![]() ![]() The above is well known to some, but if people need a refresher take a read of my latest blog post ‘ Marketing’s most marmite metric‘, or Tim Ambler’s coruscating article from 2004, ‘ROI is dead: now bury it’, a classic that should still be essential reading for marketers and finance people 18 years on.ĭespite Ambler’s article, ROI lives on and never was buried. ROI is a useful metric but not the only one.” As Les Binet likes to say: “Effectiveness first, efficiency second – net contribution to value first. So don’t use ROI as a target, use it to help you check the value for money you’re getting for your media investments. ROI is not actually a measure of effectiveness but how efficiently you achieved it. Instead you should prioritise the incremental profit or revenue you achieve. Focusing on increasing ROI would therefore limit growth or even “send you broke” as Byron Sharp says. So the easiest way to increase your ROI is to decrease your media spend. ROI tends to inversely correlate with profit growth, as due to diminishing returns ROI decreases as you spend more, and increases as you spend less. If ROI’s dangers can seem quite theoretical, ROAS’s dangers, while similar, are actually a day-to-day reality in significant parts of the digital marketing world.īefore turning to ROAS, let’s quickly recap the core issues it shares with ROI. In fact you could call ROI and ROAS allies in marketing’s anti-growth coalition. But its digital twin, ROAS (return on ad spend), might actually be doing more damage today. People have been warning about the potential problems with ROI for years. ![]()
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