ROI’s Razor: How to Win in Performance Marketing
By Alex Dinsmoor
(This piece appeared previously in Search & Performance Marketing Daily on Feb. 3, 2023)
Undoubtedly, there is no one thing that makes companies succeed with their marketing these days. With so many mediums, touchpoints and ways to target customers, it is clearly a combination of things that must be executed correctly to move the needle. Finding the right media and having proper analytics to optimize this media are key, but at the end of the day, consumers have to be engaged with the content you present to them. Comprehensive analysis of 20 years and billions in ad spend have shown that the creative can be two-thirds of the determinant of success of campaigns. In other words: creative matters!
This may seem like a remedial statement, but in many ways creative gets overlooked in the process. So many conversations with clients include talk about just getting their product in front of their target demo will surely be successful — as if exposure is the only thing they need to sell millions of dollars’ worth of their product. If it only were that simple.
There is a philosophical principle called Occam’s Razor that has been applied across science, reasoning, math, and even politics. It states that the simplest explanation is usually the best one. So, if it looks like a duck, swims luck a duck, and quacks like a duck, it's most likely a duck. The razor means that you can shave away the unlikely explanations and hypotheticals to arrive at the correct answer.
The critics of Occam’s Razor state that the principle is an oversimplification of the complexities of real life and often rules out creative thinking. It would seem that creative and this principle are at odds, but there is an application that allows brands to win at performance marketing: ROI's Razor.
This principle is that with all things considered in the equation of successful performance marketing, at the end of the day, the best creative wins. This could also be stated as the best story wins, or the best demonstration wins. It is not to say that you ignore media targeting and analytics, but at the core, you must make sure your creative and messaging is the foundation that all other things are built upon. Without this foundation, you are left with more questions than answers, and likely performance marketing that does not perform.
Occam’s Razor is grounded to the idea of parsimony — the idea of being thrifty with your resources. This is another connection to performance marketing and making sure that efficiency is key. You can be smart with your budget when working with the right people to develop the winning creative. This likely means not working with your brand AOR that is not focused on efficiency, nor does it mean allocating insufficient budget to develop creative content.
ROI's Razor also calls for the re-investment of revenues from DTC sales and performance marketing efforts into ongoing, scalable media spends. These revenues can, in many cases, pay for the ongoing media campaign — or at least act as a substantial subsidy of the media spend, thus turning a larger "gross" media spend into much smaller "net" media spend. This larger media spend is the rising tide that lifts all ships, including traditional retail sales, e-commerce partner sales, and certainly Amazon sales.
None of this may seem revolutionary, but it should act as a reminder for all marketers as we strive to find success in the ever-changing advertising world. Hopefully, ROI's Razor can be a principle we apply as we incorporate all the data that is available to us when we develop campaigns for clients. Shave away all the hypotheticals, shiny objects, and marketing fads that may seem like all the rage at that moment. Focus on the creative, the messaging, and the content and you can win at performance marketing.
Alex Dinsmoor is executive vice president and chief strategy officer for Script to Screen. He can be reached via email at firstname.lastname@example.org. For more on Script to Screen, visit scripttoscreen.com.