The Widening Disconnect Between ROAS and Business Results, Misunderstanding What Brand Means, And The "Brand = Short Term Revenue Drop" Myth
CFO: The better our ROAS looks, the worse we're actually doing.
New CMO: ROAS is the biggest gaslighter in marketing.
CFO: Our entire strategy is built on ROAS though.
New CMO: Exactly why we're ditching click-based ROAS as our growth strategy. Effective immediately.
CFO: That's financial suicide.
New CMO: Continuing what we're doing is the real suicide mission.
CFO: But our ROAS looks fire?
New CMO: It's all cap. Meta's algorithm is gaslighting your dashboards.
CFO: Explain. Fast.
New CMO: iOS 14, November algorithm shift, new exclusion limits. Incrementality death knell.
CFO: What's that mean?
New CMO: Meta now serves more ads to people already likely to purchase. Our net new reach isn't keeping up with our growth needs.
CFO: But dashboards green tho?
New CMO: If we add up conversions from Meta, Google, Klaviyo, and TikTok, we're at 300% of our actual revenue.
CFO: That's impossible.
New CMO: That's attribution overlap. Everyone taking credit for the same sales.
CFO: Have we run actual tests?
New CMO: Ever used Meta's conversion lift studies to test different campaigns?
CFO: I don't believe in that stuff. I need causal, not correlational.
New CMO: It is causal. Helps deduplicate the data we're seeing.
CFO: Receipts on current approach?
New CMO: CAC up 22%. Organic search down 15%. Meta's changes collectively destroy consumer brand builders.
CFO: So what's the fix?
New CMO: Three moves: First, block everyone who's seen us before. Only fresh eyes.
CFO: Extreme.
New CMO: Second, optimize for brand metrics not purchases. Baseline revenue becomes main character.
CFO: What's baseline revenue?
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New CMO: Branded organic search, direct traffic, and organic social referrals. Our highest margin channels. 2.8x higher revenue per session.
CFO: So what's the actual outcome of all this?
New CMO: We'll reach people just as likely to be great customers but far more likely to purchase at full price.
CFO: And?
New CMO: Increases our resilience against algorithm changes and competitive pressures. Less susceptible to price wars.
CFO: That all checks out. We need those things.
New CMO: This is brand. This is building the brand.
CFO: Never say that word in my presence. Not doing another expensive branding exercise.
New CMO: That's exactly what I don't mean. That's not what brand is.
CFO: Then what is it?
New CMO: Brand is the number of people who'll automatically think of us, search for us, or come directly to us and purchase at full price in the next six months.
CFO: So...
New CMO: It's future demand we're creating. Nothing arguable about that being existentially important.
CFO: When you put it that way, it hits different.
New CMO: The problem is definitions. Brand marketing's been done in an imprecise, ineffective way.
CFO: And you can quantify this?
New CMO: Completely possible to measure how we're building future high-quality demand beyond "click ad, buy now" windows.
CFO: 90 days. Weekly reports.
New CMO: That's the assumption. It doesn't actually take 90 days. Using brand-building creative in purchase campaigns drives incremental lift right away.
CFO: But won't ROAS look worse?
New CMO: That's why we use conversion lift studies, not click-based ROAS. Click-based ROAS is a one-way ticket to bankruptcy.
CFO: So no revenue drop?
New CMO: Take that assumption we'll see a short-term drop by moving money from performance to brand and shove it up your—
CFO: Whoa! Kids in the room. Keep it PG.
New CMO: But you get my point.
CFO: I do. LFG. Algorithm apocalypse it is.
New CMO: TikTok series dropping soon. It's gonna slap.
We sell our clients on a flywheel and not a funnel. The flywheel builds momentum over time and reduces the number of customers who leave because there is no bottom to fall out of. Marketing is about introducing your brand to people. (Awareness) Then you make them feel some sort of emotion about you. (Trusted Awareness) Then you reconnect again and again and again until the person is ready to buy. Then deliver on the promise. Upsell. Cross sell. Create memorable moments that they want to share on your behalf for free. (Chewy refunding your last order, encouraging you to donate the food, and sending cards after learning of your pet's passing.) Repeat the flywheel forever.
considering the concept not calculus , the short term ROI = d(sales)/d(investment) at piont x, and the long term ROI = total sales / total investment = Ave d(sales)/d(investment) at all x.
Say it louder please
Loved it...felt goosebumps. In instant gratification world of today, everyone wants faster sales (perf marketing)... the org goes against you if u talk brand building...till u reach CAC increasing and baseline dropping paradigm. Preston 🩳 Rutherford