Excellent Analytics Tip #22: Calculate Return On Analytics Investment! by Avinash Kaushik.
From the post:
Analysts: Put up or shut up time!
This blog is centered around creating incredible digital experiences powered by qualitative and quantitative data insights. Every post is about unleashing the power of digital analytics (the potent combination of data, systems, software and people). But we’ve never stopped to consider this question:
What is the return on investment (ROI) of digital analytics? What is the incremental revenue impact on the company’s bottom-line for the investment in data, systems and people?
Isn’t it amazing? We’ve not pointed the sexy arrow of accountability on ourselves!
Let’s fix that in this post. Let’s calculate the ROI of digital analytics. Let’s show, with real numbers (!) and a mathematical formula (oh, my!), that we are worth it!
We shall do that in in two parts.
In part one, my good friend Jesse Nichols will present his wonderful formula for computing ROA (return on analytics).
In part two, we are going to build on the formula and create a model (ok, spreadsheet :)) that you can use to compute ROA for your own company. We’ll have a lot of detail in the model. It contains a sample computation you can use to build your own. It also contains multiple tabs full of specific computations of revenue incrementality delivered for various analytical efforts (Paid Search, Email Marketing, Attribution Analysis, and more). It also has one tab so full of awesomeness, you are going to have to download it to bathe in its glory.
Bottom-line: The model will give you the context you need to shine the bright sunshine of Madam Accountability on your own analytics practice.
Ready? (It is okay if you are scared. :)).
Would this work for measuring topic map ROI/ROA?
What other measurement techniques would you suggest?