Kissmetrics Blog

A blog about analytics, marketing and testing

Built to optimize growth. Track, analyze and optimize your growth cycle.

Which Marketing Channels Deliver the Biggest Impact on ROI?

A new report released by eConsultancy, in collaboration with Oracle Marketing Cloud, has revealed precisely which channels marketers feel deliver the biggest impacts on their return on investment, and how they bring those priorities to light within their respective teams and companies.

If your efforts to squeeze relevance out of marketing initiatives leaves you feeling frustrated and confused – it turns out you are not alone. So which channels were the most worthwhile, and what efforts should you be investing more time and money into? Let’s take a closer look:

The Big ROI Catch-22

Not surprisingly, the report noted that the biggest roadblock to bigger investments in digital marketing was, simply, budget constraints. Staff constraints followed second, as did company culture and an inability to measure ROI. The report itself asked the question, “Is the culture of ROI stifling innovation?”

This creates an interesting catch-22 in that if you cannot accurately measure your ROI, you can’t provide the proof management wants. And without proof, you don’t get an increased budget to work with. So which channels deliver the kind of proof you need? Here are the results:

Marketing With Confidence

ROI-channels

Marketers rate their confidence in measuring ROI from different types of digital channels

Looking carefully at this chart, you’ll see why there’s such a disconnect between marketing investment and marketing results: paid search was the only channel where at least 50% of respondents noted that they felt “good” about ROI measurement. Other channels, including email marketing for acquisition, and email marketing for engagement and retention came close, but as the report notes, only a handful of companies would rate their confidence as “good” in these areas.

Note the considerable drop-off after this point – automation, analytics, even content marketing takes a notable hit here.

What’s Causing the Drop?

confidence

As much as we embrace and encourage the use of many of these marketing channels, it’s clear that marketers are struggling to take the information they collect and turn it into actionable insights that have marked results in their campaigns. According to the report, there are three main factors contributing to such a steep decline in measuring ROI confidence:

Budget Plans

If you’re thinking budget woes stem from a tight squeeze on marketing spending (on account of a lack of provable, measurable results), that’s not quite the whole picture. Nearly 75% of respondents on both the client and supply sides expected their digital marketing technology spending to increase.

However, a little over half of those same respondents acknowledged that it was easier to get executive buy-in and support to increase those budgets. This means there’s still quite a bit of work to do to convince the board room that these efforts are simply stepping stones toward the bigger picture of measurable results that they’re seeking.

The Customer Experience

There’s a lot of talk in marketing circles about “the customer experience” – but just how much of an impact does it have on spending? As it turns out – a lot. Making sure the customer experience is seamless across all channels is an area of significant focus for marketing, sales and customer service teams alike, and having consistent, measurable results are at the core of marketing technology investments.

Because so much is being funneled into measuring and realizing the customer experience, precious little of the budget can be afforded to try more innovative and untested strategies. More money is going toward acquisition efforts than engagement and retention, although as other studies have shown, this may very well be an exercise in focusing too much on quantity versus quality.

Company Culture and a Focus on ROI

And with so much of a focus on only measurable strategies with quantifiable results, innovation is hurting as well. Only 35% of those surveyed agreed that they reserved a portion of their marketing budgets for more maverick, untested strategies – a sharp downturn from the 46-37% range from previous few years.

That being said, budgets are increasing not only in customer acquisition and lead generation, but also in other areas as well – namely email engagement and retention, acquisition over social media and data management.

And speaking of year-to-year differences, if you think they don’t matter much in the long term – I have some surprising news. There were quite a few significant changes from 2015’s ROI confidence metrics compared to now:

What a Difference a Year Makes

EconsultancyOracle-Change-in-Ability-to-Measure-Digital-ROI-May2016

Marketers had a very different view of ROI confidence among specific channels in 2015

Look at the marked decrease in organic SEO. With paid search as one of the consistent ROI confidence forerunners, it makes sense that natural search is slipping. Considering that search engine algorithms and updates become more and more complex, creating tools and platforms to accurately measure them has become harder and harder.

But also note the increases in areas such as email marketing, affiliate marketing and automation. Our tools for measuring the “people side” (as opposed to the algorithm side) of things are becoming more intuitive. The focus goes back to the customer experience, coming full circle in giving managers and other top level executives the measurability they crave while investing in a marketing plan built for consumers, not robots.

Getting the Proof You Need

So the question then becomes “how do we get measurable proof of ROI in campaigns if we don’t have tools to measure it?” After all, everything from investments to innovation hinges on those numbers. So even if the campaign platform itself falls short in giving you the tools you need to dig deeper, you still have a secret weapon on your side: Kissmetrics.

