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Is ROI Killing Your Brand?

Jamie Allebach
Jamie Allebach Chief Executive & Creative Officer

How often have you been under fire at a meeting with questions like these: “What’s going to be the ROI from this marketing program?” “How can you expect me to invest in those markets without a definitive ROI?” Or statements like: “There’s no ROI from TV, radio, and outdoor.” Mostly from well-meaning executives who want to make sure that marketing dollars are being stewarded and invested in the most effective way.

But this type of one-dimensional thinking is killing brands. Not growing them.

Over the past 20 years, marketers have typically divided their budget into two broad categories: Targeted and Mass tactics. Ok, yes, there’s a lot more out there like experiential, influencers, social, and many other new media tactics. And I would argue that they could all fit into one of these two categories or as stand-alone tactics. But for the sake of simplification, let’s stick with Targeted and Mass.

Targeted marketing can be defined in many ways: segmentation, demographic, geographic, behavior, purchase patterns, and on and on. All good, except when you’re too focused just on a specific target audience, which equates to limited reach, scale, and opportunity.

Whether you’re using behavior modeling, the cool new buyer personas, or any other type of uber, over-the-top targeting—you are only reaching a small fraction of the market and potential buyers. And, this may come as a shock, but those in the smaller audience that you are targeting are most likely already heavy buyers of the category, and possibly heavy buyers of your brand, which means the opportunity for growth with them is very limited. And on top of that, when targeting, most of the market is not being exposed to your brand at all, which means you are out of sight—out of mind—dying a slow and painful death.

Here’s why just focusing on ROI based marketing doesn’t work. The 80/20 Rule that many marketers embrace is a complete fallacy. At best, 80% of your sales come from 40-50% of your customers, not 20%. And, the likelihood of selling more product to that group of heavy buyers is very slim. Even the thought of “if I could just get my loyal customers to buy my brand one more time…” It simply doesn’t work and never has.

On the other hand, mass marketing reaches the whole market and ALL potential buyers of your brand (and, surprise, you will also reach the heavy buyers who you were trying to reach with your highly targeted tactics).

Look, if you’re going to fish, wouldn’t you prefer to fish where there’s lots of fish?

Reach the light and non-buyers of your brand. Why? Because the overwhelming majority of your buyers are not heavy buyers—most are light buyers and non-buyers of this brand. The bigger pond—more fish! Get it? It’s all about scale*.

This marketing model is the most effective way to grow your brand. It all comes down to reach (and availability, which I mentioned below).

Is all targeting bad? No. All effective marketing programs should have a mix. But not heavily weighted towards targeted ROI driven tactics. If you have limited distribution then you have to geo target, until you increase distribution. If you have a very niche product that doesn’t appeal to the masses, then specific types of targeting can be effective. But in both these scenarios, you will not grow to be a larger brand. Even securing a large share of targeted market—still equals low sales. Don’t let an ROI focused strategy kill your brand.

*One important caveat to reach and scale is that you have to have adequate distribution.

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