Monday, January 17, 2011

Measuring Return On Investment

For the last several years, return on investment (ROI) has been "top of mind" for advertisers and non-advertisers alike. With nearly every company visit, discussion starts out with ROI. Marketers are searching for ways to measure return on investment for both print and electronic advertising. More than ever, perhaps due to expanding web options, marketers want to know if they're spending their ad dollars wisely.

Researching how to measure ROI all this time, I must admit that I've held on to some old metrics. For some that remember the old reader service card, ROI for print ads was measured by numbers of so-called "bingo card" inquiry returns. Then with web sites, ROI was measured by number of ad hits and links to advertisers' own web sites. In both cases, quantative results were the criteria.

Then, more recently, I had a "duh" awakening. To measure the impact and effectiveness of advertising and branding on a quantitative bottom line alone is a mistake. There are far too many facets of the success quotation. The value of reputation, relationships, brand awareness and buyer attitudes are impossible to measure by quantative numbers. ROI instead should be measured by:

... total sales revenue
... change in awareness of your brand
... change in market share
... change in buying pattern for your products
... change in intent to buy
... change in incremental sales revenue
... customer retention

How did I arrive at this revelation? Watching several NFL playoff games on TV this weekend, I viewed commercials for Sony, IPad, Verizon, Buick, Cadillac, Ford, Hyundai, AT&T, Reebok, Coca Cola, Pepsi Cola, Gillette Fusion, Budweiser, Dos Equis, even M&M's and more. While I didn't rush out to buy any of these products this morning, I might do so down the road. Their brands are certainly imbedded in my mind! In the end, branding is a life of its own.

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To share common sense lessons learned with 40-plus years experience in marketing, sales and as a B2B publisher.