Marketing ROI Fallacy
The Marketing ROI Fallacy is the mistaken belief that maximizing ROI should be the primary goal of marketing. In reality, maximizing ROI inhibits growth because it forces you to spend only on the 'cheapest' conversions (low hanging fruit). The true goal is to maximize *Total Profit* (dollars in the bank), which often requires accepting a lower ROI on higher spend volume.
The Short Version
You can't pay rent with ROI percentages. You pay rent with profit dollars.
Prerequisites
The Tiny Profitable Business
You optimize for 10x ROAS. Your business shrinks to $10k/month revenue.
Your competitor accepts 3x ROAS and scales to $10M/month revenue. They capture the market while you capture a high score on a dashboard.
How it works
Calculate Total Contribution Margin at current spend
Model scenarios with lower efficiency but higher volume
Choose the scenario with the highest absolute dollar profit
Common Misconceptions
Killing a campaign because its ROAS dropped from 4.0 to 3.0 (even though it drove more profit)
Judging new channels by the efficiency of mature channels
Ignoring the Law of Diminishing Returns
Frequently Asked Questions
QShould I ignore ROI?
No. ROI must stay above your break-even hurdle rate. But maximizing it essentially means refusing to scale.