I’ll be honest, attribution is a nerdy, favorite topic for me (it’s tied with Marketo as my happy place), but it’s not really what I’m thinking about this week. As I sit here writing this, I was supposed to be prepping to go on stage at Adobe Summit to present “Growing Your ROI with Strong Attribution” to 400+ people. Adobe Summit, like many large events, was cancelled as a result of COVID-19. What Adobe has decided to do instead is to hold a virtual summit. With Adobe Summit cancelled and all of us staying home and doing our part, I find myself wondering what thought leadership looks like right now, how it’s changing and what will stay the same.
With the launch of Adobe’s first Virtual Summit top of mind, a part of me is curious to see what this evolution looks like. I am interested to see how this is going to work. How will this bring people together? Is this a good vehicle to share or to learn? We all are adjusting at this time, and many of us are looking to the change as an opportunity to learn. I don’t think we often have access to free content at this scale. The level and caliber of content available for this event, particularly with the crazy timeline, is wonderful. I’m excited that through this event I am still able to share my thoughts and ideas on attribution via an on-demand session. Since these sessions are a little shorter than the original format, I wanted to put out something extra.
One of my favorite parts of digging into attribution is talking about maturity and helping people understand where they are in their journey.
The reason I like to start here is that I’ve seen organizations jump into the deep end with attribution tools and then experienced a sink or swim moment (instead of wading in, getting used to the water, and taking some time to become expert swimmers). I think there’s a lot of value in attribution, and I want to see everyone get the most out of it.
Which brings me to my primary focus today, the ROI of attribution technology. Yes, you heard me correctly!
Use of an attribution platform can lead to optimizations that change the way you spend your marketing dollars: Leading to returns 2x, 20x or even 200x compared to the returns you’re seeing today. Making data based decisions is never going to hurt you!
But, I often find companies are so super focused on being able to pinpoint and interpret the return on their marketing investments, that they don’t stop to think about the actual investment required to implement an attribution tool.
Attribution tools vary from low level cost and semi-DIY solutions that synthesis CRM data, to high speed automated attribution that creates, synthesises and warehouses data in ways that seem almost magical. But if you don’t understand how the tools work and the level of time and expertise needed to implement and maintain them… you may be buying a Mercedes Benz, or even a Schwinn, that you’re not prepared to pilot.
Instead of crashing and burning, this is a great opportunity to consider both the return the tool can provide, and also the investment it will require. Honestly, for most businesses considering an attribution platform the ROI is there, but only if you’re going in prepared for the learners permit and driving lessons you’ll need along the way.
It is also important to select a tool that will continue to support your business for the long haul. Will a Schwinn still get you where you need to go in 6 months, in a year? The investment of implementing one tool and then gutting it and replacing it is higher than first time implementation. You may lose data or have to reinvent the wheel on reporting, dashboards, etc., and then you still have to ramp.
So how do you calculate the ROI of an attribution tool?
You’ll need 1) the amount you spend per year promoting your brand, 2) the cost of the tool you are considering, and 3) the total amount of new revenue signed for the year.
Calculate your baseline for return by adjusting for ⅙ of your new revenue being marketing generated (this number may actually be higher or lower, but it’s a good place to start.
$$ New Signed Business = Adj. $$ New Business
Adj. $$ New Business = Est. Current Marketing ROI
Total Marketing Spend
5,000,000 = 833,333 = 1.5
This means your estimated ROI is 1.5 : 1, essentially that marketing earns $1.50 for every $1 spent. Now assume that implementation of the proposed attribution tool would improve that ratio by a factor of 1, and use that number to calculate the increase in revenue that would produce. Then divide by four. This final division represents the YOY cost for 4 years, and ensures that you have time for implementation and ramp. Remember, you will not be driving this thing like a professional for a while.
Estimated ROI +1 x Total Marketing Spend = Projected Revenue
Projected Revenue – Adj. New Bus. = Working Capital for Tool/Staff
2.5 x 550,000 = 1,375,000 – 833,333 = $135,416
If that final number will cover the cost of the tool and the salary needed for the tool owner for one year (this can be a percentage of salary if that employee will have other responsibilities) then the ROI is there. Note that this is a simplified rule of thumb guideline, but it’s a good place to start. Your business may be in a position where the climbing revenue projections will tip the scales in 6 months, and failure to implement now could heavily cost you, but this model works for most businesses.
Once you’ve figured out if the potential return is there for this investment, figure out where you are on the maturity curve, plot your course for getting to where you want to get using your selected platform and get moving!
Growing Your ROI with Strong Attribution:
Andy Caron — Revenue Pulse