Marketing ROI (return on investment) is the latest buzzword in the marketing and advertising community, but the part that bothers me most about it is the fact that it is not being used correctly. Businesses and Marketers are demanding good metrics at all times on their advertising short and long term to see if they are making an effective marketing investment or not.
Fact is, Marketing ROI is[(funds generated – funds invested)/funds invested]Â a short-term measurement, not suitable for assessing some marketing efforts such as long-term branding. Marketing ROI is designed to be used for analyzing short-term sales and profit. Branding is a long term investment and if invested correctly, brands can end up having values in billions (e.g. Nike, McD’s), an intangible asset.
To prevent the wrong usage of Marketing ROI, try and use the terms ‘return’, ‘short, and long term return’ accordingly.