Prioritizing Marketing Budgets – When Conversion is Not an option for analysis.

Mark  Ryan

September 21, 2009

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Many of our clients ask us how to justify larger web marketing budgets to their executives. One of the obvious places to start is an ROI analysis or a cost/benefit analysis. If there is no straight forward conversion event (i.e. Lead Generation or eCommerce), it can be difficult to measure how effective web marketing is. In some cases, web budgets need to be analyzed as a cost of doing business.

Marketing budgets are often divided up into channels/segments such as events, print, mail, television, radio, etc. The sales team, often operating on a separate budget, actually spends budget on some channels with the same goals as marketing – such as inside sales.

When analyzing how the marketing budgets should grow (or shrink), an organization should analyze how the different channels stack up against each other for common variables.

For example, as a touch-point (impression), ask your team to quantify how often each channel serves as a touch-point for potential and current customers.

Average Touch-Points (Impressions) / Month

Potential Customers Current Customers Total
Events 4,700 9,400 14,100
Website 28,750 19,950 48,700
* Print Adv 4,825 4,825 9,650
Email 22,490 25,785 48,275
Mailers 5,750 4,980 10,730
Inside Sales 4,250 2,370 6,620
**TOTAL 70,765 67,310 138,075
* Because there is no data on users, this is split evenly
** There are likely a high degree of redundant users

Another example would be to put a cost to each impression. Take the total budget per channel and divide it by the number of touch-points (impressions).

Average Touch-Points (Impressions) / Month

Budget Touch-Points CPI
Events $29,890 14,100 $2.12
Website $28,590 48,700 $0.59
Print Adv $37,450 9,650 $3.88
Email $56,475 48,275 $1.17
Mailers $49,750 10,730 $4.64
Inside Sales $27,250 6,620 $4.12
TOTAL $229,405 138,075 $2.75

From these numbers, as a channel for interaction with potential and current customers, the website and email are the most cost effective. Adding conversion rates to this table may paint a different picture. Analyzing budgets in this fashion shows that online channels are more cost effective at interacting with potential and current customers.