Years ago, in a post entitled Strategy Versus Tactics, I the somewhat controversial claim that “most companies don’t want strategies. Most companies want tactics.” In it, I argued that strategic planning is often viewed as a cost centre, or a necessary evil in a series of steps where the payoff is in the tactical executions that drive revenue.
Well, here we are almost fifteen years later, and sadly, this is more true than ever. We’re seeing companies slashing long and even mid-term planning, firing their entire strategy and insights teams, and pushing for faster, quicker, lower-funnel tactical executions with no vision beyond the immediate results.
Why is this? Is it because they’re against strategic planning at a fundamental level? Hardly. But it is understandable that, with marketing budgets more strained than ever, the fast-moving pace of the business cycle, and companies trying to maximize ROI, strategy often gets the short shrift.
And it’s not hard to understand why.
Strategy is not a performance channel
You can’t measure strategy in tactical metrics like return on ad spend, cost per conversion, impressions, sessions, or sales. Not directly, anyhow.
That makes it often seem like the dollars invested in strategy are not performing. And it tempts businesses to move money out of strategy and into low-funnel tactics that are much closer to that conversion point.
A house without a foundation will crumble
But this is a mistake in so many ways.
See, a good strategy is like a solid foundation of a house. You dig it, you pour it, and it holds up the entire structure, yet it remains invisible. Ideally, you’ll never see it again. Unless cracks start to appear, in which case you’re in a world of trouble as the house above ground starts to wobble.
Strategy, when done well, is invisible. It will never be publicly launched, or air on TV, or go live on social media. It usually lives in the form of confidential documents, briefs, brand guidelines, or internal presentations that inspire and power every single execution. If it’s done right, it will never be seen. But it will breathe life into everything that is.
(In fact, strategy is sometimes so invisible that it becomes a real challenge for those of us who build them to demonstrate our chops, since we usually can’t share confidential strategy documents in a portfolio. But I digress.)
Pulling dollars out of strategic planning and shifting them into execution is messy. It leads to substandard work that lacks cohesion, vision, or insight. It leads to duplication, to money wasted on trial and error, and to confused customers who don’t understand the brand and what it stands for. Without a solid strategy, every single one of those executions will cost more to produce and generate less revenue, both individually and — more crucially — collectively.
So how do you measure the ROI of strategy?
Strategy can and should be measured in terms of return on investment. The key is to shift the metrics you’re using. Strategy saves money by NOT spending money on:
- duplication due to work being done in silos;
- media targeting the wrong audiences;
- production of sub-standard or ineffective creative;
- campaigns that are not true to your brand;
- time spent playing competitive catch-up rather than forging your own leadership path.
And strategy generates revenue by improving the performance of your tactical executions:
- reaching the right people
- at the right time and place
- with the right message
- using powerful, impactful creative
- and following through with a seamless conversion journey
So rather than asking if you can afford to invest in strategy, ask yourself this: Can you afford not to?