Thursday, February 26, 2009

the ROI of the tiger

Pondering over the FuturelabReconsidering the Advertising Industry’ report, and in particular chapter 5 ‘Walk the Digital Talk’

The chart below represents the view of a panel of 200 CMOs, polled by Sapient, who were asked about the skills they were looking for in their agency. My initial reaction was one of ‘if only ‘twere true…’

Futurelab also speculate:
‘Digital Agencies often miss depth in communication and strategy….Many “new media” agencies outskill and outthink traditional houses on the digital front. But they often lack the broader perspective that comes with true 360°, ROI based thinking….they chase the technology rather than look at the end customer’s actual media consumption. And all think of digital campaigns rather than using digital as a platform for relationship building.'

This segues neatly onto the ROI of the tiger…

In a recent post Collaborate Marketing's James Cherkoff quotes Nick Gonzales from Inside Facebook:

‘There’s currently a metrics vacuum in the social media space and it’s being filled with traditional metrics pulled from search and display. The only problem is that these metrics don’t make sense for brand campaigns in social media.’

I would argue that it’s even worse than that, in many cases its still the largely unmeasureable traditional advertising that’s viewed as more effective despite the fact there’s not even a ‘conversion event’ ie click through.

James also addresses the ROI question with regard to social/engagement activity.
‘Compared with what?’
With that in mind, allow me to relay to you a true story.

I recently pitched a digital engagement idea which would have delivered:
- Connection with a large core group of BrandX’s most passionate advocates
- Connecting those fans with each other in the brand’s space
- Invaluable data from the above and appropriate permission to continue to engage
- 6 months of activity where the advocates create and share content
- The ability to leverage that content for SEO
- A strategy to reduce dependence on paid search over time
- Something the advocates would ‘advertise’! (ie viral by nature)
- A permanent activity based asset for the brand to reuse.
- The activity was contextual to NPD delivering a reason to buy.
- NO MEDIA SPEND (£0) (zilch) (not a fucking sausage)
- All for the same price as the MEDIA ONLY of a one month press ad across half a dozen national titles.

Whilst the idea was well received the client bought the press ad instead.
Here were those metrics, something like 68% OTS (of 5.5m) at 2.9.
That means 68% of the ‘target audience’ might ‘see’ the ad about 3 times in that month.
These numbers, of course, identify reach only and not any depth of engagement.
Head => brick wall.

With nowhere else to turn I consulted the oracle.

‘The fundamental issue is that it is very difficult to enumerate an accurate "gain from investment" when it is clear that a lot of the new marketing has an almost osmotic effect and works indirectly.
And the defence is this. If the "cost of investment" is low, as is clearly the case in much of the new marketing, then it is equally clear that only a small impact on revenues will generate an impressive ROI. ‘

The upshot is; social media and engagement activities can only be measured in the context of contribution to the overall effectiveness of all the interdependent marketing activity, surely?

The quest continues….

One of Cherkoff’s commenters added:
‘Do you think Nike are worried about the metrics on Nike Plus?’
Totally agree, but can I just state for the record that if I hear Nike+ rolled out one more time as a case study I will literally chew my own leg off and gouge my left eye out with a spoon.

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