Blog Insight

Balancing Hard and Soft ROI is More Essential than Ever

One of the most overused words in the domain of digital marketing and advertising is engagement. When I find myself using it during conversations and presentations, I feel the tug of my conscience asking me to stop using the word as a crutch and to make my meaning clear by unpacking the concept.

This is a healthy impulse and one that is supported by the ever-increasing drive to prove the efficacy of our digital marketing and advertising tactics via data analytics and success metrics. In essence, the need to be clear about the meaning of engagement is essential to presenting a coherent, clear, and compelling report on the return on investment (ROI).

After all, one marketer could unpack engagement as meaning the amount of time spent consuming content while another marketer could unpack it as meaning the amount of shares generated by the same content item. Other marketers might consider these success metrics as not very successful at all and insist that engagement be interpreted to mean the consumption of content that results in a conversion or lead.

Hard versus soft ROI

Without a doubt, marketers should strive for clarity and reduce ambiguity in the realm of defining key performance indicators and success metrics. With that in mind, let us make a distinction between “hard ROI” and “soft ROI” indicators.

Hard ROI indicators will offer us clear measurements of actions taken by our target audiences that directly impact business or financial goals. Examples of this kind of ROI include, but are not limited to:

- Conversion rates that lead to sales, revenue, or leads
- Correlation of marketing or advertising tactics to increased customer lifetime value
- Reduction of customer acquisition costs directly attributable to the marketing or advertising tactic

Soft ROI indicators will offer us clear measurements of actions taken by our target audiences that indicate positive lift for our product, brand, or service without an immediate measurement of the impact on financial goals. Examples of this kind of ROI metrics include, but are not limited to:

- Increased brand, product, or service affinity
- Positive social sentiment
- Increased content consumption and ensuing share of voice/conversation
- Increased Likes and sharing actions

Though focusing on hard ROI is essential, a digital marketer must also appreciate the value of the soft ROI measures and be receptive to a measurement framework that includes both sets of metric types. This nuanced ROI framework will generate well-rounded insights on target audiences’ needs and behaviors while suggesting more fruitful optimization possibilities.

The rising value of soft ROI

As consumers of content become more sophisticated users of digital and mobile technology, or are digital natives through and through, the value of soft ROI will only grow in importance. Since people are able to filter their streams of content and tune out interruptive marketing and advertising tactics, the role of alternative marketing and advertising techniques that offer contextually relevant, informative, and/or entertaining content increases. In this consumption space, heavy-handed calls to action reduce the authenticity and efficacy of the tactic. In this case, marketers should tune in to metrics such as sharing activity, time spent with the content, social sentiment, etc., since it has been shown that increased engagement (there it is again!) with your content is directly correlated with the probability that your prospect will return.

If this is the case, the sustained generation of content and advertising vehicles that authentically lift soft ROI indicators will likely result in a hard ROI “blip” in the mid to longer term. This means that at the outset of any marketing and advertising planning, an open conversation about what constitutes success must include a mix of both hard and soft ROI indicators.