The Marketing Value Paradox: Why ROI Isn't the Whole Story

Let’s face it – when assessing marketing performance, the almighty ROI still reigns supreme. As marketers, our campaigns live and die by this singular number that distills our complex efforts into a simple percentage: for every dollar you gave me, here’s what you got back.

ROI certainly has its place, bringing crisp clarity to an often-fuzzy field and providing that sought-after proof that our work drives tangible impact. But what if I told you that some of marketing’s most outstanding values can’t be crunched into an ROI calculator or neatly captured by those digits alone?

Welcome to the rich, vibrant world beyond ROI – the land of brand building, customer love and intangible assets that appreciate over time. This is the forest that ROI, for all its merits, often misses for the trees.

The (Narrow) Lens of ROI

ROI has long been marketing’s primary yardstick for success, and for good reason. It brings that coveted quality of unambiguous proof to the table – an eminently clear “yes” or “no” on whether our dollars were well spent. When resources run thin, ROI provides a rationale for budgets. When other departments eye our headcount, ROI gives credibility to our existence.

But here’s the rub: for a metric used so ubiquitously, ROI has some profound blind spots. Namely:

It prioritizes short-term financial gain over long-term brand building. ROI is calculated off immediate campaign returns within limited time frames. This bets the house on sales spikes and acquisition gains while neglecting the more gradual, cumulative impact of brand equity and loyalty.

It fixates on the tangible while ignoring powerful intangible marketing assets like awareness, trust, and relationship-building. Appreciate your accountant’s need for hard numbers, but don’t mistake those numbers for the whole story.

It attributes success to isolated campaigns instead of recognizing marketing’s broader, synergistic effects over time. One major brand study found that measuring ROI campaign-by-campaign only explained 6% of the sales growth equation, rendering it hugely incomplete.

For all its virtues, ROI shines a narrow spotlight on marketing success. For the complete picture, we must step beyond ROI in light of marketing’s broader, more multidimensional returns.

Expanding Our View: The Power of Intangible Value  

Intangible value lives in the starry realm beyond ROI, where brand perceptions are burnished and emotional connections forged. This is the sphere of marketing that’s hard to quantify yet essential to cultivate.

What constitutes intangible value in marketing?

The marketing firm Prophet identified 30 measures clustered into six categories:

Brand - Equity, relevance, differentiation, trust

Customer Mindset - Awareness, consideration, favourability, retention

Customer Experience – Satisfaction, engagement, net promoter score

External Partnerships – Influence on strategic partners

Employee Experience – Advocacy, motivation, alignment with brand purpose

Contribution to Innovation – Role in informing R&D, new product launches

Expressed numerically, intangible value is nebulous at best. But make no mistake; it is genuine in the way it drives behaviours over the long term:

A strong brand earns the benefit of the doubt during crises and the luxury of premium pricing year after year.

An engaged, loyal customer base provides predictable income through repeat sales and referrals year after year.

A reputation as an innovator or category shaper will eventually lead to more opportunities for partnerships, investments, and talent acquisition.

While intangibles can feel less concrete than immediate sales, their impact compounds exponentially thanks to that beautiful quality of appreciation over time. Like wine, they grow more prosperous. Like forests, they become more robust ecosystems.

Marketing and finance expert John Gerzema surveyed brand performance during the 2008 recession and found that companies scoring highest on goodwill measures like trust, empathy, and purpose significantly outperformed the S&P 500. His takeaway? Intangible value buffers even the toughest downturns.

Measuring the Intangibles: Frameworks for Fuller Understanding

Just because intangibles by nature do not submit easily to measurement hardly means we should not try. Thankfully, compelling models exist that aim to capture marketing’s fuller footprint.

Here are two stellar examples:

The Marketing Value Chain

This model links marketing activities and deliverables to a sequence of business outcomes they’re expected to drive, recognizing mutual dependencies and synergies over time.

Specifically, it weaves multiple metrics into five classes of outcomes:

Outputs → Outgrowth → Audience Mindset → Market Performance → Financial Returns

So, while financial returns are the final link here, we can now trace marketing’s contribution through the entire chain of influence. This connects the dots in ways an isolated ROI simply cannot.

The Intangible Asset Monitor

Developed by brand consultants Interbrand, this model explicitly audits ten facets of brand identity and position. Interbrand has found these intangible qualities directly influence stakeholder behaviours, which, of course, translate to tangible financial returns.

The ten intangibles measured span an expectant mother’s view of Johnson’s Baby Shampoo to the calibre of a McKinsey consultant that burnishes the aura of credibility. Metrics include:

Clarity, Authenticity, Relevance, Commitment, Differentiation, Presence, Understanding, Consistency, Responsiveness

So next time you face doubtful department heads questioning marketing’s value, share these models to underscore how marketing assets compound over time, even if not immediately apparent on this year’s balance sheet.

Hard Times Call for Full Measures

In tough economic climates, when scrutiny on marketing spend escalates, what’s a marketer to do?

Sharpen your sword with data and benchmarks. Forecast growth beyond the fiscal year numbers. And expand the conversation around value creation using frameworks like these that capture marketing’s multifaceted contributions.

Yes, include campaign ROI numbers that directly addressed short-term business goals. However, it is essential to remind stakeholders that foundational brand building, audience development, and customer loyalty are rising tides that will lift all boats in the long run.

Help them understand how quality content earns authority and trust over time. How innovation catapults category leadership that pays dividends through multiple product lifecycles. How consumer insights seed R&D pipelines for years to come.

In economically challenging times, market leaders have doubled down on long-term intangibles, and this strategy has handsomely paid off.

Your North Star Metric

While models help structure a comprehensive approach, let’s not forget that metrics exist to serve our strategies and objectives. They remain means, not ends. So, rather than chasing an array of metrics, first clarify the business outcomes that are most important for long-term success. Align key activities to those outcomes. Then, define the one or two metrics that best capture progress.

For instance, if retention and loyalty are paramount to lifetime value, then Net Promoter Score merits focus as a leading indicator of growth. Awareness lift may prove more meaningful for a product provider than temporary sales spikes. Satisfaction and affinity metrics matter most for a retailer where branded experience is the main differentiator.

Marketing expert Peter Field emphasizes the importance of identifying a key metric that serves as your guiding star. This metric helps you stay focused on your ultimate goal amidst a multitude of data points.

The Elusive Art of Meaningful Measurement

With their inherent subjectivity and attribution dilemmas, intangibles undoubtedly present measurement challenges. Yet their alternative—ignoring significant forms of value—leaves far too much impact unrecognized and resources misallocated.

Measurement, like creativity, remains an often messy, imperfect art. But even imperfect awareness of the entire marketing canvas allows us to paint a richer picture. A picture where assets compound in value over time. Where brand, community and culture ring out as clearly as this quarter’s sales figures in showing how organizations thrive. Where creativity and analytics dance in complementary ways to reveal the fuller truths.

So yes, cherish your ROI, but don’t stop there. Seek meaningful metrics that map beyond ROI, and watch the returns multiply in ways even numbers can’t predict.

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