Why the ROI of marketing tactics doesn’t matter.

There’s a problem with measuring return on investment: Marketing is a soup, not a salad.

Imagine you’re making a salad. Maybe you start with some iceberg lettuce. Necessary, but not a whole lot of nutritional value, right? You add spinach, which has got vitamins, but lacks visual appeal. So you toss in tomatoes. Chopped chicken. Sesame seeds. Put some dressing on the table and you’ve got something special.

And each ingredient made a measurable improvement.

Now imagine you take those same ingredients, put them in a pot with some water and salt, and turn them into soup. The ingredients blend together. They can no longer be pulled apart and measured.

The whole adds up to something way bigger than the sum of its parts.

A financial portfolio may be like a salad. But marketing is more like soup. There are a lot of parts that can’t be measured, but create exponential results when mixed together.

Fractional attribution is only a fraction of a solution.

About seven years ago, fractional attribution was all anyone in marketing wanted to talk about. At last, a way to measure tactical ROI!

Here’s how it worked.

Say your display ad got 10 clicks on its own. (Which sounds terrible, but bear with us. Small numbers make the math easy!) Then you ran a TV commercial. While the commercial itself didn’t get any measurable conversions, clicks on the display ad went up to 15. So in this case, the commercial got 33% of the credit, while the display ad proved it could pull the other two-thirds by itself.

Fractional attribution may be great… For advertising agencies. But it doesn’t go far enough to justify the efforts of marketing departments, because they do too many things that are impractical to ever go without.

For instance, there’s no good way to measure the ROI of developing a consumer persona. Or identifying and hiring fresh talent. Or comparing the ROI of an idea against all the other ideas that were discarded along the way. 

The moral is clear: ROI is too narrow. 

Instead, measure the success of your marketing system, including not just your tactics but your department itself. And then budget for outcomes, not for tactics.

Measuring true success in three steps.

This all makes sense. (To marketers, anyway.) But try walking into an investor meeting and declaring you aren’t measuring ROI anymore. The conversation won’t go well… Unless you have metrics to replace it with. Fortunately, there is a process estound developed as part of the Unified Marketing System.

Step 1: Determine your OKR

Objectives and Key Results made their way into management philosophy in the 1980s, but they really took off when they were adopted by Google. The philosophy is simple. You can accomplish huge, audacious missions by breaking them down into a series of small, achievable OKRs. For instance, to make soup, your OKRs might look like this:

Step 2: Determine what metrics marketing can hit

Now back up and think about what metrics marketing should measure over a defined time period. Use a chart like the one below to keep track. (We’re going to stick with the soup analogy for now, so if you’d like a blank template, download one at getunifiedmarketing.com/umsdocs.)

Key Metrics Importance(1-5) OKR(s) Gaps in Measurement
Cost of soup 2 1C None
Safety 4 3A and 4B None
Satisfaction 5 4D Nana may lie when we ask her if she likes our cooking.

Step 3: Determine how you’ll measure

Now you have metrics you can track back to what you’re actually accountable for. Next, do some brainstorming about how you can measure each one in a way that overcomes potential gaps. For the Great Soup Making Mission, it might look like this.

Metric How
Cost of soup Compare to past trips to the grocery
Safety Lack of injuries
Satisfaction Number of empty bowls at the end of the meal

These are the metrics you’ll report on from now on. So while ROI may not play as big a role, you’ll be able to prove the true worth of your marketing team and system.

Still curious about ROI? Here is a tool that’s different.

This system will help you achieve alignment within your team and with your senior leadership. Of course, ROI isn’t going away entirely. So if you’re still interested in the next step, try using estound’s ROI calculator. (Think of it as Return On Inspiration or Return On Intention, if it helps!) This calculator won’t ask you to break down tactics. Instead, it’ll give you a way to get teams focused and prove marketing can deliver the results the business needs. 

It’s like a free recipe for success. If not soup.

ready to GET STARTED?

Drop us a note and we'll coordinate a time to discuss where your marketing has hit a wall and how UMS might help you break through.

The UMS method has transformed our business. The discipline it gave us helped us survive through tough times and then thrive with years of double-digit growth. This process works and we are evidence of it.

David DeCamillis
VP Sales & Marketing, Platte River Networks