Impact of Media Channel Selection on Sales Growth and Marketing ROI: An Independent Test of Customer Retention and Profitability
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Abstract
Today, selecting which media channels to deploy has become a central strategic decision for organisations who wish to increase sales, retain customers, improve profitability and experience growth in marketing return on investment. At a high level, this paper looks at search advertising (search), social media (social), email/CRM (email), traditional and omnichannel media pairs in the context of marketing ROI and sales growth. This study additionally examines customer retention as a mediating factor behind the profitability and media channel selection. Drawing on the literatures of marketing accountability, customer equity and market-response theory, we contend that not all media channels affect financial performance uniformly because they influence firms' short-term acquisition and long-term retention or both differently. Because there was no first-hand dataset to use, the empirical section demonstrates a hypothetical framework for an independent analysis using simulated firm level outcomes. Search ads and social media are more correlated with short term sales growth, whereas email/CRM and omnichannel media balance correlate stronger with customer retention, profitability and marketing ROI This shows that firms are mistaken to use immediate sales-oriented metrics as a basis for judging the effectiveness of media channels. Marketing ROI should instead include customer life time value, retention rate, gross margin and profitability effects rather than the sales amount since these are all clearly predictive for future results
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