October 10, 2023

How to track marketing research ROI

In the second of a three-part series on marketing ROI, we dig deep into the importance of marketing research and how to track the ROI of your initiatives.
TABLE OF CONTENTS

Don Draper might not have made it in 2023. 

And not just because of the old-school 9 am whiskey-guzzling or oh-so-retro sexism. 

Mad Men’s resident advertising genius was not always the biggest fan of market research, going so far as to tell the researcher on his Lucky Strike cigarettes account:

Don Draper, suited and stylish, scoffs at research. Source: AMC.

Well, the times have decisively proved Don wrong. The question is no longer whether research is necessary—it is, even for small companies and startups—but what is the value of the information it unearths? 

Does it inform decision-making and mitigate risk effectively? 

And how can organizations track and measure the ROI of market research? What tools are most effective in this quest today? 

In the second of a three-part ROI tracking series, seasoned brand strategist and Chief Innovation & Solutions Officer at research firm Maru Todd Trautz offers his insights on all of the above and more. 

What is marketing research ROI?

For Trautz, measuring the return on a research project boils down to whether or not it has delivered the information necessary to make a decision. 

To this effect, decision-making within market research broadly falls into one of two categories: smaller-scale tactical decisions, and larger-scale strategic ones. 

Tactical research ROI

Figuring out ROI for the former can be a relatively straightforward benefit minus cost analysis. 

Say you’re researching what creative gets people to move further down the purchase funnel. Measuring the ROI of this research is a question of tracking how well the creative moves the particular set of metrics associated with the objectives – in this case, it’s usually sales. 

So calculate how much the new sales bring in, deduct the cost of research, and there’s your ROI. The most basic mechanical formula here would be: 

However, don’t be fooled by the apparent simplicity of this approach…complexity still arises in a number of ways. 

It can be hard to isolate the exact impact of a single creative when multiple touchpoints may influence a sale, for instance. 

Or you may be interested in the long-term value of acquired customers beyond just the immediate sales, in which case you’ll need more complex Customer Lifetime Value calculations. 

This is why mapping out the objectives, constraints, and viability is crucial. The metric itself is tied to the specific objective, of course–if the research aims to increase the number of leads, the conversion rate might be the key metric. Or perhaps you’ll look at click-through rates to determine how effective different creatives are at driving user engagement.

Strategic research ROI

Finding the ROI of research meant to inform strategic decision-making can be trickier, especially as the returns may extend beyond the merely financial. 

After all, a question like “How can we improve brand equity (the value of our brand as perceived by our customers)?” is trying to capture more intangible information than a more easily quantifiable increase in sales. 

Trautz views this sort of research through a holistic lens he calls “feel, behave, think”—the sequential pathway of human decision making, in his words. In terms of the brand equity question, you could break it down like this:

First, how do consumers feel about a brand: Do they find it affordable or aspirational? 

Second, how do they behave towards it: Do they buy it when it’s cheaper or do they derive more satisfaction from splurging on it? 

Thirdly, what do they think about it: If asked, what words would they use to describe the brand? What are the attitudes they cognitively arrive at about it?

The first step to accurate research ROI assessment is clearly defining its purpose, says Trautz. Are you trying to impact emotions, attitudes, behaviors or all three? Based on what decision it is meant to inform, you’ll set up the relevant metrics and ways to capture this information. 

Whether or not you agree with Trautz’s sequential steps, it is difficult to counteract his point that researching consumers’ feelings, behavior, and attitudes is challenging, which means tracking the ROI of this research component is also a challenge. 

That’s why it’s crucial to use the right processes and tools to inform strategic decisions. 

If you’re researching how best to change emotions, you may use, for instance, Implicit Association Testing (IAT), a research method designed to measure implicit “gut” attitudes that people may hold unconsciously. Trautz says capturing that emotion component requires a specialized set of tools, whether it’s implicit association or visual semiotics. 

Make sure you’ve figured out beforehand what metrics you’re tracking with these tools—and how you’ll interpret them. Download our guide for tracking research ROI for a deep dive on how to do this.

Get started now:

Click here to download.

What’s the role of marketing tech in tracking marketing research ROI?

According to Trautz, MarTech tools have dramatically mushroomed the scope of strategic research ROI tracking. 

Capturing the value unearthed by AI research tools might be impossible, if AI tools weren’t also keeping tabs on said value. Martech solutions like QuestBrand (FKA Harris Brand Platform) assess advertising impact in real time, and track brand performance over time. QuestDIY, part of Harris Quest (a suite of AI-based research tools) even lets you instantly measure customer opinion holistically across different channels.

AI tools now offer unprecedented levels of insight into even open-ended, unstructured data on customer journeys or brand experiences. Topic modeling techniques, for instance, uncover themes, topics, and structures from within a large collection of textual data. 

“Machine learning and AI let us see things that we don't anticipate, make connections that we wouldn't be able to,” says Trautz.

Challenges to overcome in marketing research ROI tracking

For Trautz, the biggest challenge is to unlearn that tracking research ROI is a mechanical process, at least for decisions at a strategic level. The implications of a decision informed by research go beyond the merely financial—it takes time to see them build up and play out. 

There’s a chain of events leading up to the project and happening after it, even if the research is carried out in isolation. So when do the researchers expect to see the outcomes? Do they have tools in place to capture them at the right point in time? Or will the tale unfold over a longer period? 

There are a lot more moving pieces to consider than in tactical research, where you might expect to see immediate results, says Trautz. Reducing ROI to mere cost-benefit analysis could cost you dearly in this context.

Tropicana: A case study in calculating research ROI…without doing the research

Or…why doing research and tracking ROI is vital no matter what the size of the company.

Trautz recounts the case of Tropicana, whose 2009 packaging design failure made its way to the business texts. The new design replaced an iconic look that customers had come to use as a heuristic—a shorthand—to identify the product. 

The Tropicana packaging that fixed what wasn't broken. On the left, the original packaging. On the right, the new. Source: Tropicana Fail by Nellie | Flickr

The disruption in how customers interacted with the brand cost Tropicana a mind-numbing $50 million before they returned to the original packaging. 

You could think of this $50 million as the ROI of effective marketing research before the campaign launch. A market research campaign could have guided them away from this expensive error. 

“Company size doesn't prevent people from doing good research…you can do research under the conditions of your budget. I've worked with large global companies that do bad research and I’ve worked with small, nimble companies that do great research,” —Todd Trautz. 

Tropicana might have used focus groups to gauge public recognition of the old design— along with their response to the new. Or it could have invested in eye-tracking technology to compare how consumers visually interacted with the two styles of packaging on shelves: The tech was more expensive in 2009 than it is now, but not nearly in the vicinity of $50 million!

That’s what makes research and ROI tracking an especially big deal for smaller brands and companies that don’t have the capacity to absorb a $50 million blow.

“Company size doesn't prevent people from doing good research…you can do research under the conditions of your budget. I've worked with large global companies that do bad research and I’ve worked with small, nimble companies that do great research,” says Trautz. 

In other words, the moral of Tropicana’s story extends beyond large companies. In fact, organizations with limited budgets have all the more reason to plan and conduct research, and to accurately measure the value of its outcome. 

Manal Yousuf

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