Imagine two lines in a marketing report. Paid search spent €10,000 and generated €40,000 in attributed revenue. A podcast sponsorship cost the same and generated almost no tracked sales.
The obvious decision is to move money into search.
But suppose the sponsorship introduced people to the company. Months later, some searched for its name and clicked an ad. Search received credit for purchases that several activities helped produce.
This hypothetical example exposes a budget problem. Rewarding only the activity closest to the purchase can gradually remove investment in future buyers.
The research behind How Brands Grow and Binet and Field’s effectiveness studies helps explain why that matters. It also gives us better questions to test.
A higher return percentage can accompany lower profit
First, the search example describes return on advertising spend, or ROAS. Revenue divided by advertising spend does not tell us profit.
Even profit ROI leaves another question unanswered: how much total profit could the business earn?
Consider a simplified example. Spending €10,000 produces €20,000 in additional contribution before marketing costs. After those costs, €10,000 remains, giving a 100% ROI.
Spending €20,000 might produce €35,000 in additional contribution. That leaves €15,000 after marketing costs, giving a 75% ROI.
The percentage falls. Total profit rises.
These illustrative numbers show why maximising average ROI and maximising profit can produce different budget decisions. Cash constraints and alternative investments still matter.
The useful question is what the next investment could contribute.
