The best way to propose or preserve any budget is to be able to show its economic worth to the firm. It is getting harder and harder to defend a budget based on history or on "keeping up with the Jones" (competition). As such, it is necessary to draw the connection between marketing spending and the resulting profit of the firm. While marketing budgets have both short-term and long-term effects, there are some interim measures that can be observed to assess the value of the spend: Return on investment (ROI), economic value added (EVA), internal rate of return (IRR), return on sales (ROS), or even simply net profit. Yet, often it is hard to draw the direct link to each of these measures because of the time delay alluded to above and the many intervening variables. As such, there are other measures one can look at. Customer Lifetime Value (CLV), and Average Acquisition Cost or Average Retention Cost. Finally, there are other financial measures that can be taken to exam the value of marketing spending on a more micro level, often at the value of a specific product or program. In this e-book, each of these measures and many others are discussed to assess the value of a particular marketing budget.
