From the PGS Papers Archives – Marketing ROI

Trade spending runs out of power, and financial efficiency runs out very quickly once you get into the eight figures. Or once you have mainly penetrated a smaller retailer’s local shopping population by the mere passage of time (e.g., Whole Foods, Trader Joe’s, etc./). And trade spend does not guarantee long-term growth in human awareness of your brand in the population.

The latter is true because throwing something on the deal again and again could easily attract random, ‘so what’ purchases in a very large proportion. It might seem like trial, but these folks may never return to you. They aren’t interested in your brand, only something with one or two attributes in your category at a cheap price. These despite-the-brand purchases are one of the biggest dangers of over-promoting your early-stage brand.  

While awareness may grow slowly for something reasonably interesting without aggressive marketing campaigns, it will take forever to get to 20-30% of U.S. households this way. You need this level of awareness to maximize returns on national distribution  (i.e., with above-average unit velocities). Notice I said ‘maximize.’ Maximizing velocity for reasonable marketing investment is massively profitable, when done correctly.  

So, how do you ensure you actually got a meaningful, long-term return? Immediate sales lift is NOT how you ensure this. It might be an indicator. It might be curiosity trial generated by overzealous field marketers.

Download my old piece on Marketing ROI to get trained on marketing measurement for founders…before you spend seven figures on meh.