Robert Cheaney
Mary Grace DeForest
Oscar de la Vega
RETURN ON MARKETING
INVESTMENT (ROMI)
What is ROMI?
The optimization of marketing spend for the short
and long term in support of the brand strategy by
building a market model using valid, objective
marketing metrics. Improving ROMI leads to
improved marketing effectiveness, increased
revenue, profit and market share for the same
amount of marketing spend.
With this knowledge, marketing
investments can be redirected away
from under-performing activities to
better performing marketing media.
Objectives Marketing Requirements Algorithm Implementation Assumptions Questions
Overall objectives
Maximize marketing effectiveness and efficiency
through common framework and approach
ROMI is a cost effective marketing measurement
tools leveraging existing systems, data and process
Drive actionable planning via ROMI findings
Integrate ROMI program into marketing planning
process
Establish customer awareness, consideration,
preference, and loyalty
Objectives Marketing Requirements Algorithm Implementation Assumptions Questions
General Advertising Schemes
Undifferentiated
Marketing
• Treats all populations the same
Differentiated
Marketing
• Targets specific populations
differently for the same product
Concentrated
Marketing
• Targets only one small
population for the same product
Objectives Marketing Requirements Algorithm Implementation Assumptions Questions
Marketing Distribution
Average
Objectives Marketing Requirements Algorithm Implementation Assumptions Questions
Types of Marketing Strategies
 Direct Population Marketing
 Web Marketing and Internet Advertising
 Non-Traditional Advertising
 Brand Advertising
Objectives Marketing Requirements Algorithm Implementation Assumptions Questions
Direct Marketing
Offline Advertising
Online Advertising
Personal/Analyst
Relations
Direct
Mail/Telemarketing
E-mail
Web and Net-Media
Testing
Collateral
Consultants
Objectives Marketing Requirements Algorithm Implementation Assumptions Questions
Offline Advertising
 Targets
specific
sections of
populations
 Diversifies the
market
TV
Commercials
Tracking
Response
Publications
Offline
Advertising
Follow-up
Radio
Fliers
Objectives Marketing Requirements Algorithm Implementation Assumptions Questions
Online Advertising
 Website Pop-up Promotions
 Direct Link “Coupons”
 Links from Related Products’ Sites
 Order of Appearance for Search Engines
Objectives Marketing Requirements Algorithm Implementation Assumptions Questions
PR/AR
Analyst
Relations
Public Relations
Team Sponsorships
Luncheons
Company Sponsorship of
other companies
Community Development
Volunteer Sponsorship
Objectives Marketing Requirements Algorithm Implementation Assumptions Questions
Non-traditional Marketing
 Text Messaging
 Promotion through News Feeds
 Personal Promotion through Blogs
 Increased Marketing due to Seasonal
Situations
Objectives Marketing Requirements Algorithm Implementation Assumptions Questions
Who should use ROMI?
“Market mix models are most appropriate for
brands that have large budgets, a highly
diverse marketing mix, and distribution via
indirect channels. B2B companies whose
marketing objective is to drive leads and
spend little on corporate branding are better
served by improving their lead management
systems.”
Forrester Research, Inc. "Best Practices in Market
Mix Modeling"; August 25, 2005
Objectives Marketing Requirements Algorithm Implementation Assumptions Questions
ROMI Estimated Gain
Previous
Year’s Sales
Data
Future
Estimated
Market
Changes
Costumer
Surveys
• CRM
Consultant
Suggestions
ROMI
Number
Objectives Marketing Requirements Algorithm Implementation Assumptions Questions
Business Requirements
Strong link between marketing strategies, profits and sales
Common metrics
Discipline and rigor
Best-in-class assets to automate
One single data source
ROI-based marketing mix model
Objectives Marketing Requirements Algorithm Implementation Assumptions Questions
Decision % Distribution
Objectives Marketing Requirements Algorithm Implementation Assumptions Questions
Results
Website and
Internet Media,
5
Non-traditional
Marketing, 10
Offline
Advertising,
47.6
Events, 8.4
Direct E-mail, 7
Direct Mail &
Telemarketing,
5
PR/AR, 5
Online
Advertising, 12
Objectives Marketing Requirements Algorithm Implementation Assumptions Questions
Business Actions
Treat marketing as a business
discipline
Measure impact of every marketing $
Reduce spend, increase effectiveness
Enable fact-driven and data-driven
decisions
Increase accountability with common
metrics
Objectives Marketing Requirements Algorithm Implementation Assumptions Questions
Region Differentiation
Services
PR
Relationship
Marketing
Collateral
Print
ads
Trade
shows
Advertising
Channel
marketing
Business
Unit
Products
Software
Region 1
Region 2
Objectives Marketing Requirements Algorithm Implementation Assumptions Questions
Real World Application
Real World
Assumptions
Adaptive yearly
evaluations
Stable ROMI #’s
No individual min.
budget
Min. Budget affects
results
Accurate Saturation
Estimated Constant
Saturation
Exponential
Linear
Objectives Marketing Requirements Algorithm Implementation Assumptions Questions
Brand
 Convey a consistent
and focused message
 Create customer
desire to purchase
 Excludes the longterm brand building
value
Objectives Marketing Requirements Algorithm Implementation Assumptions Questions
Brand Advertising
 Brand Start-up Costs
 Letterhead
 Logo Labeling/Broadcasting
 Promotional Items
Objectives Marketing Requirements Algorithm Implementation Assumptions Questions
Website Costs
 Website Updates
 Online Ordering
Costs
 Ordering
scheme/credit card
implementation
Objectives Marketing Requirements Algorithm Implementation Assumptions Questions
Sales Collateral
 Overhead costs related to business advertising
 Storage Costs
 Assets owned by company that must be
replaced when change occurs
 Letterhead
 Excess Promotional Stock
 Company Name Items
Objectives Marketing Requirements Algorithm Implementation Assumptions Questions
Questions?
Objectives Marketing Requirements Algorithm Implementation Assumptions Questions