One of the most pressing demands on marketers these days is the demand from finance and procurement departments to deliver a demonstrable return on marketing investment (ROI). It is the new reality. In simple terms R.O.I. is the calculation of profits minus costs, divided by costs – which should deliver a percentage figure.
There are issues with ROI that its critics delight in pointing out – one of the most significant issues is that it encourages short term thinking. Advertising often has an effect on consumers long after they are exposed to a message. Even in the Internet era sane people don’t jump online to order a packet of Gingernuts as soon as they see an ad promoting them. Advertising relies on memory – especially in categories like FMCG. So the metrics of success of a long running campaign are often incalculable – or results cant be necessarily be attributed to the most recent expression of a brand’s communications.
Percentages often don’t paint a clear picture. Prof Byron Sharp says “…ROI takes attention away from the actual return, in dollars. It’s the size of actual return that matters to shareholders…what matters is how effective it is, not how efficient it is. An ROI of 150 percent on a million dollar campaign is $500,000, while an amazing 500 percent ROI on a $10,000 campaign is still only $40,000.) This effect tends to encourage smaller campaigns and encourage cutting marketing expenditure…it’s possible to deliver infinite ROI by slashing advertising to zero.’
Even accounting for our obvious bias – we don’t recommend this strategy – in the current marketing environment it makes sense to pulse activity throughout the year. Even Prof Sharp recommends avoiding flamboyant campaign launches then retreating to your planning cave to ‘plan’ your next blockbuster launch. As a general principle it makes more sense to divide your budget roughly by 12 months and be mentally available to your customers throughout the year – stimulating salient memories as they make their choices. This can reconcile the ‘short-termism’ argument with brand growth. Our Oxygen™ campaign model follows this approach – which has been successfully deployed by Kellogg’s New Zealand. According to Frankie Coulter, marketing manager at Kellogg’s this approach has delivered exceptional ROI for the featured brands with sales and market penetration increasing to reverse a long trend of decline.
Many of our clients engage BrandWorld to undertake specific, tactical programmes and promotions with a clear beginning and end. Not short sighted – but with specific tasks to be achieved. Our highly effective communication model makes it simple for them to improve their ROI, build brand health while growing sales, market share or warm leads.
Another aspect of ROI measurement that is often forgotten is the cost of the time and personnel inputs – our systems reduce the number of moving parts in any campaign to maximise your ROI and leave nothing to chance.