ROI is a challenge to be sure. But you’ve done a great job here showing how to calculate it in the simple way and the more complex way. I also like the fact that you encourage people to consider timeframes and that marketing doesn’t happen overnight.

As a side note, I use the same technique when writing about ROI — explaining the simple approach and then the more complex approach — in An Audience of One, which will be published by McGraw-Hill in September. (Yes, that’s a shameless plug, but it’s also a way to thank you for your early review quote which you’ll find on the back cover. Thanks!)

Glad to see you’re covering this topic. And I always assumed you were a math major given your work at Nielsen!

Cheers, Jamie

Thanks Edorta, you raise a very good and important question. I think the approach I take is more customer-centric. So while you are correct, many transactions of products happen offline. Or some companies, like wholesalers, do not have visibility into their revenue streams. However, every one of those transactions has a person behind it. And EVERY person on the planet who buys stuff in this global digital world, uses online channels to search, discover, share, and engage with content surrounding or related to their transactions.

ROI may need to be discovered through share of voice, awareness, preference, or even simply company website traffic. The question every business should ask, no matter how digital their supply chain is, or no matter how much visibility they have to the sale, is how much share of the conversation do they have relative to other players in the supply chain.

For example, look at GE and all the content they create on their own and social platforms. While they might be selling items through intermediaries in some cases, they still want their buyers to come to their website and to experience their expertise ONLINE. That is valuable and measurable. Even if it doesn’t lead to direct sales.

Another way to look at it is this. How much activity with non-digital transactions CAN you measure the ROI. What is the ROI of a full-page ad in a magazine? Or the logo on a truck? For many companies, traditional methods like these are not conducted because of the ROI. But because a publisher sales rep has convinced a CEO that this is the only way to reach the target audience. But they offer no proof. But if that same company showed up first on a web search for the types of questions those customers ask their search engines. Or if that company produced online marketing that generates interest,, then there is ROI that can be measured relative to other marketing investment decisions.

My bottom line is this, no matter how you look at it, in every industry, there are people involved. Our society goes online to discover the majority of content we need to stay informed. The company that shows up for their buyers when we all go online, is the company that wins. And this customer-centric view can lead to calculations of value.

I hope this helps to answer the question and thanks for your interest in this topic.

Great article on a subject that certainly worries all of us. Anyway, all this is fantastic when business is conducted digitally; my concern is how to calculate ROI when businesse is not conducted in the digital world. Because there’re still many companies who don’t do online business (sales) and who have no direct transactional contact with customers. Their business is conducted via retailers and, thus, is very difficult to correlate marketing activities and sales. They cannot even track (easily) how a customer navigated down the purchasing funnel until he/she took the product from the shelve.

I’m afraid that in this world not everything is digital; many business are still conducted in the real (physical) world where tracking codes cannot be applied, where many of the marketing activities happen in the store (eg. POS material), in traditional media, in professional magazines directed to retailers, etc. and where the control of the sale and contact with the customer doing the purchase is in the hands of the retailer. Just think of any major appliance manufacturer (Bosch, Miele, Elektrolux, Whirpool,…).None of the sell online. How do you calculate the ROI of marketing activities (effectively and economically) when most of them happen not in the click world but in the mortar one?

Many thanks for your thoughts.

Mr. Edorta Mendieta