Marketing as an Investment, Not an Expense: Shifting the traditional view of marketing from a cost centre to an investment that generates quantifiable returns
Topic: return on investment (roi)
Introduction:
Marketing, in itself, represents a dynamic exchange of goods & services in the marketplace. In the modernized era, marketing has become a necessity especially for retail businesses to build brand equity, customer retention & long-term growth. The true identity of marketing lies between Cost vs Investment, so it’s time to draw a meaningful distinction between the two.
Before hanging our widespread thoughts into it, we’re going to differentiate between cost & investment. Cost refers to the spending on a commodity that may or may not deliver direct benefits to the business. Investment refers to the expenditure that is expected to yield measurable returns over time. In marketing, those returns are variably known as ROI (Return on Investment).
As a Cost :
75% of the consumers are likely to purchase from those brands who deliver personalized marketing content.
— By Deloitte Marketing Report 2025 In the late 1980s, marketers tried to reinforce an “idea” for the brand & that idea must be a
differentiator from that of the competition. However, due to the intense competition in the growing globalised world, brands have adopted a similar approach to marketing, i.e., building/endorsing their brands with reputed celebrities/influencers, which may lead to marketing being treated as a cost expense.
CASE: Pepsi India – Celebrity Over Substance – Heavy spending on celebrity endorsements (e.g., Virat Kohli, Ranbir Kapoor) without aligning the message with consumer behaviour. Spent around ₹100+ crore in ad/endorsement campaigns. Sales dropped from ₹5,800 Cr (2015) to ₹4,500 Cr (2020).
Today, many companies are rushing to launch new products rapidly, prioritizing quick market penetration through flash sales, discount campaigns, and trend-driven influencer marketing. While this strategy may generate short bursts of attention or sales, it often lacks: Brand consistency, Customer loyalty, Sustainable ROI
CASE: Mama earth – From Hype to Cost Burden – Done Quick product launches and flash sales across e-commerce platforms through marketing which costs repeat purchase rate fell from 42% to 31% (2021–2023) and marketing expenses rose which may make marketing assess like a cost.
As an investment:
CMO who view marketing as an investment outperform their peers in brands equity, growth and customer retention
– By CMO Gartner Strategic
The digital transform has lead marketing shifted to it as a performance metric which easily tracks profitability, predictability and customer retentions.
| Terms | What it Measures | Why It Proves Marketing is an Investment |
|---|---|---|
| Customer Acquisition Cost (CAC) | Cost to acquire a customer | Trackable efficiency — lower CAC = better ROI |
| Conversion Rate | Visitors who become leads/sales | Shows the effectiveness of a strategy |
| ROAS (Return on Ad Spend) | $ earned for every $1 spent on ads | Performance indicator of campaign success |
| Lead-to-Customer Rate | % of leads who convert into sales | Shows quality of leads, not just volume |
Modern marketing is still no longer just about visibility. In a world overwhelmed by content, offers, and noise, what truly cuts through is a brand’s ability to tell its story — not just once, but
consistently, authentically, and meaningfully. Storytelling allows brands to humanize their identity, giving consumers a reason to care, remember, and engage. It transforms a transactional experience into an emotional one. And it is this emotional resonance that sets the stage for loyalty, advocacy, and sustained revenue.
CASE: Cadbury Dairy Milk “Kuch Meetha Ho Jaye”- The campaign positioned Dairy Milk as a part of every small celebration — birthdays, festivals, even exam results. This emotional positioning redefined consumer behaviour, making Cadbury synonymous with happiness and moments of joy.
Conclusion:
Marketing must continuously transform to create brands and business models that are relevant in terms of adding value, and different in a competitive context. Marketing should be integrated into the core of the business, not relegated to the periphery. Ultimately, it is the brand identity, and associated reasons for purchase due to those aspects of identity, which is largely responsible for forming the company’s overall value. Every business function supports the brand, and plays a role in building that success, since brand success is thereby a collective effort. Regardless of the business you operate, what has the real potential to make the sale is what people think about the brand and what they feel about it, and whether they care enough to pay for it instead of all the other options.
FAQ’s
Q1. What is Return on Investment (ROI) in marketing?
Return on Investment (ROI) in marketing is a financial metric used to measure the efficiency of a campaign. It calculates how much revenue is generated compared to the money spent. For example, if a company invests ₹1,00,000 in an ad campaign and earns ₹5,00,000 in sales, the ROI shows the profitability of that effort. Businesses use Return on Investment (ROI) to make data-driven decisions and avoid treating marketing as a blind expense.
Q2. Why is Return on Investment (ROI) important for businesses?
Return on Investment (ROI) is crucial because it separates successful campaigns from unproductive ones. Without ROI analysis, businesses may keep pouring money into strategies that don’t deliver real value. By tracking ROI, managers can identify which activities build revenue, customer retention, and brand loyalty. Ultimately, Return on Investment (ROI) proves that marketing is not merely about visibility—it’s about measurable outcomes.
Q3. How do you calculate Return on Investment (ROI) in marketing?
