Demand Capture and Demand Creation Model
Measure both harvested demand and newly created demand to sustain growth.
- Difficulty
- Moderate
- Time to result
- ~months to results
- Steps
- 4
- Confidence
- 96%
This model separates marketing into two complementary jobs: capturing demand that already exists and creating demand among people who are not yet interested. Direct ROAS reveals how efficiently paid channels convert identifiable prospects, but it does not show whether the underlying market is growing. Incrementality measures the additional signups or revenue appearing across direct, organic, and other channels when demand-generating campaigns run. Leaders monitor both because capture eventually saturates and trends toward a one-to-one return. By beginning demand creation before that point, a company expands the pool that its direct-response programs can later convert and avoids becoming trapped by a shrinking set of highly attributable customers.
Origin
Extracted from Marketing Against The Grain during a discussion of why ROAS alone cannot support sustained market growth.
Core principles
- 01ROAS primarily measures the capture of existing demand.
- 02Sustainable growth requires creating demand among new audiences.
- 03Direct attribution and indirect incrementality answer different questions.
- 04Demand creation must begin before demand capture reaches saturation.
How to run it
- 1
Measure Existing-Demand Capture
Calculate direct ROAS from attributable clicks, conversions, acquisition costs, and customer value. Establish how efficiently current campaigns harvest people already inclined to buy.
Pro tip Separate prospecting from retargeting so strong returns from known audiences do not conceal weak market expansion.
Watch out A high aggregate ROAS can be produced by concentrating spend on people already familiar with the brand.
- 2
Measure New-Demand Creation
Use controlled incrementality studies to estimate how many additional customers or dollars appear because broader campaigns are active.
Pro tip Inspect increases across direct, organic, and other channels rather than expecting every influenced customer to click the original ad.
Watch out Do not interpret ordinary correlation as incremental impact without a credible comparison group.
- 3
Locate the Saturation Point
Monitor marginal returns as spending rises and identify when the available profitable demand is nearly exhausted.
Pro tip Use controlled spend increases or burst tests to estimate the channel ceiling.
Watch out Waiting until ROAS reaches one-to-one leaves too little time to build a demand-creation engine.
- 4
Invest Before Saturation
Fund incremental and brand activity while direct acquisition is still healthy. Let newly created demand enlarge the pool available to direct-response campaigns.
Pro tip Treat demand creation as capacity expansion rather than as a substitute for efficient demand capture.
Watch out Do not cut every campaign that lacks immediate click-level attribution.
In the wild
A SaaS company earns a strong direct return from search ads but sees marginal acquisition costs rising. It keeps profitable search running while introducing social video in selected markets and measuring whether total signups increase relative to untreated markets. The additional demand later produces more branded searches and direct-response conversions.
→ The company preserves efficient capture while building a larger future market.
The episode cites an analysis claiming Nike shifted resources toward programmatic and performance marketing aimed at serving existing demand. That allegedly favored activity that was easier to attribute while weakening investment in harder-to-measure demand creation.
→ The example illustrates how measurement convenience can displace market-building activity.
Common mistakes
Treating ROAS as the Whole System
ROAS can accurately describe demand capture without revealing whether the company is creating any additional demand.
Waiting for Complete Saturation
Demand creation takes time, so beginning only after direct returns collapse creates a growth gap.
Confusing Retargeting With Market Growth
Repeatedly converting familiar audiences can improve reported efficiency while leaving the serviceable market unchanged.
Is it for you?
Best for
It is best for growth-stage companies balancing performance marketing with expansion into new audiences.
Not ideal for
It is not ideal for organizations without enough conversion volume to distinguish incremental changes from normal variation.
From the transcript
“I think ROAS is a metric on how efficient you are at capturing existing demand. The other metric you need is how efficient you are…”
“Like the ROAS, there is no world in which at some point someone's ROAS doesn't go to one to one.”
“So you actually are better doing that before you've ever saturated that first bucket.”
From the episode
ROAS Is a Trap: How Smart Marketers Really Drive Growth