"Where should I invest my next marketing dollar?" If you’ve been in marketing a while, you probably ask yourself this question each and every day. It’s the quintessential marketing question, especially for digital marketers.
I’m a big fan of this question, because it contains the word "invest", and I view digital marketing as an investment. In fact, I recently wrote a post about Approaching Business As An Investor. It’s questions like this that investment-minded business professionals should be asking themselves, their teams, and even their prospective employees!
So, what is the answer to this question? While there are many different approaches, the one resonates the most with me is the Marginal ROI philosophy. How does Marginal ROI work? You evaluate all of your marketing channels, programs, and campaigns, and identify those where your next marginally invested dollar is most likely to drive the largest amount of revenue. If revenue is not your goal, you can optimize against other success metrics such as sales or leads. Find the channel that will yield the most leads for the least amount of money, and that is where you invest your next dollar.
The Marginal ROI way of investing in digital marketing is truly a fundamental strategy. While some advertisers optimize for impressions, clicks, position, or any other number of metrics, those that optimize with the Marginal ROI mindset are true investors, in my opinion. Don’t get me wrong, all these other metrics have their time and place, especially if you are primarily concerned with brand awareness. The investor, however, always places top line revenue and bottom line margin highest on their list.
I recently read an incredibly insightful whitepaper by Kenshoo that I wanted to share on this very topic, Kenshoo’s Maximizing Paid Search Potential By Measuring Marginal ROI. In collaboration with Bing Ads, Kenshoo really gets to the bottom of this Marginal ROI way of investing, utilizing real data from advertisers. Not surprisingly, Kenshoo’s analysis illustrates that a large amount of the time, Bing Ads offers superior results from a Marginal ROI perspective. While many advertisers spend their time optimizing towards other engines, they may under-invest in Bing Ads. The data suggests that the next dollar invested should go towards Bing Ads for superior return on investment.
In addition to the wonderful Bing Ads data, Kenshoo’s whitepaper also includes some incredibly helpful graphics that illustrate the Marginal ROI concept. I personally found the Marginal ROI Curve illustration on page 4 very helpful. If you have ever taken calculus in the past, you have probably seen this very diagram. If not, no worries, Kenshoo is here to teach you all the advanced math you need to know.
At the end of the day, I find that the data-driven approach drives superior results in digital marketing and business, in general. Take some time to read Kenshoo’s free Marginal ROI Whitepaper and supercharge your marketing and investment knowledge!
Image in this post © Kenshoo
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