Marketing: The Danger Of Focusing Upon ROI Alone

With Conversations Increasingly Concerned With Recession And Economic Downturn, Marketing Budgets And Marketing Effectiveness Will Come Under Even Greater Scrutiny.

However, to focus upon ROI is a dangerous strategy. ROI as a single measure of how well marketing spend is invested keeps brands small or stagnant. And it is one metric not to default to as marketing budgets come under pressure.

True customer-centric brands are unlikely to be in this position, as their view is on the wider market than those available, sitting at the bottom of the funnel.

The short-term pressures that inflation and interest rate hikes have on businesses is a sharp change and a challenge right now. Short-term adjustments are always necessary to meet wider challenges that businesses face and as much as marketing spend needs to be right sized for a contracted market, it also needs to be ready for a fast moving future. This means that investing slightly ahead of current market conditions or risk a small, slow start on the other side of this cycle. Traditional ROI measures do not capture this, typically advocating an under-investment.

It is imperative that the short-term tactical adjustments that you may need to make do not distract you from the bigger and more important questions that capture the full market:

– How big is your market? How big will it be when lighter infrequent consumers come back?
– Have you the right level of brand awareness to capitalise on an upswing in the market? Will the segments you are targeting now be big enough in the future market?
– Is the quality of your audience in line with the size of your target audience?

Marketing strategy needs to hold firm, manage at a 4P level, keeping to the right targeting principles (e.g. segments), keep improving their measurement capabilities, and continue to invest in the product development pipeline to be ready for the other side of the current market.

Those who don’t have the brand awareness and product solutions being built now, will likely be the most exposed in 12-18 months’ time when the market takes an upswing.