/ Pro tips: How one top CMO calculates marketing ROI.

The modern marketer is hardly strapped for data.

Rather, it’s coming at them from every direction—from various channel metrics, to digital ad spend, to financial outcomes. But when it comes to determining your marketing ROI, it can be difficult to know exactly what to include in the calculation—and how to credibly demonstrate those results to the larger organization.

It’s something successful CMOs do every day—but how? To find out, we picked the brains of some of marketing’s best minds, including Michael Brenner, CEO of Marketing Insider Group, and co-author of The Content Formula. Michael is recognized as a Forbes Top CMO Influencer, Top B2B Marketer, Content Marketer, and Social Media Marketer.

Here’s what he had to say:

1. What do you recommend including in a ROI calculation? (Is it just ad spend? ad spend + technology? ad spend + technology + salaries + overhead?)

It’s important to understand the concept of scope and what some people call “Simple ROI.” Simple ROI is taking the easiest approach to calculating ROI and using that approach consistently. This becomes an important issue when considering scope. For example, when the scope is broad, such as Overall Marketing ROI, you should include all “variable costs” such as media spend (advertising), and agency costs, as well as “fixed costs” such as salaries plus benefits and technology investments.
Once you get down to a smaller scope, such as the campaign ROI level, I recommend taking the simple approach. Measure Return on the variable investments of increased creative, content, media, and agency expenses. And then approach every campaign with the same “simple” lens. The alternative is to apply a percentage of the fixed costs to every campaign but this adds complexity that can be burdensome.

2. How did you settle on what to include in that calculation?

The best way to determine what to include in ROI calculations is to talk to your finance and accounting colleagues. They can help with complicated formulas such as NPV (Net Present Value) and IRR (Internal Rate of Return) when considering investments in various marketing activities. The variables they use should also be included in analyzing ROI after a campaign has run.

Tune in next week to learn more about how Brenner aligns his marketing efforts to larger business outcomes, and how his ROI calculation method has helped him scale marketing efforts—and optimize results.

And to learn more about how Domo can help you optimize your marketing performance today, check out our latest guide.

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