Have you ever wondered where your billable hours go, let alone the actual ROI you make on a given marketing tactic? If so, you are certainly not alone. Have you ever tried asking you agency about it? How did they respond? Did they even respond?

The truth is that most agencies need to do better. But it is exceedingly difficult for them because most agencies are bloated and need to find billable hours for all of their employees, even if they have barely touched your account and barely know your industry. In fact, just the other day a prospect was telling me that they often see new faces on their weekly status meetings and cringe thinking about the added costs they will inevitably be charged just to get them up to speed.

There are of course ways that you can ferret out the ROI of your marketing tactics, and by extension your agency. The obvious way is to measure how much sales increased after a campaign. But that’s a blunt metric because you probably had other simultaneous tactics running, or perhaps customers were responding to previous efforts, or they would have made the purchase anyhow or who knows what. You could use a fancy “attribution model” that applies appropriate credit to each online and offline contact, but as you can image, that can be complicated and takes time. There’s a great article about it here at the Harvard Business Review.

Calculating your marketing ROI is not that difficult, but as described above, inputting the actual numbers is, especially the first variable, the “incremental value gained as a result of the marketing investment.” That’s tough to measure.

Here’s the calculation:

MROI = (incremental financial value gained as a result of the marketing investment – cost of marketing investment) / cost of marketing investment

On the other hand, the “cost of the marketing investment” is more straightforward. And that’s where an agency can make or break your ROI.

So next time you need to justify your marketing ROI to your CFO, decide what to spend on next, or just want to hold yourself accountable, consider an agency that minimizes that second part of the equation with:

• Completely transparent pricing
• Great work by all measures (stopping power, creativity, clarity, strategic alignment, etc.)
• Outstanding service
• Low cost of entry. They already know your business and industry.
• Can easily justify their costs with results that count.