Marketing Expenses & ROI

I recently read an interview from Overstock.com’s CEO who discussed a number of good, interesting facts.  However, one thing that I think is a serious simplification was the line “You can reduce the waste [in marketing expenses] to zero. You can figure out how to pay back every single marketing dollar you spend if it’s online“.

There are a number of reasons why this is wrong, at least as a flat statement like that.  For one thing, it’s nearly impossible to track every single dollar as the tracking systems available are not 100% accurate.  Most tracking (especially over sessions) is done via cookies.  And at least 30% of consumers clean their cookies on a regular basis.

How this would work is you visit our site via an advertisement on Google.  You then decide not to buy anything yet but place a bookmark on the site, and say in a week, delete all your cookies.  Google (and thus us) no longer knows you visited us via the advertisement, so a week later if you buy from us, we still can’t allocate that purchase to that advertisement.  Which might, if everyone does it, look like a horrible advertisement to do and one we should delete.

This is even more significant when you look at sites like theSpiel who we sponsor.  Sure, they mention us in their advertising and have a link – but the majority of customers would come through either Google or as direct traffic in the navigation bar.  How do you track that kind of traffic (beyond coupons, which relies on customers actually using the coupon).

That’s when Marketing goes from a science back to an art.  My stats for sales from theSpiel is actually very low – much lower than what I’ve paid for the advertising.  But discussions with customers have indicated much of my preferred target market listens to theSpiel and are happy I’m sponsoring them.  So, supporting them could be worth every dollar in branding.

That’s where straight line numbers falls down, because there is still some ‘artistry’ to this business.  Or maybe I just don’t have the budget to get all the numbers I need.

PS: I’m holding off my decision on theSpiel till we finish our committed run.