Effectiveness vs. Efficiency: The Marketing Misconception
Sorin Patilinet
Senior Director Marketing Measurement Mars | Marketing Engineer | Wharton Guest Speaker | Strategic Advisor | Author of “Marketing Effectiveness -> Applying Marketing Science for Brand Growth”
Don't you think that we are overly obsessed with ROI?
We know that ROI typically involves cutting costs, optimizing spend, and improving how to place our financial bets. But here’s the other side of the coin: ROI or efficiency without effectiveness is meaningless.
I believe we should speak more about effectiveness than about ROI.
Let me explain the differences:
Effectiveness: The Impact Driver
Marketing effectiveness measures the real impact of a decision, most commonly in sales revenue today or tomorrow. It answers the fundamental question: "What results did our marketing efforts achieve?" While incremental sales are the standard, in some cases, brand share value or customer lifetime value are valid measures of effectiveness.
Efficiency: The Resource Optimizer
On the other hand, efficiency factors in the cost of attempting to achieve that impact. It’s not just about what was accomplished but how resourcefully it was done. Efficiency is typically calculated as Effectiveness ÷ Cost (ROI).
Maximizing effectiveness dramatically improves ROI at the same cost levels.
For most marketing activities, a positive ROI is a condition to play, but obsessing over ROI optimization will certainly hurt long-term growth.
We know that the best way to "fix" ROI is to cut investments. That mindset limits effectiveness, shrinks impact, and ultimately weakens your brand's potential.
By no means I am advocating to avoid ROI. Efficiency shouldn’t be ignored, but it follows effectiveness. When marketing is truly effective, efficiency naturally improves. It generates?business growth and positions marketing as a revenue driver, not a cost center.
Don’t chase efficiency at the cost of impact. First, drive real impact. Then optimize.
Effectiveness first, efficiency second.
What’s your take? Drop it in the comments.
Let’s talk.
Marketing Mix @ Circana (Formerly IRi) | Marketing Analytics | Data Science
1 天前I completely agree that ROI, while important, shouldn't be the sole metric of measuring marketing performance.?I believe a more balanced approach of prioritizing impact and then optimizing, is essential - improved effectiveness will lead to improved efficiency.
Senior advisor at OffPist Management
2 天前In Sweden we have developed an industry standard called the Effectiveness System that defines the 36 most important KPIs for marketing effectiveness. The system is supported by all industry bodies and to date we have trained over 4 000 marketing professionals on this concept. Our first principle is to highlight the difference between effectiveness and efficiency. We also advise against relying on ROI as a metric as this - is an efficiency metric rather than effectiveness - tends to correlate negatively with profit (unless you are very skilled at applying it)
Nice distinction - far too often glossed over.
Chief Client Officer at Teads
4 天前Grow your way to success or shrink your way to irrelevance !!
Co-Founder & Growth at Emotiva | AI for Creative Effectiveness at scale
4 天前Great point, Sorin Patilinet! The real challenge often lies in the culture of both individuals and companies. As a manager, achieving efficiency is widely recognized and valued within an organization, which brings a sense of accomplishment. However, striving for effectiveness requires a deeper transformation—one that pushes beyond comfort zones. While some may initially fear the shift, embracing effectiveness ultimately leads to greater impact, innovation, and long-term success.