Marketing should have an ROI – or shouldn’t it?
An article from the recent publication of Harvard Business Review
(July 25th) by Amy Gallo highlights the right manner of driving the ROI from Marketing Investments.
Though the article is largely generic, it does highlight the biggest challenge in calculating ROI from Marketing initiatives – what we should include in ‘returns’!
As per Amy,
One of the downsides of marketing ROI is that it is easy to only recognize the incremental profits in short-term sales and underestimate the long-term benefits that marketing brings to brand value.
While Customer Lifetime Value can rationally explain some part of ROI, overall this is still a tricky area to touch.
On the other hand, Prof Byron Sharp does not believe in ROI for Marketing per se.
According to him
, Do you want to lift your marketing ROI OR grow your brand (share/sales)? Because ROI is seldom a recipe for growth.
Why do people say ROI when they really mean $ sales or profit? Which btw are vastly better metrics. ROI is for capital spends and not ad spends.
Those who believe in this are literally financially illiterate
Different schools of thought – however, as a student of marketing, I believe returns should be measured – Whatever investments/costs you incur, they should translate into sales – either short-term or long-term. You cannot spend without measures. “What gets measured, gets managed!” (Peter Drucker)
Given the outright rubbishing of heritage marketing principles by Prof Byron Sharp, am sure he would not be so likeable in the marketing circuits around, even though he is surely the blue eyed boy of Modern Marketing. As a Chacha Choudhary fan, if I was to recall the big fights between stalwarts, I can see a sequel on Marketing with him – Prof Byron Sharp and Marketing ki Wapsi. Time will tell who is Sabu and who is Raaka in the marketing world!