Kim Medynsky, MBA, is principal at Medynsky & Associates
Since starting this column, I have come to realize that I have opened up Pandora’s box. In many ways, it’s because of the perception that true ROI cannot be measured. Well, I am here to say that it is possible. I have been helping clients measure ROI in a different way that empowers marketers.
Let’s start with the basics of marketing. Who is your customer? Who is your prospective customer? Are they the same group? How do you really know?
I have been hired by several well-known brands to answer those questions. Interestingly, it seems like the two customer groups have very distinct characteristics. Some clients have disputed the data because they believe they know their customers. I have observed that there is sufficient data about the current customer group, but it doesn’t necessarily represent the prospective customer and their changes in behavior and preferences in a rapidly changing world.
A case in point, a client wanted to understand why their product launch campaign did not yield the success they forecasted. My conclusion pointed to a new dimension to consider. The campaign was aimed at a specific audience profile, but the prospective customer did not represent that profile. The new product and the campaign were at risk because of the misalignment. And, for the record, the client conducted extensive research before developing the product and the campaign. How many marketers can say with certainty that their campaigns are motivating purchases with the desired strata of targets? And, is the prospective audience the same as the people who buy your product? Or better yet, as you scoped for your campaign strategy?
Since the prospective customer is a moving target, it only makes sense that we need a better understanding about who they are while the campaign is underway. How many marketers are conducting in-campaign research to understand the people who interact with the brand (not just their behaviours) while the campaign is in flight? And, what actions are taken with the data in order to change the results and optimize the entire campaign?
On the topic of product launches, I am always amazed to see the sophisticated brands launch an array of new products, allocate budgets to support only flagship brands, then wonder why the other products in the launch did not succeed. The reason for delisting a product in the CPG world could be the result of budget misallocation. An integrated ROI plan for the entire launch campaign would be helpful for the long-term success of all new products. Otherwise what is the point of launching new products if people don’t know about them, and we end up delisting those products? (Okay, that’s another discussion)
The second part of the ROI equation is looking at effectiveness of the entire campaign.
There is speculation that traditional media is on the way out, and I have case studies that prove otherwise. Just like the failed product launches, we are jumping on the digital highway and moving budgets to digital, but where does the prospective customer fit into the equation? I have worked with clients that moved their budgets to digital, and after deploying our ROI methodologies we quickly learned that the prospect supported traditional media more than online. Who is really the prospective customer?
The third part of the ROI equation is the need to optimize the entire campaign in near real-time. (Not just the digital elements)
I keep hearing that it’s too difficult to optimize the entire campaign in flight, or too much work. Or both. Well, I am here to say that it should be an industry standard to assign near real-time ROI metrics to all elements of the campaign. Otherwise, it’s really not an accurate comparison between digital and traditional media, and we’re living in the dark ages. As for the notion that it’s too much work to look at the entire campaign, I would say that if we are relying on someone else to give us their data and compute it into our terms, then I agree it is too much work. Marketers are stretched too thin already. But, are we spending our time wisely?
For anyone who has worked in an advertising agency environment, you will be familiar with an underlying formula of Efficiencies + Billable Hours = Successful Career. But, when you switch to the brand side, there is nothing to help us prove that one-hour of the marketer’s time generated thousands in revenue for the brand. Some people will cringe at the idea of logging into a system to track the marketer’s hours on a project, but here’s the upside to consider. It will show if the marketer is being pulled in too many directions or analyzing data or trying to prove that what they are doing works.
The fourth part of ROI as you have already figured out, is the ROI of our time as marketers.
If you looked at your salary in terms of billable hours, how much did you contribute to the bottom-line? Are you able to accurately assess where you should be focusing your efforts? And better yet, your return on investment in the company so it’s the best outcome for your career?
Capturing ROI in the four parts that I have mentioned is really just the start of creating a successful model, and another way to take control of our destiny.
How do you measure ROI of your entire spend? What is your ROI doing for your career?