Introducing ROMS (Return on Marketing Spend)

Now I’m not some sort of fancy professional quote maker, but I do appreciate accuracy in my industry jargon. This is probably more “old man yells at cloud” than I’m willing to admit, but I think that we need to expand the marketing sayings lexicon when it comes to talking about business outcomes versus marketing expenditure.

Right now, I hear 2 terms thrown around a lot when people are trying to measure the effectiveness of their marketing program.

  1. ROAS (Return on Ad Spend)

  2. ROI (Return on Investment)

Neither of these are perfect terms, and are often used as stand ins for a term that I want to deem ROMS (Return on Marketing Spend)

ROAS is useful in a certain context. I spend $500 on ads and get $1500 back. That’s a 3x ROAS as the revenue was 3 times what I spent. Simple and useful, but utterly lacking from a high level KPI perspective. Marketing is so much more than just ad spend. Labor, tools, brand building, etc. This isn’t even to mention all of the types of marketing that have no ad spend associated with them. Organic social, content marketing, SEO, etc. ROAS is clearly useful, but lacking at a high level.

ROI is really an investors term in my mind, and not a particularly useful one for marketing. ROI, to me, is basically short hand for what’s the profit on this activity. However, there’s so much more than marketing being included in that definition. What if there were sales people involved, what if a marketing activity was a perception exercise, or brand building, or built around increasing customer loyalty? How do you measure that? Let’s set aside for a second that analytics and reports aren’t nearly a accurate as we all believe they are. ROI is clearly a much broader term than is useful for a marketing department to be able to reasonably control or be concerned with.

ROMS on the other hand is inclusive of labor, and ad spend, and tools, and brand building etc. It takes into account the total amount of money spent in every facet of marketing, and then contrasts it with the revenue over the long term that marketing has brought in. To that end I would suggest that ROMS be measured on the basis of 1 month, 1 quarter, and 1 year to get an accurate idea of the direction that you’re heading in. While I’m not claiming ROMS is a perfect metric, I think that it can help better frame the conversation around the questions that executives are actually trying to get answered.

Prior Idiot CMO Phenomenon

persone wearing a shirt that says dumb

There’s a phenomenon I’ve noticed that happens when a new marketing team hire joins, or a new agency is hired, or a consultant is brought in. Universally, the person that was doing the job before you was a complete and utter idiot.

They had no idea what they were doing. They made baffling decisions that seemingly undermined the company and the marketing mission. They spent way too much money, didn’t achieve anything, and left things worse than when they showed up.

Only, they weren’t idiots. Or at least not all of them are.

See, I’ve been quite guilty of this myself in the past.

I’d rush in with my cavalier attitude, completely ignoring all context, declaring everything dumb, and I set to work building my vision, and only my specific vision, of what right looks like. I implement a perfect and flawless plan and everything becomes sunshine and rainbows. I save the day and am a hero. Everyone loves me. Albert Einstein gives me $100 while everyone claps.

In reality, what actually ends up happening, is I don’t understand the company dynamics all that well, I’m arrogant about my knowledge of the market, I get tunnel vision on my own way of doing things, I don’t take into account all the stake holders, I fail to realize that just because something worked somewhere else doesn’t mean it’s a fit here, and I get frustrated and sloppy.

The result? I make a series of seemingly baffling decisions that undermine the company, the marketing mission, and leave things worse than when I was originally brought in.

Sound familiar?

Look, we all do it. Most of us, I believe, pride ourselves on our abilities and genuinely want to deliver a win to the people we’re working with. It comes from a good place, but is tinged with just enough arrogance and ignorance to make things a disaster.

Here’s what you should do instead.

Go in and say nothing. Ask a ton of questions to all the stakeholders. Understand the company dynamic. Spend more time than you think you need on customer empathy. Understand not just the stated mission, but the real mission of the company. Learn what has been done and why it’s been done that way.

