Is it Fraudulent to Spend Money on Lead Gen Without an ROI?

Posted by James Obermayer on Nov 7, 2018 4:48:06 PM

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Thinking back on my career, I realized early on that marketing spending of any sort, whether for people or programs, must be rooted in my ability (and our marketing department’s ability) to justify the expense.  Nothing else made sense to me then or now.

If you intend to spend the investor’s money (AKA company money) based on notions and intuition, without a plan to report the results, you are misleading management.  If the results are not giving management the required return on investment, you are a fraud.  Naturally, not every lead gen program will be a success. Yet taken as a whole, a company’s marketing should be measurable, with the goal of always making a defined predictable return. 

Of course, proving ROI was for many years difficult in spite of Claude C. Hopkins’ book Scientific Advertising, published in 1923.  Yes, you read correctly - 95 years ago he took the mystery away: “The only purpose of advertising is to make sales. It is profitable or unprofitable according to its actual sales.”

In his first chapter Hopkins says:

“The time has come when advertising has in some hands reached the status of a science. It is based on fixed principles and is reasonably exact. The causes and effects have been analyzed until they are well understood.

The correct methods of procedure have been proved and established. We know what is most effective, and we act on basic law. Advertising, once a gamble, has thus become, under able direction, one of the safest business ventures.

Certainly no other enterprise with comparable possibilities need involve so little risk. Therefore, this book deals, not with theories and opinions, but with well-proven principles and facts. It is written as a text book for students and a safe guide for advertisers. Every statement has been weighed. The book is confined to establish fundamentals. If we enter any realms of uncertainty we shall carefully denote them.”

The Tools are Available, but the Flesh is Weak

The tools are available to prove marketing’s return on investment, but the flesh is weak, except perhaps for those who believe measuring marketing’s ROI is worth the effort. 

In the past it wasn’t because people couldn’t prove the ROI, it was because it was inconvenient, and sometimes difficult; but neither are good excuses, and both are no longer barriers.  The measurement tools have existed for some time and are getting easier to use year by year since the introduction of CRM and marketing automation.   The barriers have been lifted; the will to be held accountable must reside in the professional marketer.

Some marketers act like a child who sneaks a cookie from the family cookie jar, after being told not to. When he or she realizes no one cares, his or her bad behavior continues.  Marketers realized early on that if no one held them accountable for the bad behavior without an expectation of a return, they could get away with it. 

Even with the tools available today, ROI is still not a consistent or common measurement of marketing’s abilities. But times are a’changin’, albeit slowly.  Because the tools exist, marketers have the choice of either clinging to the past with fear and doubt that their fraudulent behavior will be exposed or use the tools to predict and prove ROI for marketing programs and expenditures.

When you do, Claude Hopkins, were he still here, would be so proud of you.

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Topics: Lead Generation, Marketing ROI

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