Marketing Is Not a Vending Machine: Rethinking ROI for the Complex Digital Era
Businesses long for marketing that works like a vending machine. Put your money in, and out pops your desired outcome, guaranteed. Unfortunately, marketing behaves more like stock markets or weather than predictable machines. The good news is that science explains marketing’s capriciousness, and companies will gain a more effective playbook if they rethink return on investment (ROI) through the lens of marketing’s unpredictable reality.
Markets are what science calls complex adaptive systems. Interactions between individuals and enterprises produce feedback loops resulting in volatility, uncertainty, and ambiguity. Digital technology has only increased and accelerated these interactions, compounding complexity’s effects. Time is an especially confounding adversary: gaps between marketing actions and measured outcomes allow for increased interactions and thus greater change. These characteristics make measuring predictable ROI challenging.
Marketers understand the importance of ROI. Yet, despite advances in technology and improvements in operations, useful financial information for making marketing decisions remains out of reach for most. The vending-machine perspective blinds management to what is needed for change, so they are unwilling or unable to give marketers the necessary tools. Marketers lack sufficient data and analytics capability. Outdated management models and organizational structures inhibit reaching objectives. These deficiencies lead to unfit ROI practices, such as rules-based attribution and a short-term focus, causing flawed decisions, frustration, and mistrust.
To improve marketing ROI measurement, businesses must reduce dependency on the machine model. My white paper outlines why and proposes a new way of thinking and managing – a “Complexity-wise” playbook, based on my experience as a CMO, my work with hundreds of marketing leaders while running IDC’s CMO Advisory practice, my research in the relevant sciences, and the practices of pioneering leaders in other turbulent environments.
By working with marketing’s complexity instead of ignoring it, companies will realize more value.
Originally posted on Kathleen Schaub’s blog.