Why CEOs Have No Idea About The True ROI Of Their Internet Marketing Campaigns

An axiom of business is, “if you can measure it you can manage it.” While no CEO would argue with this as it applies to operations or finance, when his attention shifts to Internet marketing, conditions often become very touchy-feely.

All too frequently, companies invest in Internet marketing campaigns like social media, email, SEO and PPC because everybody else is doing it and/or without defining the purpose. This leads to marketing money pits, where more money is spent every year in pursuit of vague objectives. In some cases, an arguably worse result ensues: highly effective campaigns are scrapped because the company doesn’t realize how much business they are producing.

Here are the main reasons why CEOs have no idea about the true ROI of their Internet marketing campaigns:

Selecting the Wrong KPIs

The most important key performance indicator (KPI) for Internet marketing campaigns is lead generation. However, since a great deal of effort and expertise are required to properly track and measure it, many companies don’t. Instead, they focus on other metrics with questionable value, in particular:

  • Traffic. If website traffic is up 300 percent, it may or may not be a good thing. Is the additional traffic comprised of prospects and customers? If an Internet marketing campaign is generating boatloads of new traffic comprised of non-prospects and non-customers — which can easily be done, I assure you — that campaign is not going to generate any ROI.
  • Rankings. Having website pages ranked in the top three on Google always satisfies the ego, but doesn’t always produce ROI. High rankings for keywords with low-search volume, or for keywords that fail to convert, do not generate leads. Furthermore, because Google now customizes search results for each user, rankings are relative and extremely difficult to accurately measure.
  • Conversions. “Conversions” are people who fill out a website form or call a company as a result of an Internet marketing campaign. The problem is, many conversions are not sales leads, but rather misdials, spam, personal phone calls, etc. Focusing on conversions leads companies to significantly overestimate campaign effectiveness, which is why lead validation is essential. This lead validation infographic explains the importance at a glance.

Incomplete Lead Tracking

In order to accurately evaluate the ROI of an Internet marketing campaign, a company must track leads back to their source; if not, how does the company know whether a phone lead or a form lead came from their SEO campaign, their social media campaign, or from no campaign?

Often, phone leads are not tracked at all — a major flaw because often, the best sales leads are phone-ins. Phone leads must be tracked granularly, with unique phone numbers that enable analysts to determine which campaign, which search engine and which keywords generated each lead. The same level of specificity applies to form leads. Only through granular lead tracking can a company measure ROI accurately, to say nothing of acquiring the ability to continuously improve campaign performance.

In the absence of accurate lead tracking, companies come to rely on anecdotal evidence to judge the effectiveness of their campaigns. This is a terrible way to make decisions:

  • Customer input is unreliable. If a customer says he found your company through Google, it may have been Bing — and, the customer is unlikely to remember which keywords were used in the search or even whether he clicked on an ad or an organic listing.
  • Anecdotal evidence is incomplete. Hearing 10 customers say your email marketing campaign goes in one ear and out the other may justifiably cause you to scrap the campaign … unless your hear from another 20 customers that think your emails are tremendous.
  • Anecdotes can be inaccurate. Sales reps, for example, will often say Internet leads never pan out. Never? Really? If sales managers dig into such a claim, they may find otherwise. I know of one instance where a company’s largest new customer of the year came from SEO, not a cold call — but the fact wasn’t discovered until six months after the first sale. It wasn’t a case of a sales rep trying to mislead anyone; the company simply didn’t have lead tracking in place and the customer initially couldn’t remember how he initiated contact.

Bottom Line

ROI calculations for any Internet marketing campaign will be accurate if the focus is on lead generation and lead tracking is detailed and complete. Do this, and then, talking to customers and internal personnel about your Internet marketing campaigns has real value — not as a way to evaluate campaigns, but as a way to supplement your evaluation and gain insight about how to improve.