The basic formula for Return on Investment (ROI) is:
ROI = (Revenue – Marketing Cost) ÷ Marketing Cost × 100
For instance, if you spent ₹50,000 on a digital campaign and earned ₹2,50,000 in revenue, your ROI would be 400%. A higher Return on Investment (ROI) percentage signals more effective use of resources. Many firms also use advanced models like multi-touch attribution to capture ROI across complex customer journeys.
Q4. What is a good Return on Investment (ROI) benchmark?
A good Return on Investment (ROI) varies across industries. In retail, a 5:1 ratio is considered strong, meaning for every ₹1 spent, ₹5 is earned back. In SaaS, benchmarks might differ because of subscription revenue models. A healthy ROI benchmark ensures businesses maintain profitability while scaling. If Return on Investment (ROI) drops below 1:1, it means the campaign is costing more than it earns.
Q5. How does Return on Investment (ROI) relate to Customer Acquisition Cost (CAC)?
Return on Investment (ROI) and Customer Acquisition Cost are closely connected. If CAC is high, ROI tends to shrink, since acquiring each customer consumes more budget. For example, if you spend ₹5,000 to acquire one customer but their lifetime value is only ₹4,000, the ROI becomes negative. Lowering CAC through better targeting or automation increases Return on Investment (ROI).
Q6. Can Return on Investment (ROI) measure brand awareness campaigns?
Yes, though indirectly. Return on Investment (ROI) for brand awareness campaigns doesn’t always translate into immediate sales. Instead, businesses evaluate ROI by tracking website traffic, social engagement, and growth in customer inquiries. Over time, awareness campaigns often build trust, which eventually improves Return on Investment (ROI) when these prospects convert into loyal buyers.
Q7. What digital tools help track Return on Investment (ROI)?
Several tools make it easier to calculate and monitor Return on Investment (ROI). Google Analytics measures traffic and conversions, HubSpot connects campaigns to revenue, and Salesforce links marketing efforts to sales data. These platforms help companies see whether ROI is increasing or declining across channels, ensuring accountability. Choosing the right tool ensures Return on Investment (ROI) is tracked accurately.
Q8. How does storytelling improve Return on Investment (ROI)?
Storytelling transforms ordinary campaigns into memorable experiences. For example, Cadbury Dairy Milk’s “Kuch Meetha Ho Jaye” campaign positioned chocolate as part of celebrations, driving both emotional connection and sales. By making people feel connected to the brand, Return on Investment (ROI) rises because storytelling boosts both short-term sales and long-term loyalty.
Q9. Why do some campaigns show negative Return on Investment (ROI)?
Negative Return on Investment (ROI) occurs when marketing expenses exceed revenue. This can happen due to poor targeting, lack of differentiation, or overspending on celebrity endorsements. For example, Pepsi India’s reliance on star endorsements didn’t align with consumer behavior, causing ROI to drop. Identifying these gaps early prevents long-term financial losses.
Q10. How does Return on Investment (ROI) affect budget allocation?
Return on Investment (ROI) directly influences how businesses allocate resources. If social media ads show higher ROI than print campaigns, funds can be shifted accordingly. This ensures money isn’t wasted on low-performing channels. Over time, Return on Investment (ROI) helps businesses develop smarter budgets that maximize profits while reducing risk.
Q11. What role does personalization play in Return on Investment (ROI)?
Personalization increases engagement. Campaigns tailored to customer preferences achieve higher conversion rates. For instance, email campaigns that address customers by name or suggest products based on past purchases often yield better sales. This leads to a stronger Return on Investment (ROI), since more customers respond positively to personalized marketing efforts.
Q12. How often should businesses track Return on Investment (ROI)?
Return on Investment (ROI) should be monitored regularly. Monthly tracking helps optimize ongoing campaigns, while quarterly reviews provide a big-picture perspective. For seasonal businesses, ROI analysis may even be weekly during peak times. Consistent monitoring ensures Return on Investment (ROI) remains aligned with business objectives.
Q13. Can Return on Investment (ROI) predict long-term growth?
Yes, consistent Return on Investment (ROI) indicates sustainable strategies. If a campaign delivers positive ROI repeatedly, it suggests customers are engaging with the brand long term. This consistency builds brand equity and increases lifetime customer value, ensuring business stability and expansion.
Q14. How do discounts and promotions impact Return on Investment (ROI)?
Discounts often boost short-term sales but shrink profit margins. If misused, they can reduce Return on Investment (ROI). For example, flash sales may attract bargain hunters who never return. However, when applied strategically, promotions can enhance ROI by generating volume and introducing new customers who eventually become loyal.
Q15. What future trends will shape Return on Investment (ROI) in marketing?
The future of Return on Investment (ROI) will be driven by AI, predictive analytics, and automation. These technologies will allow real-time ROI tracking and more accurate attribution of revenue to campaigns. For example, AI-powered platforms can predict which channels will yield the highest Return on Investment (ROI) before businesses even launch campaigns.
Penned by Rishabh Kumar
Edited by Zainab Shaikh, Research Analyst
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