In the world of media buying—where we manage ad placements for clients on platforms like Google and Meta—there’s always a focus on hitting specific targets. These targets can include things like how many people will see the ad, how many will engage with it, or how much revenue will be generated. Setting these goals is essential to running effective campaigns. But what if these targets are misleading? What if the pressure to hit them actually leads to worse results in the long run?
The Reality of Marketing Estimates
When we work with clients, we’re asked to provide estimates—projections of how well the campaign will perform. The problem is, these estimates are often inaccurate. Why? Because they are based on two things:
Past Performance: We look at how the brand has done in the past. We analyse things like how much it cost to reach an audience or get engagement, and we use those numbers to predict future results. But this isn’t always a perfect measure. Every campaign is different, and past performance doesn’t guarantee future success.
Industry Averages: Sometimes, we use benchmarks from other companies in the same industry. But consumer behaviour varies a lot between brands. One brand might do well because of its unique approach, while another might not, even though they are in the same industry. So, relying too much on these benchmarks can be tricky.
Even though we know these estimates are often off, they’re still required. Clients want to know what to expect from their investment, and these estimates provide something concrete to work with, even if they aren’t always accurate.
The Danger of Focusing on KPIs
Once we’ve got those estimates, clients often want to hit specific numbers, like more clicks, higher engagement, or better return on ad spend (ROAS). But there’s a problem. The more we chase those numbers, the more we risk losing sight of the bigger picture.
This is where the concept of Goodhart’s Law comes in: “When a measure becomes a target, it ceases to be a good measure.” Simply put, when we focus too much on hitting specific KPIs (like cost per click or ROAS), we start to make decisions just to hit those numbers—regardless of whether it’s the best strategy for the long-term health of the brand.
For example, let’s say a client’s campaign is focused on reaching a certain number of people. Over time, the client pushes for broader audience targeting to get more results. At first, everything looks good on paper—the numbers are high, and KPIs are being met. But the problem is, when you target everyone, you may stop reaching the people who are most likely to care about the product. This can lead to less meaningful engagement, and ultimately, the campaign’s effectiveness declines.
The Optimisation Trap
The “optimisation trap” happens when we make changes to a campaign to achieve a specific target—like getting more clicks or more conversions. But to do this, we often have to make compromises. Maybe we narrow our audience too much or focus too heavily on one goal, like driving immediate sales, instead of balancing it with long-term objectives like brand awareness or customer acquisition.
In this pursuit of short-term wins, we forget that marketing is a long game. The constant push to grow results can lead to diminishing returns, where the campaign starts plateauing or even declining. This often happens when agencies, under pressure from clients, try to manipulate strategies to keep up with rising expectations, rather than sticking to a strategy that delivers lasting impact.
So, What’s the Solution?
It’s easy to feel like we’re stuck in a cycle—constantly chasing numbers that, in the end, don’t reflect the true value of the campaign. But there’s a way out. The key is to shift the focus back to what truly matters: long-term business outcomes.
The problem with most estimates and KPIs is that they focus too heavily on short-term results, like clicks or sales, and don’t always account for the broader impact of things like brand awareness or customer loyalty, which might not pay off right away but are crucial for future growth.
Here’s what we should do instead:
Define meaningful objectives: Start with clear, business-driven goals. Instead of just chasing clicks or conversions, focus on what really matters for the client’s business. This could include things like building a stronger brand, increasing trust, or improving customer retention.
Balance short-term and long-term goals: While it’s tempting to focus on immediate results, it’s essential to balance that with strategies that contribute to long-term success. Sometimes, that means investing in brand awareness or customer engagement, even if they don’t lead to instant sales.
Be transparent with clients: It’s important to have honest conversations with clients about what’s achievable and why. Setting realistic expectations can help prevent the constant pressure to chase numbers at the cost of the overall strategy.
This is where the new model we’re introducing comes in. By shifting our focus from arbitrary targets to real business parameters, we can create a more sustainable and effective approach to marketing. Let’s explore how this model works and how it can help us make smarter decisions when allocating marketing budgets.
How Much Should Clients Spend on Marketing?
One of the core challenges of media buying is determining how much the client should invest in marketing. This decision isn’t always straightforward. It’s easy to fall into the trap of proposing a budget based on industry benchmarks or what we think will impress the client. But this approach doesn’t always consider the client’s unique financial situation or business objectives.
