There’s a wave of social posts lately touting the ROI of one media channel over another. Perhaps you’ve seen them: “Channel X delivers an ROI of 5.60 vs. Channel Y at 3.50.” The implication is obvious — shift budget to Channel X, right?

Media owners are, of course, right to promote their offerings. But I wish they’d do so more carefully.  Maybe these posts should come with a footnote: * your results may vary.

The truth is, ROI is a function of many decisions — and highly sensitive to context. These values aren’t stable enough to support bold claims without major caveats. The fine print matters: such results are valid only within the scope of the study, and may not hold true in your business environment.

ROI for any channel can vary based on:

• Spend level: In most channels, increasing spend decreases ROI (and vice versa), due to diminishing returns.
• Mix effects: ROI is not a fixed channel property. Change the mix, and each channel’s ROI shifts.
• In-channel tactics: Targeting, creative, timing — all affect outcomes. Some are captured in MMM models; some are not.

Even more importantly: ROI should not be your sole metric. A high-ROI channel that delivers little incremental volume may not help your business grow. Smart media planning balances financial with volume impacts.

ROI is best viewed not as a goal, but a constraint. The right question is: How do I maximize total incremental volume while staying within a viable ROI threshold? That answer usually lies in the mix — not a single channel.

And all of this assumes the underlying model is robust, validated, and comprehensive enough to rule out confounding effects.

So when you see bold ROI claims, take them with a generous pinch of salt. Don’t reallocate your budget based on someone else’s results. Instead, Find Out For Yourself (FOFY). Run simulations, explore marginal impacts, test different mixes. That’s how you make confident, context-specific decisions — and help ensure your results can vary in your favor.

There is a class of marketer whose business model gives them a distinct advantage. The group includes banks, telcos, publishers, ecommerce sites, some companies in travel and health. Their difference? They know their customers directly; they can transact and communicate without going through intermediaries.  In recent years these businesses have been joined by new hybrid models, for example, retailers whose loyalty programs allows them to see individual customer behavior, not just sales baskets and aggregate unit volumes.

When it comes to building a marketing mix model for these brands, there are significant opportunities to improve returns on investment by combining an understanding of the impact of public facing media (eg TV, Print or OOH), as well as personal, (eg 1:1, CRM media such as email.

To achieve this, the data design needs to embrace all CRM media along with above-the-line media into the MMM (and all other forms of marketing communication!), so that you can understand the total business dynamic more coherently.  The model can then incorporate the effects of efforts aimed at cross-sell, up-sell, retention, and winback.

Whether you see this as an exciting opportunity probably depends on whether you’re a marketer who sees things as glass half full, or glass half empty.

The good news is this kind of integration offers the opportunity to increase the incremental effect of all efforts….CRM, brand building, etc…by double digit percentages.  On the CRM side, contact frequency, channel choice and customer prioritization all benefit from this broader view of what impacts buying.  

For the MMM view of marketing effect, we can meaningfully distinguish effect on current customers from effectiveness in converting prospects to customers.  We can also take advantage of segmentation data on the customer database to better understand how all forms of marketing communication affects customers from those segments.  For example, what marketing mix best supports the relationship with the minority of customers who generate the majority of profits?

The bad news is that by NOT doing this your budget is almost certainly wasting money on poor attribution, inappropriate allocation, and misleading evaluation of effect. And yet, many marketers make that same mistake.

Why does this happen?

• Data and Decision Silos
  • In some companies CRM planning and decision-making are located in a different part of the company from media planning
  • There should be a point of integration of the two, but sometimes this is not the case or if there is, the processes function poorly
• Attribution Bias
  • Thinking of attribution as analysis of only digital data or of MMM as only mass media blinds analysts and decision makers
• Analytical Complexity
  • There is no doubt that this integration increases the complexity of both CRM and MMM modeling
  • In some organizations the perceived complexity is enough to turn marketing leadership away from the effort
• Bad Incentive Design
  • Media teams may focus on MMM and only for media as their responsibility; same with CRM teams. 
  • Synergy between the two won’t happen unless they both support it, along with the CMO

How to overcome these barriers?

Consider what a double digit percentage improvement in incremental sales would mean to your company and your brand.  Compared to that, realigning incentives, improving analytical work and creating bridges between marketing teams is far less costly. 

So let’s say the glass is half full, and get to work on filling it to the brim.