Then, and only then, start slowly changing things towards your new vision, the vision that’s inclusive and actually tailor made for the company and their customers. Introduce things one by one. Listen to what people think. Bridge the gap between your knowledge and best practices with what the present reality is for the company. Use data to make decisions and test in a thoughtful and deliberate way.

I promise you things will go much better, and not just for the marketing outcomes, but for the relationships as well. Don’t be the next prior idiot CMO.

There are no hacks for hard work.

One thing I’ve noticed, and been deeply guilty of myself, is that there are no hacks for hard things when it comes to marketing. 

What do I mean?

I mean that you can get every industry report there is, and marketing is still work. You can have the most comprehensive, seamless, and automated reporting system there is, and marketing is still work. You can have cutting edge AI tools that will optimize your bids, audiences, placements, and creatives, and marketing is still work. You can outsource large parts of your job to agencies or the greatest experts in every kind of marketing imaginable, and marketing is still work. You can be absolutely dominating on a specific platform with a fantastic ROI that requires very little upkeep, and marketing is still work. 

There is no way around hard work when it comes to marketing. This shit is hard. 

No tool is perfect, platforms are always changing, what works today, may not work tomorrow, agencies need direction and collaboration, etc. etc. etc. 

There are, of course tools, processes, and systems to make your job easier. There’s no doubt.

There are however no hacks, or tricks, or tools to make the job easy. 

You see, marketing is an inherently self destructive field. What do I mean? Anytime something gets popular, a marketer comes in and ruins it. 

Media companies inherently trade on people’s attention. It’s the business model they’ve been in ever since the first billboard went up in the Colosseum (I have no idea if this is true, I just made it up. Sounds cool though right?) They create something people want to watch, and the price is they’re forced to watch something they never would otherwise. Us marketers? We’re that otherwise bit. 

So, then a new medium, or channel, or site, or whatever becomes popular it’s a race against time before it becomes so saturated with marketers that people, frustrated and disillusioned, move on to some other form of entertainment. Any time you find something that works, there are 10s of thousands of other marketers chomping at the bit to take what you’ve found and use it for themselves. In the process the fierce competition for consumer eyeballs is every so slowly wearing down the credibility and the usefulness of whatever trend or authenticity the mediums we market on have managed to build. Repeat ad infinitum. 

I say all this not to be cynical about my profession, but to point out that the work never stops. You can never have it all figured out. At best you can have it all figured out for today. A platform changes a feature and you’re dead. A competitor rolls in swinging their weight around with 1000x the ad budget, you’re dead. People realize your product is accidentally killing all the sea turtles one day.

No matter what, you have to do the work.

Marketing Is Not A Destination

This is going to come off a bit pretentious artisty of me, and I get that, but I’m going to say all this anyways.

Marketing is not a thing you do, and then it’s done.

I see a lot of founders, especially a lot of product focused founders, treat marketing as if it’s an item to check off their to do list. As if it’s an action item to be solved and then it’s done. Not the case.

I was speaking with the head of growth of a recently acquired big startup. He told me about how before the acquisition they had run into an issue. They had massively scaled and gained most of their growth up to that point by cleverly utilizing a feature on one of the bigger social networks and acquiring tons of users for quite cheap through this method. However, one day they woke up, and the rules had changed. Their golden goose was gone, and it was absolutely devastating. We then talked about how they were struggling to find new channels as they hadn’t bothered to invest in anything else in the meantime because it was working so well. They were stalled out and scrambling to find answers.

This sort of scenario is exactly what I’m trying to talk about. This startup got lucky. Not to discount the work they did, but they found a good acquisition channel and then coasted. They found a destination, but like so many people they discovered their destination was really just a pit stop. In retrospect, if they hadn’t simply declared marketing “solved” this wouldn’t have happened.

Marketing is work. It’s day in and day out optimization, tweaking, and testing. If you want to stay ahead of your competitors, if you want to grow your company, if you want to be secure in the future of your business, you can never let marketing just coast. Ever.

