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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.

Patricio Robles

Published 27 May, 2011 by Patricio Robles

Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.

2381 more posts from this author

Comments (7)

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Nick Stamoulis

Sometimes all you have is faith. You take a step back and look at your numbers and say to yourself, "Things seem to be looking up, but I can't pinpoint the exact reason. But I think it could be because of..." Sometimes ROI isn't a direct cause and effect. There can be a lot of things impacting your success.

about 5 years ago

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Yannis Anastasakis

No, you can't always measure exactly everything; especially when campaigns cross over segments (say, both printed and multiple electronic segments) - and sometimes the nature of your business may place the real conversions far from you (like with visitor's bureaus where being seen and talked about in social media is increasingly what the game is about). And even then, you can measure engagement one way or another..

My suggestion would always be to allow common sense to prevail if you can't measure your ROI... But apart from very few exceptions, I can't think of many cases where you really can't do so..

about 5 years ago

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Hostel Dublin

Faith is important - often just for the first step - but you can't rely on faith. You have to have some type of measurement - and if you don't, you're doing it wrong. Faith first - measurement second

about 5 years ago

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Slots

I think you have to couple your works with action and faith will work just fine..

about 5 years ago

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Stuart

ROI is only as important as the return achieved as the end result, faith based interests in marketing can be worth a risk to achieve a better return, businesses that succeed generaly take a few faith based risks!

about 5 years ago

Mike Gomez

Mike Gomez, SEO Analyst at Epiphany

If your ROI is "faith" based, that to me sounds like the social strategy isn't correct from square one. Or that there is a lack of understanding as to how to measure social media efforts.

Ensuring you have a distinct objective and targets that are in line with current business objectives (social media needs to be part of your overall business objectives after all) you can set KPIs that will directly demonstrate a connection between your social activity and your achievements.

The above example uses an individual (Laura) within a team collaborative (the other Mother Jones journalists) so of course it is going to be hard to track ROI. As I’ve mentioned above, social should be set up in line with business objectives. If this means increasing subscriptions, by how many and within what time period? What needs to be done to achieve this? Furthermore, is there a (social) team/individual overseeing if not just Laura’s efforts but that everyone involved are correctly contributing to the goal as a whole?

For me, Patricio’s first bullet point is most true in this instance. Mother Jones seems to need a few tweaks in both how they measure and what they measure in order to understand if all efforts involved are contributing to a final end point.

about 5 years ago

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Joe Cibula

Inverse search consumer queries + direct responses from businesses = 100% ROI. Everyone can put their faith in that.

about 5 years ago

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