For years, marketers have championed ROMI — return on marketing investment — as a key measure of success. But for one Fortune 100 CEO, ROMI stands for something very different: risk on marketing investment. 

In a candid conversation, he shared why traditional metrics fail to address the critical uncertainties of marketing spend and how a shift in mindset is essential for navigating today’s volatile landscape. His insights reveal a pressing need for accountability, precision and smarter strategies to optimize go-to-market efforts and manage opportunity costs.

A CEO’s perspective on investment effectiveness

Risk on marketing investment. When this CEO first said it, I thought, “Someone doesn’t just come up with that.” He was clearly aware of marketing language and had considered it. I asked him to describe more of the thinking behind his ROMI riff. I knew he had it.

“First of all, what passes for ROMI is mostly B.S. by people who are trying to solve a problem without knowing how. Part of this is the way we refer to ‘ROI’ in business, which, unfortunately, is just a historical efficiency metric that assumes that what’s being discussed was effective. But if we look around, it’s pretty obvious that a lot of what we do in companies is not effective. Moreover, ROMI is worthless because it tells guys like me nothing about what we can expect and how we can alter course if that becomes necessary.

Second, as far as risk goes, let’s start with opportunity cost. This is the idea that you can only spend a dollar or a euro once, and you want to spend it in the most effective way. When you don’t, you not only lose all or part of the expense, but you lose that better investment that you could have spent it on. 

Our company is spending a bit more than a billion dollars in 2024 on our go-to-market. Some substantial part of that number is necessary. I mean, you can’t run a business that can’t sell your products, and there’s a basic threshold expense that’s required, and it’s usually not a trivial amount. But what about the rest?

Keeping with that idea, what if 30% of the rest of it is ineffective, basically a waste? What if 30% of everything is just a waste? Using a company of our size as an example, that sort of money is very significant. Our shareholders would probably love to get some of it as part of our earnings per share. 

We need to identify and eliminate significant pools of waste, and then we must spend that money in far more effective ways. Like hiring new people that can add awesomely to our business. Like opening new markets in countries where we are not now in business. 

When we think about the upside of opportunity cost, it often means the opportunity cost on ineffective spend just starts at 2X. If we are able to spend it with much better effectiveness and leverage, the swing in our opportunity cost could be a lot more than 2X.”

This sums up the thinking of many F2000 executives I’ve interviewed and probably many others I don’t know. It’s a C-suite perspective that’s not limited to GTM. They talk about other functions in much the same way. However, the dark jokes about marketing and sales have become memes in many C-suites.

Why? It’s because their sense of risk continues to spike. Politics, wars and rumors of wars, AI, social division, unhappy employees, spiking opex, proliferating legal issues, challenging investor sentiment, debt, debt, and more debt… you name it. C-suites have more and more reasons not to want to assume anything anymore. They literally can’t afford it, given the shareholder scrutiny in many companies.

Dig deeper: What are marketers’ investment priorities as 2024 winds down?

From demand gen to brand trust: A strategic shift

In another part of the interview, I asked the CEO how he thinks about brand in the context of customer decision risk.

“It’s necessary to keep people aware of us, but that’s just the ticket to ride. What they think about us is what matters. Reputation. Are we good to do business with? Can they have confidence in us and our products? That’s what matters.”

I know that brand is making a comeback in B2B after years of demand generation. The brand guys must grok why demand gen is in crisis and being gutted here and in other companies: Demand never showed that it worked. When we look back on all the money poured down the demand generation rathole, it makes everyone I know very queasy.

If the brand guys just start throwing money at it without any way to demonstrate its value, for real, then they will end up on the same ash heap. That would be bad. Brand and reputation are central. That’s why our finance team is leading a combined effort to learn how to understand, forecast, prove, and optimize our GTM efforts.

We can’t leave this to marketing and sales, or any other function. I realize that will be heard as a bit of a slam, but the reality is that we haven’t been getting what we need to know. We don’t know if we are spending the right amount of money in the most effective ways, particularly given external factors we don’t control. That acceptance of ‘not knowing’ is not going to continue for much longer.”

Dig deeper: How marketing leaders can transform marketing from a support function to a growth driver

Rethinking ROMI: Risk and opportunity in marketing investment

Dealing effectively with risk will be pivotal to your success in 2025. And like everyone else, the math is your only way forward when calculating the network of probabilities and performance — and the associated risk profile — of your part of the company.