ROAS and ROI Fall Short, "Will Send You Broke," Says Murmur’s Dave Levett

The days of relying on return on ad spend (ROAS) and return on investment (ROI) as definitive measures of marketing success are over, said Dave Levett, managing director at Murmur.

Speaking candidly at SXSW Sydney on Monday, Dave explained that these traditional metrics fail to account for long-term brand building and the diminishing returns of short-term digital campaigns. Instead, marketing mix modelling is now the go-to tool for marketers who want to maximise both efficiency and effectiveness.

"One of the key problems marketers have at the moment is differentiating between marketing effectiveness and efficiency," Dave said.

Marketing effectiveness relates to achieving business objectives, while marketing efficiency focuses on how quickly and cost-effectively those objectives are met.

"The first problem with return on investment is that it only focuses on current revenue and does not account for future potential."

He emphasised that traditional metrics often overlook the significant benefits of long-term brand building, which can yield double the profit compared to solely focusing on short-term returns.

"You need to put 40 to 60% of advertising into building a brand that drives future revenue," he said.

He warned that focusing exclusively on short-term metrics could be detrimental to marketers' success.

"Return on ad spend is really 'reckless overstatement of ambiguous existence'," Dave said.

Dave argued that marketers need to consider a more holistic approach, such as marketing mix modelling, to assess their campaigns' impact accurately.

Marketing mix modelling is a key service offered by Murmur. It involves statistical analysis that quantifies various marketing variables and their influence on performance.

“It helps to understand how different marketing elements — like pricing, promotion, and distribution — affect sales," Dave explained.

"In a world where cookie tracking is increasingly restricted, and many users are not being captured in reporting, it’s crucial for brands to adopt methods like marketing mix modelling.”