As a followup to Wednesday's entry on marketing ROI, John Costello, CMO at Dunkin' Donuts reviews his company's market orientation efforts. The Q&A style post covers a lot of ground associated with generating, disseminating, and responding to market intelligence; specifically, market intelligence associated with analytics. At one point, though, Costello comments on calculating marketing ROI that appears confusing at best. The troubled money observation:
Dunkin’ is fortunate, because we’re still getting a strong ROI on traditional media like television, radio, outdoor and in-store POP. We’re somewhat different than some other marketers who shifted into interactive marketing because it no longer works. We conduct fairly sophisticated analyses across all media, and then adjust our plans based on that ROI. So while interactive, mobile and social are growing at a faster rate than traditional marketing tools, they’re earning their way into the marketing plan through the ROI that they provide. You won’t see a wholesale shift to those media. Traditional media still represent over half of our total marketing budget.
Costello's response gives an impression that Dunkin' Donuts can and does calculate a separate ROI for each media. ROI is simply the ratio of the investment in a project to the returns generated by the project. While the investment in a television campaign can be figured, how does any company calculate the returns from a television campaign? This question applies to radio, transit, social, etc. If Costello has such a formula, then he would be financially better off working as a consultant than Dunkin' Donuts' CMO because many organizations would pay to know this information.
Rather, I think Costello meant that Dunkin' Donuts calculates an ROI for all marketing campaigns, which would include expenditures associated with buying time on television and radio, space in magazines and on billboards, and insertions in social media.