By using Kissmetrics, you can track multiple types of marketing campaigns and gauge their effectiveness accordingly. Kissmetrics intelligently segments customers into different channels, which tracks visitors based on where they came from (social campaigns, pay-per-click channels, organic search and more). Not only does this show you which areas are worth your attention and spending, but also distinguishes between where traffic is coming from versus where customers are coming from – and that’s an important distinction. What’s more, you can track these same users across the customer journey – from the moment they become acquainted to your service until they complete checkout – and beyond.

ecommerce-funnel-channel-segmentation-kissmetrics-1024x730

This way, you get a clearer view of which type of marketing results in the greatest impact on revenues and conversion rates. But that’s only scratching the surface. You need to know which campaigns, not just referrers, deliver the biggest bang for the buck. By using UTM codes in your URL tracking, Kissmetrics can show you that too. You’ll be able to see, for example:

  • Which paid campaigns (right down to the keywords used) bright you the most sales
  • The LTV (lifetime value) of a customer coming from a paid campaign versus an organic search
  • Which products get the most shares on social media versus ones which result in sales (the two can have widely different results!)
  • Whether or not your PDF lead generation campaign leads to a sale (yes, UTMs can be used to track referrals that have downloaded a PDF too)

revenue-report-seven-campaigns-kissmetrics

Gauging the total revenue, average revenue/customer and the lifetime value of customers from the Kissmetrics channel property dashboard

So if you’ve been struggling to wring measurable ROI out of things like social media campaigns, these kind of reports can deliver the insights you’ve been looking for, along with the concrete numbers beloved by the boardroom.

Moving Forward with Confidence

With all this talk of marketing investment, return-in-investment, budget buy-in and confidence, you could say that a great deal of stress in trying to “prove” the best outlets for spending is putting increased pressure on today’s marketing teams. That being said, however, our focus is shifting more toward measurable results as they relate to people, not programs – paving the way for more insightful tools that help us unlock a bit more of buyer behavior as we continue to map the customer journey.

But as marketers reading about marketing spending and measurement, we’d like to hear what you think. In your own experience, have you found the findings noted here to be true for your own work? Or do you feel that the end goal as to what constitutes “measurable” is constantly being moved? We’d love to hear your feedback and thoughts, so why not share with us in the comments below?

About the Author: Sherice Jacob helps business owners improve website design and increase conversion rates through compelling copywriting, user-friendly design and smart analytics analysis. Learn more at iElectrify.com and download your free web copy tune-up and conversion checklist today! Follow @sherice on Twitter, LinkedIn or Google+ for more articles like this!

  1. Regarding what you said here about Kissmetrics: “What’s more, you can track these same users across the customer journey – from the moment they become acquainted to your service until they complete checkout – and beyond.”

    How is it possible to do this when the customer journey is so fragmented across devices – their work computer, home computer, phone, etc., and especially if your business doesn’t have a user authentication system that you can use to identify people as they log in on different devices? This, to me, seems like the biggest challenge in accurately measuring the customer experience.

    • Hey Ethan,
      Great question!

      Kissmetrics connects all visits across devices. The best way to explain this is with an example.

      Let’s say you visit example.com on your mobile phone, browse around a little bit but leave the site. Kissmetrics assigns you a random ID, such as 135325tsshg.

      Three days pass.

      You come back to example.com via your home desktop. Again, you look around but don’t buy anything or register for an account. You’re assigned a different user ID, this one might be 754323dsrts.

      Two days later, you visit example.com through the same mobile phone that your first visit came from. This time you register for an account and make a purchase. Kissmetrics ties this visit and the previous visit back to you. So your previous anonymous ID of 135325tsshg becomes your email address (or username, or however you identify people).

      The next day, you visit example.com on your desktop to check the status of your order. So you login and check the order status. As soon as you login on your desktop, all that previous activity (including the mobile phone visits) is then tied to the same account. The activity from 754323dsrts is then tied to the email address you logged in with on your mobile phone and desktop (both of which are the same email).

      So all your desktop and mobile visits are tied together once you verify (i.e. login) who you are. And going forward, all data will be tied to that account.

      This is how Kissmetrics tracks everything from first visit all the way to revenue – across devices.

      Make sense?

  2. Absolutely, what constitutes as “measurable” will continue to move and shift.I enjoyed this analysis and wanted to point out that measuring results in terms of people rather than programs is nothing new. It’s how accurately and efficiently we’re able to do so that is evolving. But it has always been challenging and it will always demand innovation.

    From an SEO perspective, I’d add that innovation is not stamped out by marketers and clients obsessing over proof and hard data. Quite the opposite. In my opinion – As long as we’re humans making sense of the tools and data we use – there’s no stamping out the innovation involved in intuiting and interpreting the results we gather.

    Search engine algorithms are getting smarter at “reading people” as you mention. Overall, this compliments our efforts in analyzing metrics and ROI rather than complicating them. Sure it takes time for us humans to work with the changes and updates to our tools and the engines of power that be – but that’s the nature of certain channels.

    If you “can’t wait for solid proof” then you should probably reallocate your budget to tactics that give you instant insight. (I’m not saying it’s better or lesser insight.) That’s up to you. But generally, we must understand that certain channels are more long-term focused than others and despite year-to-year shifts in confidence this is rather fixed.

  3. I have talked to a lot of people and almost no one is tracking ROI on PPC the right way and have no real chance competing against people that are who have longer sales cycles. If you’re not tracking leads through a backend system like Kissmetrics, you are a sitting duck as the cost of front end lead gen keeps rising and eventually prices you out of the market.

4 comments

Please use your real name and a corresponding social media profile when commenting. Otherwise, your comment may be deleted.

← Previous ArticleNext Article →