Jan 7, 2019 6:38 AM
“What’s the ROI on this?”
The first several dozen times I was asked this by brand marketing directors, dutifully, I gave long, academic answers that were part predictive modeling, part brand value over time plus “goodwill” in case of acquisition, part short/medium/long-term sales minus prorated costs.
No one wanted to hear this.
Search ROI and you’ll see that it’s an investment term, as in stocks. Applying it to modern marketing is essentially taking a swan dive and adding four reverse summersaults in a pike with a half twist, and calling it a swan. It can no longer be called a swan. Math killed the swan and turned it into a perversion of species that cannot be called a bird at all.
Now I answer the question, “What’s the ROI on this?” with this phrase:
“ONE MILLION DOLLARS.”
True. The first time was about a decade ago with a consumer-facing client who spit out the question at a campaign concept presentation. My agency was presenting a multi-channel expression that supported promotion and brand, eloquently positioned the organization to prospects, deepened engagement to current customers, and, in a word, was perfect. Checked all the boxes. Great idea. Instead of saying, “Brilliant!” she said IT.
“What’s the ROI on this?”
Pause, stare down, beat:
“ONE MILLION DOLLARS.”
Since I have been saying ONE MILLION DOLLARS, brand-side folks don’t ask me about ROI twice.
Of course, you, CMO, are not personally to blame. ROI is the bane of your existence too, with CEOs asking to isolate what cannot be isolated unless in a controlled environment by PhDs in white coats. CEOs don’t want to hear the real, academic answer either. It is likely that you’re part of the choir in the church of “Why Is This Always So Hard?”
This article is not about the positives of unaccountability. Nor is it anti-math. There simply are other, more actionable ways to think about measurement in marketing beyond sales. Since more and more brands are developing in-house departments, it might be the perfect time to really, truly redefine success, and how to attain it by way of leadership:
1. Conceptualize excellence. If the organizational process of marketing is broken, the output of the marketing is inconsistent, and “what contributed to performance” cannot be isolated. ROI doesn’t factor just what was purchased under a marketing budget, it also includes the value of what was created, and the cost of creation. What are the metrics of your marketing department’s internal processes? Do you have a speed to market metric? An efficiency metric and a corresponding quality metric? If you live by “organized chaos” internally – nothing wrong with that – do you correlate the chaos with opportunism? Do you have a metric for proactivity? Ideation? Conceptualize a state of excellence for your internal affairs, and hold people accountable for at least acknowledging the importance of excellence. Excellence is the connection to soul, self-worth and delivers the nirvana of mastery. Bonus! A correlation to your retention rate of current employees.
2. Allocate human and monetary capital by way of a balanced portfolio. OK, if ROI came from the investment trades, then let’s drink from that well. Would your broker suggest putting all of your money into one investment? No. Not simply multi-channel marketing, but multi-STRATEGY marketing. Think of it in terms of allocation of marketing portfolio risk, and adding performance metrics to each bucket:
3. Make marketing infrastructure a separate category of measurement. The next new digital this-or-that has been screwing up marketing metrics for nearly two decades now. It’s the equivalent of going from candles to electricity, and then saying marketing worked because of interior lighting. Digital (really, how about we get rid of this term and call the tactics the acronyms they are, i.e. SEO, PPC) will continue to do cloud “what worked” unless you think about your web ecosystem as overhead rather than a marketing channel. So that 10% in the above gets reallocated to other strategic priorities as tactical support, and your true marketing budget becomes more potent.
Can it all really happen? Can the scourge of ROI be eradicated in our lifetime? Yes, but it will require courage, or at very least, permission. Choose your favorite inherent cognitive bias on why we collectively continue to default to this ancient standard of validation. Sure, it feels great to say, “We’re up 20% over last year!” but we all know that “past performance is not indicative of future results.” As CMOs, shouldn’t the ability to position an organization for future results be the real measure of worth?
Go ahead. It’s liberating. And it’s the right thing to do: “ONE MILLION DOLLARS."
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