Our new model starts by answering two key questions:
- How much can the client afford to spend on marketing?
We need to understand the client’s current financial situation—what they can realistically invest without compromising their overall business health. This requires an honest assessment of the client’s cash flow, profitability, and financial priorities. - What are the client’s sales targets?
Every marketing campaign needs to be tied to clear business objectives, usually around driving more sales or increasing revenue. The model helps define these targets based on what the client wants to achieve and how much they hope to grow in a given period. From there, we can determine the marketing spend required to support those sales goals.
Allocating the Marketing Budget
Once we know how much the client can spend, the next step is deciding how to allocate that budget. Not all marketing goals are created equal. Some objectives—like increasing brand awareness or engaging with a new audience—might require more investment up front, while others, like boosting conversions or driving immediate sales, may demand more targeted spending.
This is where the model helps us prioritise marketing objectives by assigning a value to each goal. For example, if the client’s focus is on long-term brand building, we may allocate a larger portion of the budget to campaigns that drive awareness and engagement, knowing that these efforts will eventually lead to sales. On the other hand, if immediate sales are a priority, we might put more budget into direct-response campaigns or retargeting strategies that drive conversions.
Key Business Performance Parameters
To make these decisions, we need to understand some key performance parameters that affect the client’s business:
- Monthly Sales: We need a baseline for how much the client is currently selling, as this gives us an idea of the starting point for growth.
- Target Growth in Sales: This is the amount by which the client hopes to increase their sales through marketing efforts.
- Current Business Overheads: Understanding the client’s ongoing business expenses (without marketing costs) is crucial to knowing how much room they have to invest in marketing.
- Expected Changes in Overheads: Are the client’s costs expected to increase in the near future? This could affect their ability to spend on marketing.
- Average Transaction Value: Knowing the average amount spent per transaction helps us predict how much marketing is needed to achieve specific sales goals.
- Expected Changes in Transaction Value: Is the client planning to raise their prices or adjust their product offerings? This can impact how much we need to spend to hit sales targets.
Deriving Key Metrics from Business Data
Once we have a clear understanding of the business performance parameters, we can derive other important metrics that guide our marketing decisions:
- Current Gross Profit: Knowing the client’s profit margin helps us understand how much they’re actually earning after covering the cost of goods sold. This will guide decisions on how much to spend on marketing relative to their profits.
- Target Sales Volume: The number of units the client needs to sell to hit their sales target. This helps define the level of effort required to meet those goals.
- Target Number of Transactions: The number of individual transactions required to meet the sales volume target. This tells us how much traffic or how many conversions we need to drive.
Bringing It All Together
By aligning the marketing budget with business performance parameters, this model helps ensure that every dollar spent on marketing is working towards clear, measurable outcomes. Instead of simply chasing numbers for the sake of hitting KPIs, we now have a more strategic, financial foundation to guide our decisions. This model provides a way to:
Define realistic marketing budgets that are based on a client’s actual ability to afford and sustain marketing spend.
Allocate budgets effectively across different objectives based on their business value.
Tie marketing efforts to real business outcomes, ensuring that every campaign is aligned with the client’s broader growth goals.
The new model is a shift from arbitrary targets to a more thoughtful, business-driven approach to marketing. By starting with clear financial parameters, we can help clients make smarter decisions about how much to spend on marketing and how to allocate their budgets in a way that drives long-term success.
This approach not only helps us deliver more meaningful results for clients, but it also provides a clearer path to achieving sustainable growth. Rather than focusing on short-term wins or manipulating KPIs, we can help clients focus on the bigger picture—driving actual business growth and achieving their long-term goals. By shifting the conversation from “What targets should we hit?” to “What financial outcomes do we want to achieve?”, we can build marketing strategies that deliver true value.
Conclusion
The reality of marketing is that it’s messy and full of trade-offs. As media buyers, we are constantly caught in the pressure to meet KPIs, but we must remember that the ultimate goal is to drive meaningful business outcomes. By focusing too heavily on short-term targets, we risk hurting the long-term health of the brand.
We need to shift the focus away from simply hitting numbers and instead think about how our marketing efforts align with the client’s overall business objectives. Marketing is about more than just chasing KPIs—it’s about creating lasting value. If we can help clients see that, we’ll be doing more than just hitting targets—we’ll be building successful, sustainable campaigns.