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CMOs: What your CFO needs to know about ROI

CMOs: What your CFO needs to know about ROI

Discover why CMOs need to take action and appeal to their CFOs by taking them on the journey to incrementality.

Author : Sona Abaryan, Partner

Date : November, 2023

Until the prospect of losing digital trackability began to loom, attribution had taken center stage in marketing measurement. At least for some.

Attribution, whether through last-click or multi-touch (MTA), often conveniently focused on easily “measurable” factors while overlooking vital drivers of marketing performance. An imbalance that prioritized trackability over impact. And with the decline of the cookie, that so-called advantage continues to fade.

Marketers are once again seeking more holistic methods, such as marketing mix optimization (MMO), that takes an econometric approach. The problem is that, thanks to attribution, ‘proven’ ROI expectations are high. Worse, if you can’t prove it, you don’t get budget for it. And why would you? With the notion that ROIs (or ROAS) of 10, or even 15x are the norm, it’s difficult to pitch for seemingly lower ROIs.

But the ROI playing field isn’t level. Attribution’s worst crime is mis-attribution. Claiming credit where none is due. No matter how unintentional, it has been at best confusing and sub-optimal, and at worst mis-directing and detrimental.

And now, when the need arises for a sales push, it’s a hard sell to persuade your CFO you need to use other channels, having spent a decade training them otherwise. It’s equally hard to say that a switch to MMO means that what you thought was ROI, wasn’t after all.

Against that backdrop, it might be nerve-wracking to justify spend, but that’s exactly why CMOs need to take action, and appeal to their CFO’s head for figures. Taking them on the journey to incrementality will be the best decision you ever made.

Remember:

1. Not all ROIs are born equal

Understanding the measurement methodology is necessary to correctly interpret ROI. As is an understanding of whether a lever is being properly accounted for – is it impacting the path or just in it?

2. Budget allocation decisions cannot be made on incomplete measurement

A holistic understanding of incremental ROI is needed. For example, if you have measurement for your search and social ROI, but not your TV or Sponsorship ROI, how can you accurately allocate budgets?

3. You no longer have to brush off brand building activities as unmeasurable

Strength of brand and brand driving marketing tactics CAN be quantified. Marketing is multi-dimensional and complex. Understanding the whole funnel through measurement contextualises the role of each activity.

4. Marketing measurement is a value driver, not a cost

Almost all marketing activities are treated by CFOs as a cost centre, where the goal is, more often than not, to minimise OPEX. But if measurement is considered a generator of ROI, can it not then be considered an asset that drives value?

 


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