A self-sustaining marketing budget is a unicorn in the business world, up there with “angel investor” and “someone who sends emails instead of scheduling unnecessary meetings.” Every business wants an ROI-focused marketing plan that pays for itself, but no one is 100% certain how to get it. And we won’t lie to you—there’s no “one weird trick” or formula that is foolproof. But it is very possible to achieve digital marketing success with a little critical thinking and some creative problem tackling.
What Does an ROI-Focused Marketing Budget Look Like, Anyway?
In the simplest of terms, ROI-focused marketing earns the company more profit than the cost of the marketing itself. So, you spend a thousand dollars on an ad, and it makes you two thousand dollars in increased sales. You can then spend another thousand dollars and make two thousand more, ad infinitum. The marketing sustains itself, Bob’s your uncle, we move on with our lives.
The trouble comes when you start trying to prove that an individual marketing initiative directly caused an increase in sales or visits to the store. Proving that X investment resulted in Y return isn’t easy in the real world, and often, marketing can feel like an all-or-nothing endeavor. If you did not do any marketing at all, you know your sales would suffer, so you can’t stop entirely. But beyond that, digital marketing campaigns can feel like a black box where you pour in money and sometimes get results. Measuring the ROI from the black box can feel bleak.
Unlike a science experiment where you can change a single variable and observe the result, there are always things changing that can mess with sales, profit and loss, and advertising costs in the real world of modern business. The black box remains opaque.
How to Calculate ROI in Digital Marketing
If your product or service is exclusively sold online, you do have a way of looking into that black marketing box: harvested data. If your business thrives off of Google Ads, you can pretty clearly see how much each click costs you and if it converted into a sale or not.
But even data from Google, Facebook, and their cousins isn’t necessarily complete; it’s more like a snapshot peek into the inner workings of a very, very complicated machine.
For example: Your vegan hotdog ad may have shown up as somebody was scrolling through Pinterest, then a week later they could have been reminded of it because they heard a different ad on the radio on their drive home from work, so they stopped at the grocery store for vegan hotdogs. But you’d have no way of linking those data points, so the money spent on that Pinterest ad could be incorrectly considered a loss. The snapshot can be misleading.
So, what’s a business owner to do? You don’t want to keep pouring your marketing budget into the black box and hoping you get good results, but if all you have to go off of are snapshot peeks, how can you be certain you’re making the right choice?
Brace yourself. The answer is: you can’t.
Get Comfortable With Educated Guesses
“Plans are useless, but planning is everything.”
– Dwight D. Eisenhower
In war, commanders often take whatever information they can get their hands on and make a plan based on it. It’s typically not enough information, or as much as they’d want, but they need to act, and so they do. And that’s a lesson marketers need to follow, too: get as much information as you can, be comfortable knowing you don’t know everything—and then act.
So, to build a self-sustaining marketing budget, get data. Either you can harvest it digitally or earn it through trial and error.
And once you’ve gathered as much marketing data as you reasonably can? It’s time to start advertising.
“Data, data data! I cannot make bricks without clay!”
How to Improve Your Marketing ROI With Data
First, establish your baseline. Harvest as much data and information as possible and compile it in a way that helps you understand where the business currently stands. Consider how much total money is spent on which categories and how much profit is made monthly and yearly.
Next, take detailed notes. Just like a scientist, you’re trying to control for variables in an experiment (marketing your stuff), so you need to record everything you do. There are a couple of reasons for this. One, so you can replicate it, and two, if you make a change, you can see what effect that change had. This process can be lengthy, but without it, none of these other ROI-focused marketing suggestions will help.
Start a new ad campaign or marketing push. It’s probably better to begin with something smaller here; a new Facebook ad, a new billboard, a new TV spot on Saturday nights. Whatever you choose, try and control for as many variables as you can.
Analyze and interpret the results and compare them to the baseline. Once a decent amount of time has passed (a month is a good starting point), you can compare the data you had before you started the new marketing push with the data you currently have. Deduce what worked (or what didn’t), and then…
Run a new ad, using what you learned from the last one. This is how to grow and evolve the digital marketing strategies you use: test, gather data, evaluate, test again.
How Do You Prove Your Marketing is Bringing in ROI?
How can you prove the effectiveness of a marketing strategy if you’re operating with incomplete data gathered from black-box snapshots and trial-and-error research? By creating your own marketing metrics for success.
Every marketing initiative should have a goal in mind before it starts. That way, when it is complete, you can say, “We did what we set out to do.” There may not be a clear dollar value attached to the success, but it is certainly measurable.
This can be especially helpful when a goal is something like brand awareness. There’s no way to peek into people’s brains to measure if awareness increased. But you can say, “Our goal is to get our brand’s name in front of a million people in the next month,” and take action to make that happen successfully.
So, to prove your marketing is working from a financial standpoint, you need enough data to show the change that was probably caused by your advertising and marketing, and you need your own success metrics to gauge whether something performed well or not. It’s a lot, and it would be a lot easier if there was “one weird trick” to get a self-sustaining marketing budget right. But at the end of the day, what it takes is hard work, and not a small amount of courage.