The Marketer's Paradox: If My ROI Is Going up, Why Are My Sales in Decline?

Today's marketers are facing a paradox: We have better intelligence and tools for driving growth than ever before. Data-driven digital marketing, programmatic and audience buying are proven to be delivering results. But if return on investment [ROI] is going up, why are sales in decline? There are some simple causes and effects: Media inflation continues to increase across all channels, while reach has declined for most every channel and publisher. Rising costs combined with declining reach drives up Cost-Per-Point [CPP], which means creative needs to be exponentially more effective to deliver the same results (and that's before attenuation of media attention is factored in). In most cases, even the best creative cannot offset the decline in efficiency. It's just math. And as the math suggests, in most cases we'd expect to see a decline in payback. Yet most channel-specific measurements show a positive ROI. Why? A combination of factors is at play. Many ROI analyses today are fundamentally flawed. Some of the most common problems with today's analytic tools, or the deployment or interpretation of them, include: Even with strong analytic models, it's easy to misread results. In a marketing mix model, you may see switching between competitors as Brand A steals share from Brand B in month one, only to have Brand B win it back in month two. Although there is neither category growth nor topline growth for either brand in this model, both would count it as positive ROI. From the brand's point of view it actually won some sales, even though in reality it was a zero-sum game. Before the tyranny of ROI, marketers understood the need to evaluate campaign payback alongside other metrics—brand health, penetration and switching analyses, elasticity, etc.—to get a sense of their overall brand performance. Today, the art of understanding the basket of measures required to manage a business is being lost as the science of quantifying financial impact has taken hold. Marketing analytic acumen must become a requisite for marketing talent. It is no longer good enough to rely on a marketing analytics function to own measurement, without the deep understanding of their marketing counterparts. The only way to effectively grow a business is to learn what works and doesn't work. Learning requires feedback. Analytics must accurately and reliably provide that feedback to drive decision-making. And marketers must understand the core building blocks of advanced analytics. This includes a comprehensive understanding of topics, such as: A marketer's job is to profitably drive growth. If the business isn't growing faster than the competition, it is losing share. If it is not acquiring new customers, it is losing ground. And if it isn't doing it profitably, it is losing margin (and probably losing marketers their jobs). With better analytics, marketers will be able to build their businesses profitably, so that sales and ROI both go in the same direction. About Neustar Neustar, Inc. helps companies grow and guard their business in a connected world. We provide the world’s largest brands with the marketing intelligence needed to drive more profitable programs and to create truly connected customer experiences. Through a portfolio of solutions underpinned by the Neustar OneID system of trusted identity, we enhance brands’ CRM and digital audiences, enable advanced segmentation and modeling, and provide the measurement and analytics all tied to that persistent identity key. Neustar’s position as a neutral information services provider - and as a trusted partner to Google, Facebook, Twitter, Pinterest and Amazon - avails marketers of the most comprehensive customer intelligence and marketing analytics in the industry. More information is available at www.marketing.neustar.

The Marketer's Paradox: If My ROI Is Going up, Why Are My Sales in Decline?

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