Marketing is a journey. NOT a destination.

How to build a 12.5 billion (with a B) dollar company by making almost everyone hate you.

If you’re taking a stand on something. I mean really taking a stand, you’re going to have both supporters and detractors. If you’re trying to make a name for yourself, you’re going to have to make strong statements so people understand who you are, why you exist why they should care. When you make that strong statement. When you make your brand stand for something real, something is going to happen.

People are going to get pissed off.

Anything worth standing for, anything that is going to stir strong emotion, that’s going to inspire loyalty and get people to part with their hard earned dollars is going to have to be a bold statement. The flip side of course is that any statement that is bold is, by definition, one that is daring to make. That means there’s people a lot of people, maybe even a majority of people that will disagree.

The United States has a population of 330 million people. The EU has a population of 508 million people. The world has a population of 7.4 billion people. Let’s assume you take a stance so extreme that 99% of people hate you, but 1% of people are madly in love with your product.

That’s 3.3 million customers in the US

That’s 5 million customers in the EU

That’s 74 million+ customers Worldwide

Let’s also assume that they each give you just 1 dollar per month. One measly dollar. That’s 12 dollars per year for 74 million people. That’s 888 million dollars a year in revenue. At current Enterprise Valuations on the S&P 500 that means you would have a company worth:

12.5 billion dollars.

That’s IF you piss off 99% of the people.

Look I get it. Negative feedback can be really hard to deal with. You don’t want to scare off potential customers. You know what the quickest way for your company to die is though?

Saying so little, or nothing at all, and no one cares.

At least is someone hates you they care. I’ve seen many companies that are hated thrive. I’ve never seen a company that no one has strong opinions about do well.

So go forth. Make a statement. Be thoughtful, but decide to be authentic. Decide to stand for something. Decide to create the kind of company that someone can can incorporate into the idea of who they want to be rather than just building a product. Decide to build such intense customer loyalty that they’re yours for life.

The Best Way To Get Good At Social? Use Social.

I’m going to let you all in on a secret.

It’s a big one.

You can learn how to be a master of any social network.

Literally any or even all of them. It just takes 1 weird trick.

You ready?

Use the social network.

I know that’s super pithy and hand wavey, but it’s 100% true. You see you can have so much of an advantage over your competitors, over the market, over everyone else by just taking the time to actually learn and use a social network. Understanding the inside jokes, the way people communicate, the pitfalls, etc. All this puts you at a huge advantage over your competition when it comes to effectively extracting value from social platforms.

Let’s take Reddit for example.

I’ve been a big advocate of Reddit advertising for a few different reasons. In fact, I am paying out of pocket, not client money, because I believe in it so much. Why am I such a big believer in Reddit ads? I’ve been a Reddit user since 2010, almost 8 years now. I understand the community in a way that many advertisers just don’t. The inside jokes, the interplay in between subreddits, “legendary” stories that people quote that others would overlook, etc.

Here’s the thing. You can read the manual on Reddit. You can understand how every feature works. The thing that if you aren’t a user you can understand how things work, but not the why. You’ll only ever have a skin deep understanding of the user experience.

I’m nto saying spend your entire work day on social media. Not at all. As much as it is my industry, it can also be a huge distraction. I specifically section off 1 hour of my day that is 3 things.

  1. Using social in order to better understand it.

  2. Use social to engage with my target audience of other marketers.

  3. Learn from others in my industry.

So it’s sort of a 3 birds with 1 stone sort of scenario. I’m using social and understanding it, but I’m also accomplishing real business goals at the same time. This sort of combining can give you the context you need to deeply understand a platform, and also accomplish tangible business objectives at the same time so you don’t feel like it’s at all wasted.

At the end of the day whether it’s social or newspapers or tv or whatever, you need to deeply understand the platform to be able to effectively use it. It’s what all good marketers do.

Your marketing is not a function of your ego.

