Female orgasm and Return On Investment

Watching someone from a creative agency talk about Return On Investment (ROI) is like watching men describe what an orgasm feels like for a woman. They are desperate to explain it correctly. But in truth, they don’t have a clue.

I suppose I was lucky. I had an insightful charity client help me understand ROI early in my career. I had just finished presenting 60+ PowerPoint slides of ideas - or more accurately - a presentation chock full of new ways for this charity to spend their money with our agency. His first comment was: “Steve, any fool can raise millions by spending millions. It is the clever marketer who spends thousands to raise millions.”

I’ve never forgotten this sage advice.

It became clear at that very moment why most agencies struggle with ROI. We get caught up in the presentation/production of our creative ideas and lose touch with how our ideas impact the business.

In this case it was even more poignant. Every £3 could save a child’s life. If I was wasting marketing spend on profligate ideas, then I was taking money away from life saving work. Focuses the mind.

So, why do agencies get it wrong? Not enough practical experience? Never been there when it happens?

In defence of agencies it is clear why we don’t burden ourselves with ROI. From creative to suit, you get ahead if you deliver award winning creative. And award winning creative is very rarely linked with business results. When it is linked to results, the results tend to be communications measures (e.g. likes, downloads, awareness, responses, and complex regression analysis in desperate search of a link to sales). Not ROI.

Marketing Directors are not overly concerned about ROI, either. Much to the dismay of their CFOs and CEOs. They tend to be focused more on short term marketing goals. For example, bringing in more credit card applications than the last person in their position — — regardless of the customer’s long term value to the business. Increase the number of applicants by 15%, then move on to the next level of title and pay long before any ROI can be measured.

Are they getting bored with being misunderstood?

The Board has had enough.

I presented at a Board meeting of a large, international IT brand. I was on at the end of a long day where each Board Director had reported how their costs were running to plan, but their revenue was well below plan. The guy on before me was the Marketing Director who presented on how well all of his campaigns had done in terms of awareness, leads, etc. Beating all the targets that had been set! None of this ‘success’ had trickled down to the Directors’ businesses. They were looking to tear a strip out of someone and who better than the agency.

I presented a series of case studies from within their own very large organisation. In each case, I did my best to focus on how they could produce fewer, better communications and deliver improved ROI. To do this, however, they would need to view their marketing cost line as a marketing investment. They would also need to spend more time on the items that impacted results more significantly (e.g. media) rather than the copy of their latest customer newsletter. I wasn’t sure if I would be lynched or loved.

Then a very strange thing happened. The Board Directors started competing with each other to see who could be the next to work with us on a pilot programme.

How do you get it right?

If I could go back in time, I would tell my younger self that nobody really knows how to do it, everyone thinks everyone else is doing it so everyone claims that they are doing it. Be honest and learn. Worry less about getting it right the first time. Work on creating a culture where return on investment is talked about, together.

This is not a call for everyone to rush back to University so that they understand the complexities of Net Present Value. (Though, a basic understanding of NPV might be a good thing.) Rather, it is a challenge to everyone involved in marketing to become obsessed with connecting every campaign - from PPC to prime time TV spots - back to business results.

You’ll know you got it right when a Marketing Director asks whether he should double the spend behind your idea or cancel the campaign, and you can answer them specifically and confidently.

As for the female orgasm

Steve Barton is a senior marketing executive with a successful track record of managing digital transformation, running award winning advertising agencies and helping start-ups grow.