Why Demonstrating Marketing ROI Is So Important for CMOs
When times are tough, costs must be cut and spending must be justified. Yet, outcomes must continue, business as usual. This conundrum puts CMOs between a rock and a hard place. How do you deliver results with a tighter budget? More importantly, how can you tie those results to your budget effectively?
The majority of CMOs are turning to a little metric called return on investment (ROI). As macroeconomic uncertainty results in tighter budgets, marketing spend is under more scrutiny than usual. Every dollar spent needs to be correlated with a healthy return, and fast — 77% of CMOs say they’re under pressure to prove increased short-term ROI on marketing campaigns.
In this blog, we’ll break down why ROI matters right now, what a focus on ROI changes about marketing activity, and how to start delivering ROI despite the current economic climate.
CMOs Must Track & Prove ROI Faster Than Ever
In the face of a looming recession following several years of pandemic-related upheaval, a laser focus on ROI is a pretty natural response for company leadership. After all, when so much is uncertain, doubling down on the things that are working is a no-brainer.
This certainly seems to be the case. Nearly 37% of marketers report that tracking ROI is becoming increasingly front-and-center, especially for larger organizations. Indeed, ROI has risen to the top of company leaders’ priority list.
Marketers report the top metrics for their CEO, CFO, and board members are:
- ROI: 48.4%
- Delivering business outcomes: 39.9%
- New customer acquisition: 35.8%
Couple this with shifting customer behavior due to inflation, and it’s never been trickier for CMOs to deliver on leaderships’ expectations. As recent Gartner research has identified, the burden to deliver ROI falls heavily on the CMO’s shoulders.
“In order to meet the enterprise mandate of driving growth amid continued disruption, CMOs must act decisively to prioritize their investments and their strategy for the year ahead [2023],” said Ewan McIntyre, Gartner Marketing’s Chief of Research.
The Impact of an ROI Focus on Marketing Objectives & Outcomes
Prioritizing ROI impacts CMOs’ decisions around marketing activity and outcomes in a variety of ways. Beyond the pressure to deliver ROI in the short term, the current environment has led marketing leaders to worry about their strategy as a whole. 31% of marketing leaders are concerned they’ll have to curb creative campaigns, with an additional 30% worrying they’ll have to operate more reactively instead of proactively.
This new focus on tying marketing activity to clear-cut returns can be new territory for many marketing activities, presenting challenges for marketers and CMOs alike. For example, when analyzing marketing campaign effectiveness, only 28.4% of marketers report measuring ROI to do so. In fact, 45.7% of marketers say their brand is “too focused” on ROI.
Clearly, there is a large disconnect between the metrics the CEO and CFO want to see and what marketers believe is important. In bridging that gap, CMOs have their jobs cut out for them.
In today’s climate, an ROI focus means CMOs have to more or less accomplish all of the following:
- Work smarter with a tighter budget in order to deliver the same outcomes as before.
- Help the CEO and CFO understand what ROI means for marketing, and help marketers understand what ROI means according to the CEO and CFO.
- Ensure a focus on ROI doesn’t distract from impactful marketing activities where ROI is difficult to measure, in both the short and long term.
In short, doing all this with fewer resources is a tall order for CMOs and the organizations they lead.
How To Retain Budget, Maximize Marketing Activity, & Prove ROI
One of the most important things CMOs can do to successfully lead their marketing organizations through uncertain times is learning how to strengthen value calculations that prove marketing’s importance. Although it may seem counterintuitive, this often means moving beyond ROI as an end-all metric and making the case to evaluate budgets on various other inputs instead.
For example, the ROI of your marketing tech stack can be difficult to tie directly to pipeline numbers, yet it’s essential to marketing activities that do influence revenue. Likewise, long-term strategies may not have an immediate ROI, but they do pay off with time. Striking the right balance between what’s essential for both now and later can be difficult on your own.
Learn More About Inverta
Inverta acts as a player, coach, and trusted advisor when it comes to helping CMOs measure and deliver ROI. Our new campaign-in-a-box solution can build short-term wins while we set up your organization for future success.
- Interested in how Inverta can help coach you through a campaign planning strategy? Contact us here.
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