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Instead of judging each marketing channel's Return on Ad Spend (ROAS) in isolation, contractors should measure overall ROAS. This approach accounts for the entire customer journey and exposes whether operational weaknesses, not just marketing, are hindering revenue generation from incoming leads.
Applying a single attribution model, like last-touch, to all channels is a mistake. It undervalues top-of-funnel activities and can lead to budget cuts that starve the pipeline. Instead, measure each channel based on its intended outcome and funnel stage.
With AI enabling precise control over media spend, key performance indicators are changing. Brands now move beyond simple Return on Ad Spend (ROAS) to more sophisticated metrics like incremental ROAS and contribution margin, reflecting a new emphasis on profitable growth rather than just volume.
ROAS (Return on Ad Spend) is a vanity metric that can mask unprofitable customer acquisition. By focusing on POAS (Profit on Ad Spend), brands are forced to measure the actual profit generated from advertising, linking marketing directly to bottom-line health and avoiding the trap of 'growing broke'.
CFOs and CEOs are noticing a major discrepancy: marketing ROI reports look positive while actual business results are soft. This is because legacy metrics from agencies justify spend on outdated channels, obscuring the lack of tangible impact.
Calculating marketing ROI is misleading in B2B because sales is required to work every deal to close. A more holistic financial view is needed, accounting for sales costs, brand spend, and contribution margin, rather than relying on flawed direct attribution models.
When a business with 50% gross margins achieves a 4-to-1 return on ad spend (e.g., $20 CAC for an $80 order), the primary focus should be on scaling that proven channel, not prematurely diversifying into unproven, potentially lower-performing ones.
Resident's team doesn't set fixed goals (e.g., "Meta must hit 200% ROAS"). Instead, they constantly evaluate channels relative to each other in real-time. This flexible approach allows them to dynamically shift budget to the most efficient platforms as market conditions change, maximizing overall yield.
Optimizing for cheap leads can attract low-quality subscribers who don't convert. MarketBeat found greater profitability by paying more per subscriber from reputable sources, which resulted in a much higher return on ad spend (ROAS).
Don't evaluate marketing channels in silos. A paid search lead isn't just from one click; it was enabled by 5-7 previous brand touchpoints from mass media, social, and other channels. The entire marketing strategy works as a closed loop, and its success must be measured holistically against overall business growth.
Marketers often equate effectiveness with ad ROI, but communications typically drive only 10% of sales. The other 90% is influenced by levers like pricing, distribution, and product performance. True marketing effectiveness requires a holistic view across all these business areas, not just advertising.