Marketing ROI Should RIP

There’s a scene in the Bill Murray movie What About Bob, where he’s telling a joke. He says: “the doctor draws two circles and says ‘what do you see?’  The patient says ‘Sex’.  So, the doctor draws trees, ‘What do you see?’ The patient replies ‘Sex’.  The doctor draws a car, an owl, ‘sex, sex, sex’.   The doctor says to the patient ‘you are obsessed with sex.’  And the patient replies – ‘well, you’re the one drawing all the dirty pictures!’”

So in today’s environment, the concept of ROI (Return on Investment) has become an obsession for marketers.  And CEO’s and CFO’s are drawing the dirty pictures.    I’ve watched some marketers become so pressured by ROI that they simply become incapacitated; unable or unwilling to embark on anything they can’t prove an incrementally better result than the prior attempt.    As marketers, we’ve simply become OCD on it – flipping the Go/NoGo switch on the items we spend money on 15 times consecutively to make sure we’re getting it right.

Now, the whole concept of marketing ROI erupted in 2007 (check out this cool search on Google Trends) and it has not only become the fodder of countless blog posts, articles and conference sessions – it is the primary way that marketing software and services are sold these days.

But, here’s the thing that has become lost:

ROI is NOT Value
And…
ROI is different than Accountability

So – ROI as it is currently being applied to the marketing strategy should die as a way we measure success.

Here’s Why:

Marketers Don’t Invest In ‘Things’ – We Invest In People & Processes

So, there are two major areas where marketers are pressured to show ROI.  The first is when we buy stuff like software tools and services. And the second is when we buy advertising and/or marketing services like PPC media, Display Advertising sponsorships or agencies to conduct search engine optimization.

Let’s look at tools first.

Let’s just state it flat out.  Tools don’t provide ROI.  Tools only provide the promise of a faster, more reliable, more measurable or easier way to accomplish what we need done.  Most of us inherently know that when we purchase or subscribe to an analytics tool, or a content management system it isn’t going to spontaneously give us more effective marketing.  But it’s still amazing to me that most marketing software tools are sold with these claims:

“buy this software it will give you 25% more leads.”

“buy this service, you’ll get a 40% lift in conversions”

See, if you put a welding torch in my hand – you have not equipped a sculptor with a more effective way to generate ROI from a plumbing business.  No, what you’ve done is equip a marketing guy with something with which I’m most likely to burn down the house.

Besides, let’s be honest, if we do purchase a tool (any tool) – and we do subsequently generate 40% more leads – how likely are we to say “oh, yeah, it wasn’t me and the team… it was the software.  The software was what gave us the leads.” Right.  I thought so.  Not bloody likely.

But, that’s the thing.  It’s not the tool – it’s how we use it that will determine if we’re successful.  And, if we are – we’re damn sure not gonna go back and do an ROI study to prove that.  In fact, have you EVER gone back after purchasing a piece of software and calculated whether or not you generated more money from that tool than what you spent on it?

No,  of course not.  Why?  Well, mostly because who the hell knows how to do such an ass-backward analysis?   But more importantly it’s because ROI is not Value.  Once the tool proved to be an enabler – it was all up to you and/or your team to make it work.  That’s where the value is.

And How About Media and Services

So, that brings us to the tactics we deploy to generate more leads/opportunities – and the same concept applies.  Email newsletters don’t generate ROI – nor does PPC, Content Marketing, Event Marketing or Display Advertising.  You generate the value by deciding to do those things.  You generate the value by creating the compelling content that persuades your target audience.

I’ve watched marketers get so focused on data that they run right down the road of mediocrity.  Here’s what happens.

They try a new tactic – let’s say Pay-Per-Click.   They optimize and optimize that tactic over the course of six months until they have it “just right”.   They’re spending $X per visitor, and they’ve laser sharpened their funnel so that they’re spending $Y per acquisition.  The math works and the CFO is happy.  And so on and so forth through all the other tactics.  But then, they’re paralyzed.    If those equations slip for some reason – they’ll be considered a failure.  Every new strategy or tactic considered has to be run through that algorithmic sniff test.  And, these marketers spend all their time just maintaining that delicately balanced ball on their nose.

Now, organizationally, that fear maybe founded or unfounded – but nevertheless it’s there.

And, usually because of the time to ROI pressure – what happens is that the funnel is completely optimized for the bottom.   Marketers operate in fear that if they try new, breakthrough strategies for early stage buyers, or re-design the content to address new personas – that the balls will come tumbling down – and that suddenly they’ll be deemed irrelevant.

Is it any wonder that the average lifecycle of a CMO is less than three years?

ROI is different than Accountability

So really who’s to blame for all this?    I mean, really, we need somebody to blame for this right?  Well how about we don’t this time.   How about instead of fixing the blame, we fix the problem.

Let’s Use Both Sides Of Our Head

Marketing is not finance.   Goldman Sachs and Bernie Madoff aside, our CFO’s come in and they look at the business for the numbers.  Numbers are numbers – and are right or wrong.   There are no “compelling and persuasive” ways to balance the ledger a little better than last time.  CFO’s find the balance (quite literally).

Then, the CEO’s job is to look at that balance and then make decisions about where to temporarily displace it in order to exponentially increase the value of the organization.  Should we invest more in marketing?   Should we invest more in product development?  Should we upgrade our telephone system?   Imagine if, after the CEO placed that bet, we expected the IT team to generate the ROI on the new phones?

As marketers, we will never fully succeed when we operate in fear.  It’s not the tools and tactics that will deliver us better, more effective marketing – it’s us – the marketers.  It’s our teams, the process we put in place.  In short, our right brain delivers us growth, and the left keeps us balanced.

We need both.

So, let’s kill ROI as a pre-determinant of whether we’re going to move forward with some new initiative.

Let’s be accountable, but let’s work with our CEO and our CFO to jointly measure marketing against the objectives of the business – not proving that every tactic we invest in returns a profit.

Let’s take a long-term view of the company objectives, and how marketing will deliver against those.   Let’s strive to deliver a profitable marketing department.  But more importantly let’s strive to deliver innovative strategies that increase our value in the organization.   That’s a department where we can temporarily, but purposely, displace the balance of our returns in order to deliver exponential value.

That’s the true value for the business.

What say you?  Is Marketing ROI working out for you?