Tag Archives: ROI

ROI Is Dead — Long Live ROI

“Some things that count can’t be counted;
some things that can be counted don’t count” – attributed to Einstein

MBAs, accountants, financial analysts, and many others have been trained to evaluate activities by their Return on Investment (ROI). This has often been honored but ignored. Particularly in marketing initiatives such as mass media advertising. In this case, the often large expenditure is either accepted of faith or evaluated against questionable criteria such as recall.

The issue of ROI returns when asking questions such as should you mount social media initiatives such as blogs, wikis, or a presence on Twitter. The ROI question was prominent at this mornings Social Media Breakfast. The good folks at HubSpot, have provided a video of the talks.

A broader and I think more appropriate question is what is the value of a social media (or any other program)? This begs two kinds of questions – relating to benefits and costs. Some authorities such as David Scott
Wish to finesse the question entirely. At a recent seminar I attended, he asked “what’s the ROI of putting on your pants?”

I think the question or something like it deserves an answer and you should expect it to be asked.

There are a variety of conventional and emerging ways of tracking traffic, repeat visitors, time visiting, mentions, searches, etc. Of course, it always pays to ask customers how they found you. In aggregate these are more comprehensive than measures of traditional advertising, but not as compelling as measures of direct response advertising.

Costs for new media can and generally be far lower than traditional media. A viral video on YouTube need not and generally should not have the same lavish production values or costs as that for a 30 second prime time spot. The key to mew media success is rapid experimentation with low cost programs. Low cost does not mean free. The person who blogs, follows twitter, maintains your Facebook page, etc. could always be doing something else. Managers will always have to use judgment. Reasonably designed tests of social media should be cheap enough that they approach the Nike test of “just do it”.

TV or Not TV

One of our consistent themes has be lack of enthusiasm for television advertising. This is not just the curmudgeon in us. Although TV can be cost effective to reach large numbers of viewers and useful to introduce or support a brand. However, TV campaigns are usually structured so they are difficult to evaluate. The commercials can be expensive to produce and difficult to target to your market.

Traditional ad agencies have not helped and often sacrificed accountability in pursuit of creativity. Senn and Fallon’s interesting but unconvincing apology for ad creativity, Juicing the Orange, continues in the wrong direction. Fallon produced the memorable herding cats Superbowl ad a few years back. Though the production was memorable, viewers couldn’t remember the sponsor or that its business had to do with the ad.

What’s a marketer to do? An intriguing option is provided by online agency, Spot Runner. They deliver three benefits, which make TV at least worth a test – cheap yet professional production, easily targeted media buying, and convenient detailed reporting.

Spot Runner offers extremely low costs through web based automation. A full service ad agency can charge tens or hundreds of thousands for a custom produced TV commercial. With Spot Runner, you choose a generic commercial from a library of several thousand and then customize it for your product or business with your logo, graphics, offer, and a professional voice over. The result looks like the real thing rather than a homemade ready for YouTube spot. This costs all of $500 to $750 depending on the amount of customization. The ad can, and usually should, display trackable information such as a unique phone number, URL, or email address.

Once you have a commercial, where do you run it? Spot Runner has an automated media buying process, which allows targeting as precisely as individual zip codes as well as specific times. The process is roughly similar to creating ads through Google’s AdWords. Spot Runner’s appears easier for the novice TV advertiser. Unlike Google, you can call Spot Runner with questions and problems.

Does this mean that TV should be part of your marketing mix? It does mean that if you have $1500 to $2000 for production and a media buy, you can find out.