I (fortunately) got a slap in the face when trying to sell marketing ROI optimization
I couldn’t have imagined years ago when I was at school that the most important skills in marketing would be basic math and accounting skills, writes Antti Kaihlanen, Foppa Co-Founder & CEO.
15 years ago I worked in direct marketing and data analytics. We built segmentation and scoring models and different messaging to different target groups – that is, the same job that’s done in all (digital) agencies today. The only difference was that it wasn’t impressions on screens but letters and catalogs delivered into the eyes of the target group.
One of our proprietary tools was a scoring model, which could be used to improve direct marketing ROI. On one bright spring morning I went to sell this great, cost-saving solution to a marketer who’s still one of the biggest advertisers in Finland today.
When finalising my kick-ass sales presentation I closed my pitch: “I can make the same sales with 20 percent lower marketing costs.”
On the other side of the table, two marketing guys were combing their hair with their fingers.
“We don’t want to optimize, but to maximize,” stated the older of the friends.
“We are interested if you’ve got more mailboxes to sell so that we can invest more,” the younger marketer continued.
There was no deal.
I jumped into my Fiat, paid for in instalments, and drove to the office. On the way, I figured out what went wrong.
I’ve always been a numbers person with a creative mindset. Back in school, however, I thought that mathematics and accounting belong to back-office nerds. I was sure that the marketing guy who thrives in the front line will manage just with enthusiasm, common sense and basic calculation skills.
“Marketing is above all basic mathematics and simple calculations, which is to maximize the company’s profits.”
On the way to the office, my Fiat started to cough for some reason. I thought about why I bought the car with instalment payment. Because I wanted to optimize, therefore save, I concluded. Wait a minute – or did I actually want to maximize the money I had so I could buy something else and thus achieve more?
In a way, just like those guys at the client meeting.
After returning to the office, I looked at the optimization Excel I had prepared for the meeting. It was clear that if there were more mailboxes and the target group could be increased, the ROI-multiple would decrease, but sales and thus absolute return would be higher.
It was impossible to sell mailboxes, but if you printed the catalogs on slightly better paper and put more pages and focus a bit more on the creative, would the conversions improve and would the average purchase increase? Certainly.
That meeting and its aftermath changed the direction of my thinking once and for all. I started to think that optimization only leads to the premature death of the brand. “You save and limit your measures until your target is only one person” was my motto in all optimization discussions.
I finally understood that marketing is above all about basic mathematics and simple accounting and the goal is to maximize the company’s profits, not to optimise ROI ratios.
Why am I telling this story? Because it is especially relevant in times like this. The uncertainty ahead of us easily leads to the budget guy paying a visit to the marketing department. No need to panic. Just do your basic math and ask one important question:
“Do you want us to exist in the future as well?”