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In the digital world, tracking ROI is supposed to be easy. After all, there are so many tools for analyzing traffic and conversions, and attributing them to particular sources.
But in reality, tracking ROI isn't always as simple as it would seem. Many marketers, for instance, still focus exclusively on the last click despite the increasingly sophisticated tools that are capable of going beyond the last click.
As a result many either misattribute conversions to the wrong source, or miss them altogether.
The fact that ROI can't be (or simply isn't) always tracked accurately means that there's still plenty of room for faith-based ROI online.
Just look at social media. Many companies can't prove quantitatively that their social media investments are paying off, but that doesn't mean that marketers don't believe there is ROI to be had in social media.
A perfect example of this can be seen with blogging platform Tumblr, which has become quite popular with magazines. The editors of some of those magazines speak of Tumblr endearingly, yet they don't have the smoking gun evidence showing that it is delivering ROI.
For instance, Mother Jones' new media editor, Laura McClure, is convinced Tumblr is driving subscriptions indirectly, but she doesn't have the data to prove it. "I don’t know that it’s driving subscriptions but it is driving buzz, which I think in turn drives subscriptions. [emphasis mine]"
Is this sort of faith a good reason to invest in a platform or campaign, or is faith-based ROI a dangerous thing for businesses? The answer isn't always clear.
On one hand, there is risk in assuming that ROI exists. Assumptions are often wrong, and can prove very costly.
On the other hand, the reality is that in some instances, ROI is very difficult if not impossible to calculate with 100% accuracy. Just because it can't be seen doesn't mean it's not there.
So what should companies do? Here are some tips:
Believe, but make sure you're doing everything you can to verify. Can't prove that an initiative is producing ROI? In many instances, you may not be doing everything possible to track ROI. With a few small tweaks, it's often possible to take an initiative whose ROI seems unquantifiable and develop a means to quantify it.
In other words, before falling back on faith, make sure you've explored all the ways you might be able to calculate ROI.
Prioritize. To mitigate risk, initiatives that have a quantified ROI should usually be prioritized over initiatives that don't.
Even if you believe that a print ad campaign is producing better results than paid search advertising, for instance, that belief probably shouldn't justify spending more on print ads at the expensive of paid search, at least until the belief is validated.
Remember that numbers aren't everything. For obvious reasons, ROI is important and can't be ignored. But it is but one metric that businesses should base decisions on. Take social media, for instance.
Many companies can't fully quantify the ROI from their social media efforts, but that doesn't mean that social media is a channel not worth investing in.
Avoid blind faith. Just because you can't establish ROI for a particular initiative doesn't mean that you can't evaluate ROI.
If you're investing $50,000/month in a marketing campaign for which firm ROI is hard to track, there's a good chance that you can look at other campaign-related metrics to make an educated guess as to whether the campaign is really capable of delivering a profit.
At the end of the day, there's a fine line to walk when it comes to this issue. Companies that won't spend money on anything lacking an established ROI are more likely to miss out on worthy investments.
At the same time, companies that have a little too much faith may find that faith can be a path to failure.