What Does Yield Mean in Marketing?

In the context of marketing, "yield" typically refers to the output or result obtained from a marketing effort or campaign, expressed in terms of the desired outcome, such as sales, leads, conversions, or customer engagement. Yield marketing focuses on maximising the return on investment (ROI) from marketing initiatives by optimising the performance and outcomes of marketing efforts.

Yield in marketing can be measured and analysed using various key performance indicators (KPIs) or metrics, depending on the specific marketing goals and objectives. For example, in digital marketing, yield may be measured using metrics such as click-through rate (CTR), conversion rate, customer acquisition cost (CAC), customer lifetime value (CLTV), return on ad spend (ROAS), and other relevant metrics.

The concept of yield in marketing emphasizes the importance of efficiency and effectiveness in marketing strategies and tactics, with the goal of achieving the highest possible return on marketing investments. It involves continually monitoring and optimising marketing efforts to ensure that they are delivering the desired results and driving meaningful outcomes for the business. By focusing on yield, marketers aim to improve marketing performance, optimise resource allocation, and drive better business results.

How to Calculate Yield in Marketing Campaigns.

The calculation of yield in marketing depends on the specific marketing goals and objectives of a campaign or initiative. It typically involves comparing the desired outcomes or results with the resources invested, such as time, effort, and budget, to assess the efficiency and effectiveness of the marketing effort. Here are some general steps to calculate yield in marketing:

1. Define the desired outcome: Start by identifying the specific marketing goal or objective that you want to achieve, such as sales, leads, conversions, or customer engagement. This could be the primary focus of your online marketing campaign or initiative.
2. Measure the marketing investment: Quantify the resources invested in the marketing effort, including time, effort, and budget. This could include costs associated with advertising, content creation, campaign management, and other marketing activities.
3. Calculate the yield: Divide the desired outcome by the marketing investment to calculate the yield. This could be expressed as a percentage or a ratio, depending on the specific metric or KPI used.

Example Yield Calculation

If you spent £1,000 on an online advertising campaign and generated 100 leads as a result, the yield could be calculated as 100 leads / £1,000 = 0.1 or 10% yield. This would mean that for every pound invested in the campaign, you generated 10 pence or 10% return in the form of leads.

It's important to note that the calculation of yield may vary depending on the specific marketing goals, metrics, and KPIs used, and it's important to align the calculation with the specific objectives of the marketing campaign or initiative. Regular monitoring and analysis of marketing performance can help optimise yield and improve the effectiveness of marketing efforts.

"Yield in marketing measures the output and effectiveness of marketing efforts, focusing on maximising ROI. It assesses efficiency, tracks performance, aids resource allocation, sets realistic goals, and reveals optimisation opportunities. All marketers should be using it somewhere on their metric dashboards!"

Paul Mills
CEO & Founder, VCMO

Advantages to Calculating Yield as a Marketing Metric.

Calculating yield as a metric in marketing offers several advantages, including:

• Efficiency Assessment: Yield provides a way to assess the efficiency of marketing efforts by comparing the desired outcomes or results with the resources invested. It helps businesses understand how effectively they are utilising their marketing resources, such as time, effort, and budget, to achieve their marketing goals.
• Performance Tracking: Yield allows businesses to track and monitor the performance of their marketing campaigns or initiatives over time. By measuring the yield at different stages of a campaign, businesses can assess the effectiveness of their marketing efforts and make data-driven decisions to optimise their strategies.
• Resource Allocation: Yield helps businesses make informed decisions about resource allocation in marketing. By calculating the yield for different marketing channels, campaigns, or initiatives, businesses can identify the most effective and efficient channels or strategies and allocate their resources accordingly to maximise their return on investment (ROI).
• Goal Setting: Yield provides a benchmark for setting realistic marketing goals and objectives. By calculating the yield based on historical data or industry benchmarks, businesses can set achievable targets for their marketing efforts and align their strategies with their overall business objectives.
• Optimisation Opportunities: Yield calculations can reveal opportunities for optimisation and improvement in marketing efforts. If the yield is low or not meeting expectations, it may indicate that adjustments need to be made to the marketing strategy, targeting, messaging, or other elements to improve performance and achieve better results.

Overall, calculating yield as a metric in marketing can help businesses assess the efficiency and effectiveness of their marketing efforts, track performance, optimize resource allocation, set realistic goals, and identify opportunities for improvement, leading to more effective and efficient marketing strategies.

Disadvantages to Calculating Yield as a Marketing Metric.

While calculating yield as a metric in marketing can offer several advantages, there’s also some disadvantages to be aware of:

• Simplified View: Yield is a simplified metric that may not capture the full complexity of marketing performance. It focuses on the ratio of outputs to inputs, which may not consider all the nuances and subtleties of different marketing initiatives or channels. Relying solely on yield may result in an oversimplified view of marketing performance and may not provide a comprehensive understanding of the effectiveness of different marketing efforts.
• Limited Context: Yield does not provide contextual information about market conditions, competitive landscape, or customer behaviour, which can impact marketing performance. It may not consider external factors that can influence marketing outcomes, such as changes in consumer preferences, market trends, or competitor activities. Without proper context, interpreting yield alone may lead to inaccurate or incomplete conclusions about marketing effectiveness.
• Incomplete Measurement: Yield typically focuses on a specific outcome or result, such as conversion rate or revenue, and may not capture other important marketing metrics or indicators, such as brand awareness, customer satisfaction, or customer lifetime value. Relying solely on yield may result in an incomplete measurement of marketing performance, as it may not consider the broader impact of marketing efforts on the business.
• Lack of Benchmarking: Yield calculations are often based on historical data or internal benchmarks, which may not provide a comprehensive comparison against industry standards or best practices. Without proper benchmarking, it may be challenging to assess the relative performance of marketing efforts and make informed decisions about optimisation or resource allocation.
• Overemphasis on Short-term Results: Yield calculations are typically focused on short-term outcomes, such as immediate sales or conversions, which may not fully capture the long-term impact of marketing efforts on customer relationships, brand equity, or customer loyalty. Relying solely on yield may result in a myopic focus on short-term results, neglecting the potential long-term benefits of marketing initiatives.

It's important to consider these potential disadvantages when using yield as a metric in marketing and to use it in conjunction with other relevant metrics and contextual information to obtain a comprehensive understanding of marketing performance.

Recap on Yield.

Yield is a marketing metric that measures the ratio of outputs to inputs, providing a simplified view of marketing performance. Its benefits include simplicity, ease of calculation, and the ability to assess marketing effectiveness based on tangible outcomes. Yield can help businesses identify the most effective marketing efforts and optimise resource allocation.

However, watchouts include potential limitations in capturing the complexity of marketing, lack of contextual information, incomplete measurement, potential overemphasis on short-term results, and reliance on historical or internal benchmarks. Careful consideration of these factors is important when using yield as a metric in marketing to ensure a comprehensive and informed assessment of marketing performance.

About VCMO

VCMO helps SMEs and investor-backed portfolio companies with a £2 million or higher turnover that operate without a full-time Chief Marketing Officer. Our Fractional CMOs and tailored services transform marketing potential into a competitive advantage that delivers scalable and predictable growth, increased profits, and enhanced enterprise value.