Blogs Return on Marketing Investment MARK 430 Week 2 Lab

Blogs (Weblogs)  Online publishing tool / content management system  No technical skills needed by the user  Text and graphics  Often used as online journals or diaries  Posting appear in reverse chronological order (most recent posting first)  Also used as “groupware” - where a team of people add to the blog to share information between themselves, and with others  Blogs are publicly available on the web  anyone can read them, but not everyone can post / comment on a posting (depending on how they have been set up)  Blogging software can be purchased for setup on a server  Also available as web-based software, for free

Blogs and marketing  Companies should monitor blogs to learn what is being said about their products and services  Some companies host blogs of their own  eg. Macromedia and Microsoft let their software architects communicate directly with customers using blogsMacromedia  Blogs are being watched very closely by marketers to gauge their effectiveness  Can also use RSS feeds (Really Simple Syndication) a form of xml syndication used to distribute blog entries (aka a “news aggregator”)  a new way to communicate with customers?

Instructions for the MARK 430 blog  We are using a free web-based blogging software called “Blogger”  Everyone in the class will receive an inviting them to join the blog  Click on the link in the , then create an account for yourself. Your username and password can be anything you like, but use your real name for the “Display Name”  Once you are registered, you will be able to  post to the blog by signing in at  make comments on postings from mark430.blogspot.com mark430.blogspot.com

Are blogs useful for marketers?  In pairs, do a web search to find some material that helps to answer the question of whether or not blogs are a good tool for marketers to use to reach their customers  Go to Sign in and post the URL for the material you have found to the MARK 430 blog, along with both your names and a sentence explaining what the material is about.  To post a URL use the link button on the posting form, or if it does not appear on the form, enter the URL by hand using HTML code eg. MUC

Return on Marketing Investment Model (ROMI)

Return on Marketing Investment (ROMI)  ROMI is framework for understanding which marketing investments yield a high return  2 elements 1.Amount of financial expenditure on marketing 2.Amount of financial return created by that expenditure (ie. profit on product)  Financial return is not simply sales revenue  Financial return = product sales revenue LESS direct costs of the goods sold  OBJECTIVE IS A HIGH POSITIVE ROMI NUMBER

Calculating the return side of ROMI  Using Customer Lifetime Value (CLTV) to compute ROMI  Return side of ROMI = the lifetime of repeat sales generated by a satisfied customer (future net income)  CLTV model includes  average order size  gross margins  frequency of purchase  customer retention rates  expected duration of the customer relationship

The mothernature.com ROMI calculation spreadsheet  Parameters for the calculation include market size, customer behaviour, and financial margins  4 sections to the spreadsheet  Annual new customer arrivals (based on market size and conversion rate)  Total marketing cost per retained customer (investment needed to create a lifetime customer)  Customer expenditure to offset marketing expenses (number and frequency of purchases)  Market response forecast and forecasted returns (expected ROMI based on forecast order size and forecast number of repeat purchases)