buy-in that keeps your joint marketing initiatives on track.
Focus on what is working, what isn’t and – most importantly – how you can change things up based on the data you have.
So, frame it, as we do within Corvidae’s reporting, something like:
‘Did you know that reallocating 22% of wasted spend would generate an additional £1.4m p.a. Worth considering I think? Here is the data’.
Make a cross-channel assessment of ROI
Effective marketing attribution plays a key role in all of this.
If you can’t properly track and measure right across your entire marketing activity then you don’t have the data you need to feed your ROI calculation accurately.
According to our own research, over 60% of marketers agree that the data to support cross channel decision making on marketing is broken.
What you are going to need in your corner is an attribution solution that enables you to break through the data silos and can correctly value the contribution of all of your client’s media channels. From the early impact of brand-related activity (which we would guarantee you are undervaluing right now) right down to the impact of Paid Search.
Futureproof your ROI analytics
Your clients are at a pretty pivotal juncture in marketing terms right now and it is incumbent on you as an agency partner to help them choose an attribution and measurement solution that enables ROI reporting – with futureproofing built-in.
Google has confirmed that third-party cookies are going away by the end of 2024 and changes like iOS14.5 (and the planned changes to Google Android App tracking) are all having a seismic impact on the ability to track and measure.
Many are lamenting the death of the third-party cookie but we know from our work with clients that cookies did a pretty poor job of attribution – and as a result calculating ROI.
The reality is that, if you are going to have to move away from cookies for tracking, your only option is to look at a predictive technology like AI in their place.
Which is what Corvidae uses to supply marketers with fully cookieless attribution.
How Corvidae can help
Corvidae is our unique attribution tool.
We’ve been working on it for almost a decade now and we’re pretty confident in saying that we’ve cracked the solution for broken and inaccurate attribution.
Corvidae uses its patented AI technology to stitch together touchpoints across the entire customer journey – meaning no need for cookies. Providing our clients with user paths that are twice as long as Google Analytics and 95% accurate, compared to just 20% for tools that still rely on cookies for tracking.
We’ve made switching to a new attribution tool simple. All it takes is 3 simple steps to get up and running with Corvidae.
Find out more about our attribution solution for agencies and partners here. Or, download our guide below.