What ROI Isn’t Telling You About Your Marketing

By Chris Neuner, Executive Vice President, Sales and Account Management, QualityHealth

It struck me at a recent conference. For every presentation about a marketing program, the proof of the pudding was its ROI. 4:1; 6:1; even 1.5:1. And I began to wonder about the rest of the story:

What’s an ROI not telling us?

It doesn’t tell us how well the program is working: if it is delivering at its optimal best, or what the best is. Importantly, it doesn’t tell us why a program is working. And, in many cases, it fails to help us evaluate how a program is working relative to other programs.

What is ROI?

Yes, of course we know it means return on investment, but you would be astounded by the multiple, wildly different interpretations of what return on investment means. Differences become even more significant when we start considering the several ‘methodologies’ used to calculate it. Do we even know what we mean when we quote a program’s ROI?

So here’s my thesis: ROI is a measurement tool, inconsistently defined in the industry, that has shortcomings as a decision-making tool, failing to inform the direction we marketers need to take to drive marketing effectiveness and make marketing choices.

What are some of the limitations of ROI?

  1. Uni-dimensional MeasurementROI reports on the impact of the program but does not provide much information regarding orders of magnitude (what level of ‘good’ is a positive ROI?) and it could be deceiving (low ROI yet high performance on other metrics). Good performance should be a function of strategy, channel, situation and anything else you need to round out your marketing mix. As an example, a display buy could have a significantly lower ROI than Search, but deserves to be in the plan because it fulfills a key strategic objective, awareness. Among display buys, one buy could deliver a significantly lower ROI than another, but with a harder-to-reach and unduplicated audience. I read somewhere the suggestion that instead of measuring financial return on investment, we should perhaps switch to measuring “return on objectives” instead.
  1. Nothing between the R and the I
    The way DTC marketers use it, ROI measures the number of patients that get on brand as a result of an investment in a program or tactic. Part of its elegance lies in its simplicity. Output / Input. But reality isn’t simple. Patients encounter programs, and then go through several complicated decision processes and intermediate outcomes that may or may not keep them from ultimately getting and filling a brand script. Which they may or may not fill, may or may not take, may or may not refill, and which may or may not help them feel better. This is complex behavioral stuff, and ROI as a measure does not give us the clarity we as marketers need to keep driving brand value and patient impact.Remember the Softer Side of Sears campaign? It did not deliver a positive ROI. It did succeed in stimulating store visits; however, those visits did not translate into purchases. Customers were disappointed with the merchandise, so didn’t buy. But when measured on ROI along, the campaign did not deliver.
  1. No uniform formula for ROI
    By definition, an ROI is a measure of Revenue / Cost. But how an ROI is calculated tends to evolve and morph to suit situational or strategic needs. There is no real rule on what to include as a cost (media expenses, creative fees, RM program deployment, cost of sample fulfillment), and what qualifies as a benefit (retail price, wholesale price, gross profit). Some companies look at net ROI, others at gross. Some present historical ROI, others work with projected numbers. Some companies look at ROMI, or return on marketing investment, considering as cost the monies spent on the buy. There’s the question of whether the ROI is measuring proven action, reported action or intention. All of these approaches yield different results – all valid, but different.As an aside, here’s a true story. I recently presented what I though was an extremely respectable 3:1 ROI for a complex program in a very competitive neurology category – to a surprisingly unimpressed audience. Apparently, other programs for the brand were delivering at as high as a 6:1 ROI. After several rounds of desperate investigation, we uncovered that these other programs were reporting gross ROI while we were reporting net. At a gross level, our program delivered an 11:1 ROI. And to think we had almost lost the business because of the inconsistency in definition.
  1. Vastly differs by when you measure
    Programs deliver return at different rates throughout their lifecycle. Returns tend to be low early as the program is building up momentum. If all goes well, performance then increases, driving the program to an optimal steady state, after which the program enters the zone of diminishing returns. Obviously, the ROI of the program is different by stage. Your social media could be delivering a negative ROI until the day you need a social platform to address, say, a public outcry about a new print ad. And then it’s the best investment you’d made. So should ROI be an average over the course of the program? Or should it be measured at a point in time? Should that be the high point? Should we be looking at different ROIs at different stages? Or should we be thinking about other metrics by which to evaluate performance?
  1. Limited timeframe
    ROI measures generally account for a specific time frame. For DTC brands, the time frame is usually 60 days post-campaign to prove the impact of driving an incremental script. Because of our need to “grade” a program and make a decision, we report a program’s ROI, and then we close the case. Because of cost or logistics, ROI measurement systems typically don’t measure the additional benefit after the 60 days, which could be significant for more complicated or referral-heavy brands, or could represent heavy adherence impact.

