The New Demand for ROI Driven Digital Marketing in an Inflationary World

The 2022 business environment has been incredibly challenging for companies as they are experiencing rising costs due to supply chain driven inflation. At the same time, they are dealing with curtailed spending by both consumers and businesses, due not only to inflation but also a reduction in pandemic-era safety net programs that kept a floor under purchasing power.

This unique and challenging cocktail of business conditions has forced many business owners to take long and hard looks at how they are allocating their resources. As margins have become compressed, nothing becomes more important than evaluating return on investment (ROI) for every part of the business.

The Rising Demand for ROI Focused Marketing

As businesses need to continue to stimulate demand for their products, marketing is still an important investment. But the mix of tactics and channels to which companies allocate their resources has started to change with the increased need to focus on ROI.

The result is that many tactics that do not produce immediate, measurable ROI are not going to be in demand as much as those that can produce immediately measurable, ROI-positive results. This is true for both digital marketing as well as legacy print and media advertising.

First off, it should be noted that all marketing strategies can have a very positive ROI. But certain forms of advertising have greater uncertainty around what that actual ROI is, and as some forms of advertising have measurable ROI over a long timeframe, the lag in ROI measurement can make it difficult for businesses to stay nimble.

While it may seem counterintuitive, many businesses have seen success by investing in longer-running marketing strategies during challenging times. This is often a higher risk investment, but if done right, it can be extra beneficial to a business that has the ability to weather the economic uncertainty in the short term.

What Digital Marketing Tactics Win for Immediate ROI?

In general, digital marketing may likely win out over legacy marketing when ROI becomes a greater focus, because digital marketing strategies are almost universally easier to measure, thanks to advanced analytics and tracking capabilities that measure results in real-time.

The following tactics are big winners in ROI-driven marketing:

  • Email and Loyalty Programs: Email and loyalty programs work on both short-and long-term time frames. The beauty of a good email program is that it can stimulate demand immediately, and the loyalty component will keep those customers coming back on an ongoing basis. Plus, given that it’s fairly easy to track and measure sales and leads from these campaigns, measuring ROI is fairly straightforward and simple.
  • Online Paid Search Advertising: Paid search advertising is beneficial for how nimble it can be. Advertisers can choose to bid on ads only when there is a high chance that they will gain a positive ROI from their advertising. And like email campaigns, paid search tends to focus more on capturing interested buyers lower down the funnel — leads that are much more likely to purchase than those from a top-of-funnel awareness campaign.
  • Conversion Optimization: For high volume brands, it makes sense to focus on conversion optimization campaigns. They are almost by definition, squarely focused on maximizing ROI by testing and tuning variations of webpages, ad copy and visuals to find which are the most effective at converting prospects into customers. ROI measurement is as simple as tracking the total purchases made after optimization has been implemented, then evaluating that against purchases in a prior comparable period. Or alternatively, a split-test can showcase the effective ROI improvement of the newly optimized digital assets.
  • Local Search Marketing: Many small businesses are dependent on being found on local map services, especially in a competitive local environment. Since improvements in local search engagement often drives immediate and attributable growth of in-store activity, it stands to reason that local search is one of the most important places to focus for these businesses. It may be slightly more difficult to measure ROI on local search marketing compared to other tactics, but there are still many ways in which ROI can be attributed and estimated.

ROI-Based Marketing Requires Strong Analytics and Tracking Capabilities

Regardless of the tactics any one organization uses, there is a universal need for tracking and attribution to determine true ROI. Without adequate tracking, marketers are left in the dark having to make vague estimates of whether their campaigns are earning the company money or not.

As a result, the first investment ROI-driven businesses need to make is in the ability to track and attribute actions of customers and prospects and then equate that to actual revenues.

Final Takeaway: All Marketing Matters, but Better Attribution = Better Ability to Control Costs

Overall, in the current economic environment, firms should not ignore awareness-focused marketing strategies or marketing that takes a while to make an impact but should take a balanced approach, leveraging marketing budget to spend part on items that can provide a reliable and quick ROI and then allocating the rest to build up long-term, high-growth tactics such as PR, SEO and social media.

GREENCREST can help ensure you get the best return on your marketing investment. Contact Us today for more information.