Static ROI metrics, respond to a dynamic marketing situation

This is part two of a two-part article. The first part, “Return on investment is missing in action”, can be found here.

Life would be much simpler if marketing was a machine. Your marketing budget would produce an expected return on investment, given a fixed input. In real life, calculating the ROI of your marketing spend is impossible. Markets are non-linear in nature.

“Markets are subject to the butterfly effect.” wrote Kathleen Schaub, marketing strategist, in her article “Marketing is not a vending machine.”

“[The] non-linearity…complex systems means continual surprises. Small changes, especially in the beginning, can have profound effects later. For example, a single tweet in 2021 could initiate a huge deal that closes in 2023. Alternatively, large actions may have little or no effect, such as when sales decline despite a large ad buy. Markets are semi-predictable and therefore can be modeled, but only within the bounds of probability and time. she wrote.

Schaub, along with Mark Stouse, President of Proof Analytics, have been busy dismantling the assumptions surrounding marketing spend and reconstructing an alternative method of perceiving its value. Predictability and control are eliminated. The perception and the reaction are there.

“This is a huge cultural shift for marketers,” Stouse said. “We are talking about a profession that has very, very much appreciated orchestration. Orchestration is just another word for control. What we’re talking about here is learning, being able to see the variations over time in the market and evolving accordingly.

You’re not in mission control of everything that happens in your marketing, Schaub added, leaders struggle to understand that. “Marketing can influence, push and intervene, but cannot control this. And neither are sales.

Marketing is a complex system, Schaub continued. “You have to differentiate on an individual basis, what’s happening with a particular buyer, a particular account, and what’s happening at the macro level, where you talk about how to connect your revenue.” she says. “You will never have the data to predict individual counts.”

These individual accounts are not additive, like machine parts. “They each have their own weird journey, some of which follow the trend line perfectly, but many will color well outside the lines.” Schaub said.

Connect the periphery and the core

There needs to be some connection between the people “at the forefront” (the “periphery”), who have direct and immediate experience with the current market, and the senior executives (the “core”) who have the analytics for their give the big picture, but have no idea what’s going on at ground level.

General Stanley McCrystal, in his book “Team of Teams”, described a similar problem in Iraq, where he had to oversee a joint special forces and intelligence effort to hunt down al-Qaida terrorists in 2004. Hierarchy, bureaucracy and information silos hampered the effort at first. The solution was to network all information and decentralize decision-making, transforming a large, cumbersome organization into an agile giant capable of acting quickly.

The business equivalent of this would be a multidisciplinary team, made up of marketing (event expertise, campaign expertise, content, analytics) and sales. They would work collaboratively, using first-hand information and then leveraging a seamless pipeline of data from the analytics side, Schaub explained. “The Edge and the Core talk as close to real time as possible.”

The obstacle is not technological, but human. “We don’t have people in the right places,” Schaub said. “We haven’t trained people to ask the right questions. We haven’t trained people in automation. The notion that marketing can be orchestrated is something people need to be weaned off of, she said.

The Edge needs to confirm with ground truth the analytics it receives from the Core, Stouse stressed. It’s sort of a risk mitigation. Analytics will look at the market with a “projection point of view”, but there will be a time lag. The Edge may have to take a detour around the circumstances, thus altering the arrival at the announced goal.

Beating or missing “the number” isn’t the right question here, Schaub said. “Annual marketing plans are obsolete the minute they are delivered.” Planning is useful for setting goals, but getting marketing to adhere to a plan that was made months ago “probably doesn’t make sense,” she said. “Marketing plans never survive the first contact with the customer.”

Read next: How to Measure Content Marketing ROI and ROE

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You’ll never be able to think about ROI the same way again

So what can marketers do? Changing the way you analyze and apply data requires a change in mindset. It’s not as crazy as reinventing the spinning wheel, but it is a challenge.

It comes down to “asking the right question, expressing your hypothesis, it creates the model. It also dictates a list of data sets needed to arm this model, about two-thirds of which will be external factors that you don’t control, one-third of which is what you’re currently doing,” Stouse said. .

The idea that an omnibus model explains everything does not work. “It’s a collection of many models, some of which are related, some of which are not, some of which are standardized and applied to many different markets,” to give a meta view, he said.

As the marketer goes down this path, they’ll learn the “things that I don’t know, I don’t know,” Stouse continued. “More will become visible to you as you process these analyzes and add new factors to the model in the future.” Old and revised models can be run simultaneously to understand variances. You’ll need at least one data analyst to make this work, Stouse added.

“The analysis will tell you what things you should really pay attention to and what things are less valuable.” Schaub said. “You will know where the big waves are.” An empowered, yet accountable, agile team at the Edge will be able to make adjustments on the fly by reacting to market changes. The goal is to spend marketing dollars wisely, not stick to a haphazard plan you put in place a year ago, Schaub said. The team is empowered to know how and when to do their numbers.

The agile team doesn’t have to start as a big project. “[S]small and full pie. Schub said. The agile team, or “customer value team,” can sit at the Edge where it “touches the customer,” coordinating sales, marketing and product skills, Schaub said. It can take months or even a year for this team to function properly. The short-term desire for quarterly results won’t work here, but may need to work concurrently while building the agile team, without this metric.

You will also need to create a network that the agile team can leverage. “Start opening channels between groups,” Schaub said. Put Slack on so people can keep each other informed. The change here will not be linear. “It will go slowly, slowly, slowly, slowly, then it will take off.” She explained. “Not because of what you do, but because of what the bands do. The group brings that out.

“Start at these small scales. Let him succeed. Build the connections. And it will expand. says Schaub.

Ultimately, the mission to change the way people think about marketing requires some insight to see new concepts clearly. “Once the lights come on, you can never think of the old again,” Schaub said. “It’s my mission to turn on the lights for people.”

About the Author

William Terdoslavich is a freelance writer with a long experience in the field of information technology. Prior to writing for Martech, he also covered digital marketing for DMN. A seasoned generalist, William has covered IT industry employment for, big data for Information Week, and software as a service for He also worked as a Features Editor for Mobile Computing and Communication, as well as a Features Section Editor for CRN, where he had to cover 20-30 different technology topics in an editorial year. Ironically, it was the human factor that drove William to write about technology. No matter how hard people try to organize and control information, it never quite works out the way they want it to.