I once opened a presentation to a client with “Your opinion on marketing doesn’t matter.”

The meeting actually ended up going really well.

See I actually meant what I said. I was working with a decent sized and well funded startup helping them figure out analytics and paid media. Along with their CMO we spent weeks running tests into different potential customer verticals guided by the qualitative parts of marketing. We did the interviews, we made the archetypes, we knew “who” needed our product.

We knew that the qualitative only gets you so far.

In the words of Justin Trudeau it’s “CURRENT YEAR” and there isn’t an excuse to not be a data informed marketer.

So we began testing.

Proper A/B testing.

Isolating variables like audience, creative, calls to action, landing pages. Factor by factor in succession until we landed at a functioning funnel. A funnel that was getting us leads at 80% less than the industry average. A funnel that companies we kill for.

We sat down with the CEO, and while he was delighted he also was wondering if we’d overlooked a different platform where he was “pretty sure” the customer spent their time.

That’s when I dropped the bomb.

“You’re opinion on marketing doesn’t matter.”

Followed up quickly by “My opinion on marketing doesn’t matter either.”

You see vision is important. It’s not everything though.

Why? Data trumps instinct, and we had it.

I went on to explain exactly what we had here, how we could scale it, and why this was so important. In that moment he understood.

See I was intentionally inflammatory. Sometimes though being that direct though is necessary to change ingrained patterns of thought. The world of marketing isn’t the same as it was before. The old problem was a lack of data. The new problem, a topic I’ll cover later, is that there’s an overload of data. However, the point is that there is data. Data attached to every single marketing activity. Imperfect data granted, but data enough to lead in the right direction.

If you’re sitting around thinking about your marketing, who your customer is, and you have some data, start there. When you’re able to take the qualitative, that which you intuitively know, and marry it with the quantitative, that which can be proven with data, you end up with a marketing program that can truly break through the noise and create a real impact for your business.

To be successful you have to go both fast and slow.

I realize this is kind of a weird title, but hear me out. I’m doing my best with my blog, as opposed to my videos which are instructional or my podcast which is really about people, to sort of muse on marketing and business in general. My other content is primarily how to guides, but those can‘t be as effectively utilized without the proper context from where they came from and what they should be used for.

One thing I’ve found in business, especially in the startup community, is this focus on growth hacks and getting rich quick. No one makes their own product, they dropship (not that I have a problem with dropshipping, it’s a fine business model, but too many people treat it as a get rich quick scheme, which it isn’t.) Instead of building longstanding relationships with customers, they focus purely on acquisition. Instead of finding a sustainable business model, they maximize revenue and hope to get bought out before they go bankrupt. It seems like no one is in it for the long haul, they just want to retire to Ibiza by 35. Who cares if they built anything of lasting value?

I have bad news for the people who think you can just find a hyped up idea, muscle through, focus only on short term wins, and get out.

It doesn’t really work.

I mean practically speaking it does, just probably not for you. For most people the lust for gold, as it were, can’t motivate you enough, for long enough, to achieve any sort of real success. Maybe it can for a few months, or maybe even a year or two, but building a huge business with a massive exit that you can retire off of takes far far longer my friends.

That said, there are valid reasons to use these sort of hacks. Especially early on, you need to hit very aggressive revenue goals in order to build something that can sustain you, your employees, etc while you work on your long term play. That’s why when it comes to marketing you have to go fast and slow. When I market for a company I look to see how I can get them a handful of short term wins while building the sustainable machine that will give them success for years to come. They need to see that early win to know I’m not full of crap, but they also need to start working now on what will give them success in the long term.

Having the ability and the perspective to see both the long and short term, and create a marketing program that caters to both goals is really really hard. However, if you master it and break through, you’ll become the kind of unicorn marketer that can grow almost any sort of company, and can achieve the level of success you want. You just need to be both urgent with the tactics you can do today, and dedicate the resources to the strategies that will pay off 5 to 10 years down the road at the same time.