Return over time (R.O.T) is a better measurement of marketing success than Return on Investment (R.O.I). Though most of us do not hear much about R.O.T., it is actually much better than ROI especially in internet and social media marketing where there are statistics to measure.
Why R.O.I is not a Good Indicator of Marketing Success
First, let’s us see why R.O.I is not a good indicator of marketing success.
Most business owners treat marketing as an investment expense. Many think that the more money they invest, the better their sales will be. The less money they invest, the poorer the sales will be. This is not true at all. Marketing cannot be treated like an investment project.
Marketing is a very subjective skill like music. Different company’s marketers may use the same marketing or branding platform as their competitors but the result may be different. Customers may buy eventually from a competitor even if the company had spent millions of dollars more than the competitor.
Till now, there is still no clear indication of whether marketing contributes to the company’s return on investment. The effectiveness of individual marketing strategies is often blurred by the term R.O.I.
Company A may invest one million dollars on TV advertising last year. Their last year sales volume was two million dollars. However, this does not mean that there is a 100% increase in sales; so, the R.O.I on marketing for Company A should be 100% too! It does not make sense as the sales volume may be the result of other marketing strategies or the customers may be buying the products due to the recommendation from their friends.
Because of this R.O.I thingy, many marketers continue to convince their management to invest on non-effective mass marketing strategies such as prints, TVs and radios, just because there are some sales for the company.
Many big brands today still make the mistakes by believing that R.O.I is everything for them. They continue to spend massive amount of advertising dollars with the reasons of better R.O.I.
Definition of Return Over Time
Return Over Time (R.O.T) is a new term coined by me. Return here does not mean sales and profits, it means the number of leads, prospects, call in, online enquiries and social media leads generated from each of your individual marketing strategy.
The bigger the value of the company’s R.O.T, the better the particular marketing strategy will be. The lower the value of the company’s R.O.T, the less effective the particular marketing strategy is to the company.
Why Return Over Time is a Better Measurement of Marketing Success?
Companies can focus more of their marketing budget on strategies that have higher Return Over Time. (R.O.T); whereas they can scrap away those marketing strategies with lower R.O.T. Low R.O.T may also mean that the particular marketer that manages the strategy may not be the right person to handle the project.
By better allocation of the marketing strategies and limited budget, the company can therefore saves more and gets more. In this way, the marketer can have the extra time and money to spend on more branding strategies to further grow the brand to the next level.
Return over time (R.O.T) also gives the marketers the indication to change marketing strategies when the time comes. This is because any marketing strategy in the world cannot be consistently successful. There will be changes over time. The brands that once dominated their industry through TV advertising, may not be able to do so today. Hence, if the R.O.T for a particular marketing strategy starts to fall, the marketer will then have to relook on the strategy again.
Return over time (R.O.T.) helps the company to determine whether they have engaged a good marketer that knows how to make use of clever marketing strategies to grow the company’s branding; or whether they have engaged a bad marketer who knows how to wiggle his or her way through under the pretense of getting better return on investment (R.O.I) for the company.