A call for better visibility and more insight

Here’s my soapbox. Marketers need better clarity to make better decisions. My appeal to brand marketers, agencies, media companies, and our research partners is that we look beyond ROI and financial impact to really understand consumer flow and dynamics within the program. For every program, marketers need to know:

  1. Who is interacting with your program?
  2. What’s their journey to conversion?
  3. What’s happening at the pharmacy?
  4. What’s happening post-pharmacy, i.e., the financial impact … and ROI?

Imagine, you are marketing an antidepressant, and your email conversion program drove a 4:1 net ROI. Great news, right? But now what? Should you push the program up to 5:1? Or higher? And what levers would help drive up the performance?

Instead of just focusing on ROI, here’s the kind of data we should be gathering through our match-back and other measurement studies:

  • Return on Marketing Objective:
    Are you measuring against campaign goals, or are you just measuring conversions? As mentioned above, if the goal of the campaign is to blast awareness, for example, to block a competitor, then measure the extent to which you accomplished that goal. Do not expect that campaign to deliver the highest conversion in marketing history! Instead, ensure that you measure net impact on awareness levels, both for you and your competitor to claim victory on your blocking strategy.
  • Quality of Interaction:
    Who is interacting with your program? Many times, we only know that say, 30,000 people visited our microsite, or 12,000 opted into our email program, but we don’t know who they are. Are they in fact patients who have been previously diagnosed with depression? Or who, subsequent to the campaign, get a depression diagnosis? What brand of antidepressant are they currently using? Is the campaign sourcing from the same class of drug or different class or category altogether? In other words, are we spending against the right target?
  • Provider Journey:
    Did program participants see a doctor as a result of the campaign? Did they discuss the brand? What does that discussion look like? Did the doctor give them a script for the brand? Or is the doctor largely prescribing something else? Did some segments of patients get prescribed the brand at a higher rate than others (e.g., switch vs. new to brand)? Where did the highest conversion come from (i.e. class of drug, category)?
  • Payer/Pharmacy Experience:
    Did the patient take the script to the pharmacy? Did they experience payer-related issues? Were these issues unique to the brand? How were the issues resolved? How often was DAW written? Did they experience brand substitutions?
  • Financial and Clinical Impact:
    Did they pick up their prescription? Did they take it? Did they continue taking it as directed? Did they feel better? Did they continue of therapy?

Critical marketing decisions such as whom to target and how to reach them cannot be based on ROI alone. So in conclusion, here are my three take-aways:

  1. Marketers, whether or not you invest in a marketing program must be the result of a strategic discussion about the program in the context of marketing objectives, and not based on a single numerical ROI.
  1. To evaluate the financial contribution of a program, don’t settle for a superficially simple answer to “What’s the ROI?” without understanding the where, why and how of program value.
  1. When working with ROIs, proactively address your expectation for how an ROI should be calculated, so you have a consistent view across all your investments.


Discover More About the Marketing Issues that Matter to get the Most our of Your Strategy

Join QualityHealth, and top marketing innovators in the industry, in San Francisco, July 29-31, at Digital Pharma West (view the brochure or register for the event) and in Philadelphia, October 21-24, at Digital Pharma East (request more information or register for the event).


About the Author

Chris Neuner, Executive Vice President, Sales and Account Management, QualityHealth

Neuner is EVP, Sales and Account Management at QualityHealth, the largest digital patient identification and engagement platform for health products and services. With 15 years of experience innovating in the interactive marketing and media space, Neuner has partnered with leading companies such as Eli Lilly, Novartis, Genentech, and Medtronic. In addition, he founded Greater Than One, leading it to become a top full-service digital agency in the healthcare industry. Neuner can be contacted via email at cneuner@QHperform.com. Please visit QualityHealth at www.QHperform.com.

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