Tracking Impact for Sustainable Growth

In today’s dynamic marketing landscape, tracking the impact for sustainable business growth is more crucial than ever. Return on ad spend (ROAS) often becomes the go-to metric due to its straightforward nature: invest a certain amount and see a return. But is it truly that simple, especially when aiming for sustainable growth?

The complexity lies in the fact that the more precise the metric, like ROAS, the more susceptible it becomes to manipulation. Achieving a seemingly high ROAS—say, 20 times the input—might involve just adjusting a few marketing tactics, such as enhancing retargeting strategies or offering more discounts.

The primary concern is that ROAS primarily gauges efficiency in tapping into existing interest without fostering new interest. Imagine focusing solely on catching the few remaining fish in a pond while hardly acknowledging the dwindling water levels.

In a conversation from the recent podcast Marketing Against the Grain, the proper approach isn’t to discard ROAS but to expand your view by embracing multiple metrics. Enter the “buckets model.” This framework distinguishes between capturing immediate returns and nurturing long-term growth.

Exploring the Buckets Model for Sustainable Growth

To effectively track the impact of your advertising efforts, consider diversifying beyond a single measure. The buckets model offers a streamlined technique to structure your advertising into three key categories: direct ROAS, incrementality, and brand awareness. Each of these facets plays a unique role in not only maximizing returns but also enabling future demand generation.

Direct ROAS: Focus on Demand Extraction

Your primary bucket acts as the revenue driver. It focuses on extracting current demand, ensuring that every dollar spent results in direct financial returns. Suppose you’re achieving a 3:1 ROAS—this means each dollar spent generates three dollars in sales. Optimizing this bucket involves concentrating on metrics like clicks and conversions from an audience already familiar with your brand.

Indirect ROAS: Bridging Demand Extraction and Creation

The second bucket emphasizes incrementality. This metric evaluates the additional interest generated through advertising efforts. With a focus on new audience engagement, this bucket helps measure the extra value brought by campaigns over a prolonged period, particularly in channels where immediate conversions aren’t the primary aim.

Case Study: Conversion Lift Studies

To effectively gauge incrementality, you can employ conversion lift studies. By testing specific regions against untouched areas, marketers can uncover the true impact of their investment. Regular re-assessment, every few months, is recommended to ensure continued accuracy and relevance of the insights gained.

Brand Awareness: The Pillar of Demand Creation

Your final bucket is devoted to building brand credibility and recognition. Rather than being concerned with direct returns, this phase focuses on engagement-driven strategies, including advertising methods like podcasts or outdoor media. Success here is often gauged by reach and impressions, emphasizing long-term loyalty and market expansion.

Strategic Alignment Across All Buckets

Utilizing the buckets model effectively calls for a strategic sequence in filling each category. Primarily, saturate your direct ROAS category. Conduct exhaustive tests on platforms to identify limits for financial viability. Monitoring your approach enables you to detect when to transition into incrementality measures.

Incrementality testing allows marketers to systematically track the growth of indirect engagements and to set the stage for developing brand recognition strategies that eventually feed back into the other two buckets.

Choosing the Right Metrics for Sustainable Growth

Ultimately, grasping sustainable business growth requires both measurable and more abstract approaches. By implementing a framework that integrates diverse tracking metrics, your business can adeptly capture current demand while preparing for future shifts.

Ready to elevate your understanding of advertising tactics? Dive into the full episode of Marketing Against the Grain for more insights.

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This blog post was inspired by insights shared by marketing experts Kipp Bodnar and Kieran Flanagan from HubSpot, as they dissect growth tactics and learn from leading industry figures.