As part of my job, I meet many brands and agency executives. Everyone would agree that they face unprecedented, strong pressure to drive ROI. ROI usually means sales. Sometimes it means KPI right before sales, such as sign-ups, store visits, etc.
A CEO wants to hold the CMO accountable and ask him or her to show ROI for each marketing campaign. However, everyone knows that the sales outcome is influenced by many factors beyond marketing. So, it’s not an easy job to let the marketing team commit to ROI as its KPI. Even if the marketing team agreed to commit to it, it’s extremely challenging to hit that target constantly. That may explain why CMO turnover is the highest in the C-suite. A Forbes piece from March 2019 referenced research done by Spencer Stuart which revealed that the average CMO tenure is 44 months.
For some jobs, it’s very easy to tie performance to a specific outcome. A good example is a sales rep. If a sales rep can hit the quota, that usually means the person is a good rep. Start-Up CEO is another job whose performance is very easy to measure. Some jobs—such as Chief Culture Officer—are much harder to measure. Marketing is a tricky one because people feel that there must be a way to measure its performance. However, an accurate measurement is actually difficult to obtain.
Because the CEO continually asks the CMO about ROI, the CMO decides to come up with some BS KPIs that are easy to measure and easy to improve, at least in the short term. This doesn’t mean that it’s the right or most important KPI. (I will write another piece about this point.) This explains why there are so many ad-tech and market-tech solutions that claim they solve ROI issues for CMOs.
I completely understand that the pressure is getting stronger. However, unless sales and marketing are managed by the same person, it’s unfair for the CMO to entirely own ROI, especially because there is really no technology solution that can help brands perfectly measure ROI. As this ROI trend gains traction, it creates an unproductive effect that shifts brands’ focus away from the most important objectives, such as building a strong brand. We all know that without strong brand equity, performance marketing will not work. Yet, this is happening today at a faster pace than ever before.
In the next post, I will share how this trend impacts ad sales strategies from a media owner’s point of view.