Whether it’s quarterly, monthly, or even every week, your investment review is a crucial opportunity to prove your marketing program’s value. It’s also a check-in you don’t want to waste. After all, it’s good to have Finance in your corner. Consider: per the latest Deloitte / Duke CMO Survey, over 40% of CMOs whose companies achieved below-market growth pointed to underfunded strategy as the leading culprit, while nearly a quarter of CMOs (24.6%) whose companies performed better-than-market credited adequate funding. These are just two data points supporting what you likely already know: buy-in from Finance is critical. And to make Finance the ally you need it to be, you’ll want to be sure you put forth the best case that your budget is worth every cent.
1. Embrace Better Math Hitting your numbers is awesome, but past performance does not necessarily predict future results. In marketing, that’s true largely because of channel saturation: there’s only so much you can spend in a given channel before you’ve maxed out on target customers. It’s important that your measurement can distinguish between incremental impact on average over time – incremental ROI— and marginal returns up to the moment, or marginal ROI.
Distinguishing incremental and marginal returns is fundamental to continuous improvement. First, it allows you to focus on the changes you can make at any given moment to make marketing more efficient with budget fluidity (more on that soon). It also frames marketing in terms that Finance already embraces – they’re already thinking in terms of incremental and marginal returns; more to the point, they don’t just want to know incremental results on average, they want to know marginal performance right now. Finally, it also allows you to build predictive models that account for channel saturation and diminishing returns. Those models foster more accurate conversations about the results you’ll see if you add budget to your current channels – results that are likely to be different from the ones you’ve seen so far.
2. Embrace Budget Fluidity Across Channels One of the biggest benefits of dynamic measurement around marginal ROI is that, by following the detailed ups and downs of channel performance, you’ll know when to move spend from a channel that’s starting to dip into another where you’re leaving money on the table. This agnostic view allows for budget fluidity across all channels, which in turn can drive enormous efficiency gains across your marketing program. It’s also an approach that Finance team members can appreciate – especially ones who take similar “loyalty to nothing, justify everything” approaches to spend, such as zero-based budgeting.
3. Embrace Improvement Through Continuous Experimentation In so many cases, the data you have now is too sparse to build decisions from — or outdated as market and campaign conditions change. At every juncture, you need to be honest about the data you have. You need to always be ready to retest, run new experiments, and get new data to feed and augment your current mix model – so you can place new bets on the most promising outlets right now. Better experiments give you far more accurate models and programs. Within investment reviews, experimentation also gives you empirical proof: When Finance asks you to justify your assumptions, you can point to the scientific work you’ve done to arrive at your conclusions.
4. Have Honest Conversations with Media Partners With dynamic KPIs, constant experimentation, and fluid budgeting in mind, you can be up front with media partners and platforms – the Meta’s, Google’s, and Tik Tok’s of the world – about your expectations. Explain your KPIs and approaches, and let them know that, with your solid measurement in hand, your goal is to secure and defend any media investments as long as they continue to show optimal results, and not beyond that. This way, both your and the platforms’ goals will be aligned to giving you the results you want. Conveying these conversations back to Finance also shows that you and the Finance teams are equally in step around defending and stewarding the company budgets.
5. Understand How Paid Media Impacts Both Growth and Profitability Marketing investments can drive top-line growth as well as bottom-line profitability – and often, those goals are mutually exclusive. Be sure you’re clear about your intention going in to your investments – from establishing KPIs through making individual spend choices. This will drive a much clearer conversation with Finance, allowing you to establish exactly which kind of “wins” you’re describing over the past period. Finance is likely already slicing all investments into these categories, and will appreciate your breaking down conversations along these lines too.
6. Let Go of Last Click Investment reviews are moments when Finance looks to answer how much of total sales is driven by paid media. This means there’s real pressure to bring metrics to the table that clearly tie marketing activity to top- or bottom-line success; vanity metrics just won’t cut it. With this in mind, one approach to let go of ASAP is Last Click measurement. While last click can sometimes be correlated with total sales, investment reviews demand far stricter accounting. At the end of the day, knowing how many customers clicked an ad before jumping to a landing page gives zero information about whether your paid media is driving net new sales – or perhaps cannibalizing organic leads. Stick with metrics and KPIs that clearly show how marketing drove revenue, not just whether your ads caught customers’ attention.
When it comes to implementing these pillars, some require deep shifts to your marketing measurement approach; others might be solved with quick fixes. Regardless of the effort involved, adapting each of pillars – embracing better math, budget fluidity, continuous experimentation, honest partner conversations, an understanding media’s role in both growth and profitability, and letting go of last click – will set you up for a far more productive media investment review, and a markedly improved marketing program overall.
