The Marketing Plaza

Marketing measurement now has its own acronym — ROMI, or Return on Marketing Investment. It has hit the big time with its own detailed explanation in Wikipedia.  The key to the Wikipedia definition is the differentiation between short and long-term measurements and this is also what separates the amateurs from the pros.

Short-term ROMI is exactly what you would expect — the ratio of  what  you spent on a single tactic versus the increased revenue.  It’s a bit more complicated, but that’s it in a nutshell.  But, if you’re good at marketing, you likely have a campaign running, not a single tactic, and you’ll need a more sophisticated method for measuring return. That’s what the pros are calling long-term ROMI.

Long-term gets into the issue of branding, brand awareness, and the ultimate marketing mix.  How can you decide if you’re in the pro leagues?  Here’s a simple test: Are you concerned with brand and market share or just chasing more sales?  There’s nothing wrong with more sales.  It’s the reason to be in business after all.  But, if you’re only measuring sales, you’re in the minor leagues. The pros are looking at brand equity and market share in order to build towards the future.

And, of course, even this academic discussion on Return-on-Marketing-Investment pre-dates the effects of social media on the marketing mix.  If you bother to check the Wikipedia bibliography on the term ROMI, you’ll see the most recent reference is from 2006.  It’s safe to say that the use of social media in branding is just beginning to hit its stride. Branding giants — from Kodak to Zappos — have embraced it. These companies don’t take marketing lightly and they wouldn’t be in it just for the fun of it.  There ‘s no question that marketing’s future is in today’s social media — at least as one growing leg of the marketing mix stool.