Looking for help in making MMM + CRM = ROI work for you?  Contact me at dbeaton@navigationme.com

Image credit: ChatGPT

The March 2025 SpencerStuart CMO Tenure Study (https://www.spencerstuart.com/research-and-insight/cmo-tenure-study-2025-the-evolution-of-marketing-leadership) has some encouraging words for CMOs: tenure is up slightly vs the last study and there is evidence of increased acceptance of the role in the C suite.  Key quote: “…more companies are shifting marketing to make it more overtly focused on delivering revenue.”

So for the aspiring or inspiring CMO, the idea of how to create and sustain advertising leverage: the incremental sales lift in a business created by advertising over a specific period of time, is as central as ever.

To illustrate, let’s consider an example drawn from our work with a major advertiser, measuring the incremental lift their advertising (covering all forms of marketing communication) delivers.  The numbers are disguised to support confidentiality, but the ratios shown here are seen broadly across many brands we have worked with.

Given all this, where can the CEO/CFO/CMO best look for ways to improve business results?

One route, only too common, is to ask Procurement to squeeze fees across the board.  Operating on the $15 million of fees being paid, they might find 10-15% “savings”, resulting in a gain to the company on the order of $1.5-2.25 million.  Not unsubstantial.

But on the other hand, optimization of spend as shown here is capable of generating over 4x those gains.  Further, we need to recognize that Procurement efforts and Optimization efforts probably act against each other; cutting agency fees leads to disincentives and dysfunction that could undermine advertising’s effect.

What are the alternatives to cost-cutting? 

• Invest more in advertising….use the ROI curve (https://navigationme.com/2024/12/02/win-your-budget-battles-at-the-frontier) to ensure this move builds profits
• Invest more in creative; when done well this will amplify the effect of all other work
• Evolve the product or lean into new product development
• Revisit pricing strategies
• Rethink the customer experience to look for more ways to build value for customers and the brand alike

….all of which require the ongoing talent and leadership of the CMO.

Consider for this brand, this roster of agencies and client marketing teams took a budget of $70 million in working media and created $357.6 million in incremental sales…a healthy leverage ratio.  Their value to the brand and the business is proven. And that should give this CMO the clout to be trusted to lead the brand to the next level.

The annual budget setting exercise is a rite of passage for every marketer once they become responsible for a budget, in most companies.

While they vary in practice, most have a common structure: Marketing works up a budget based on historic performance plus a wish list of projects they want to fund for the coming year.  For some companies, there are many marketing teams doing this workup. It will be up to the CMO to consolidate these and negotiate with the CFO and CEO for approval.

At the C suite level marketing’s plans and projections are important, but so are budget requirements from other teams across the enterprise.  Now the competition begins; who gets funded, who comes up short.

All of this is based on what is known at the time budget decisions are set.  For many companies, once the budget is set, it is set like hard concrete.  Woe be the manager who misses target or who is at risk to over-spend due to factors that could not have been known at the time the budget concrete was poured.  Media inflation, unexpected increases in costs, supply shocks in the value chain, they all have the potential to disrupt the best laid plans.

As the year unfolds, the concrete can create more problems:

• If a new opportunity arises, and it inevitably does, marketing is forced to cut budgets where it does not want to in order to fund the new.  Why cut something that continues to look like it contributes to profitable growth?
• Imagine that some of the things being tested in the previous year are returning much better results than status quo.  They should be rolled out, but can they be without cutting other productive projects?
• Sometimes the market trends so favourably that a bright future is there for the taking….if marketing has the budget to exploit it.  If they don’t, the favourable tail winds may do more for competitors.
• Predictive models, if sufficiently accurate and reliable, can show upside opportunities from those budgeted.  Are you able to take advantage?

Think of a fixed budget as a barrier to opportunity:

As budget rises, marginal revenue should as well, but on a diminishing curve.  For businesses with relatively fixed marginal costs, there will come a point where marginal costs exceed marginal revenue; this point represents the maximum contribution marketing can make to sales over this period.

But a fixed budget typically, in our experience, falls well short of this, leaving the brand/company with a lost profit opportunity, shown here as the grey area on the graph.

What can be done?

Consider building some agility into the budget process instead.  Instead of targets and budgets set in concrete for a year, there is the recognition that things change (for better or worse) and so should the budget.

Agile budgeting can incorporate contingency funding, flex targets, outcome-based opportunity funding, or rolling budgets over shorter time horizons.  Each has its strengths and weaknesses.  But before they are considered, you should decide if your annual budget process is holding you back, and by how much.  It might be time to lose that ball and chain.