We cover the basics and more in our ABCs of Marketing Measurement series. Learn More

ABCs of Marketing Measurement


Y is for Solve for Y – Growth through ROI

Businesses regularly grapple with the decision to optimize for growth or profitability and their nuanced tradeoffs. The pursuit of one goal often comes at the expense of the other, prompting organizations to chart a strategic path aligned with their unique circumstances and objectives. There are many implications of growth vs. profitability, particularly in how to leverage marketing. Businesses looking to grow must turn their attention to optimizing Return on Investment (ROI) as a strategic approach for efficient marketing channel investments.

Growth is not merely a goal but a necessity for brand survival. To grow successfully, brands must strategically focus on maximizing Return on Investment (ROI) to identify efficient additional marketing channel opportunities. This approach, though it may involve sacrificing some immediate profitability, is a crucial step toward achieving the incremental growth necessary for the longevity of most businesses.

The ROI Paradigm

Return on Investment (ROI) is the measure of the gain or loss generated on an investment relative to its cost. In the context of marketing, it becomes a strategic compass, guiding brands towards optimal investment decisions. While immediate profitability is undeniably important, strategic investments that maximize ROI can be the catalyst for sustained growth. Incremental growth is not just desirable; it is essential for the survival and prosperity of businesses in today’s dynamic marketplace.

Equating Growth with Marketplace Share

A fundamental principle in business is that the share of marketing growth tends to mirror the share of the marketplace. Understanding and leveraging this correlation is key to gaining a competitive edge. Increasing market share is intrinsically tied to increasing the share of voice in the market. In a world inundated with messages, standing out and being heard are critical components of a successful growth strategy.

diminishing returns curve

To increase market share, brands must focus on maximizing their share of voice through strategic allocation of resources. This involves directing investments toward the highest end of ROI to ensure efficiency and effectiveness in reaching the target audience.
Leverage S-Curves from a Marketing Mix Model to help identify the maximum range for investment. Invest in each media vehicle as close to the point of saturation as possible. This not only ensures efficiency but also acts as a force multiplier for growth. This strategic approach allows brands to achieve more with less, amplifying their impact in the marketplace.

Embracing the Future

As we navigate the evolving business landscape, the strategic imperative of maximizing ROI in marketing investments is clear. Sacrificing immediate profitability for incremental growth is an investment in the future health and success of a brand. By understanding and harnessing the correlation between share of growth and marketplace share, brands can strategically position themselves to not only survive but thrive in the competitive marketplace.

In conclusion, the journey to unlocking growth begins with a thoughtful analysis of ROI and a commitment to maximizing efficiency. Brands that embrace this strategic imperative are not only investing in their own success but are also poised to shape the future landscape of their respective industries. It’s time for brands to make the strategic shift, maximize ROI, and embark on a journey of sustained and impactful growth.

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