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‘Beware ROI’ was one of the warnings from Les Binet and Peter Field at the launch of their latest research ‘Media in Focusgan’ in June 2017. Measuring it is all very well, but how can you use that knowledge to optimise marketing investments. John Webb, Managing Partner at EffWorks partners Gain Theory, puts forward the approach that they use to help their clients avoid the ROI trap.

The raison d’etre for the majority of Market Mix Modelling agencies is to calculate the marketing return on investment, or ROMI.  Gain Theory takes a different approach – knowing the ROI is nice, but does little to solve the pain points of our customers –how to optimise marketing investment, the allocation between media channels and to ensure that all touchpoints are working coherently.

This article originally appeared on www.gaintheory.com

As one Marketing VP recently said in an independent CMO survey: “MMMs provide some insight into making better investments, but that is still fairly one dimensional”.

Because we start from a different position – dynamic improvement rather than static reporting – our approach is also different.

The common approach to media impact

John Webb will be speaking at EffWeek 2017, presenting a new green paper on measurement strategy

By far and away, the most common approach to estimating the impact of media is to use an ad stock.  This may largely be seen as taking the ratings that your target audience had an opportunity to see and then decaying them.  Using a decay allows the media to be tested for an immediate effect, as well as an impact over the medium and longer term.

Now, this approach is fine if you are only concerned with identifying the ROI.

But it says nothing about wastage and it gives little insight into weekly phasing or even where diminishing returns begin to set in.  This is because a rating has little definitive to say about the chances of your target audience hearing or seeing an ad.

Ratings are a trading currency.  Nothing more.

Consider a simple example.  What do 20 TV ratings actually represent from a viewing perspective?  It could mean that 20% of your target audience have had an opportunity to see (OTS) one exposure.  Or it could mean that 10% are at 2 OTS.  Or some other combination.  On its own, it is impossible to say.  As ad stocks are based on this rather ambiguous metric, they have little to say about the level of reach or frequency required to drive improvements in your ROI.

Our tried and tested AdModel approach is much more forward thinking and considers five key parameters that provide key information for all stakeholders:

Infographic showing Gain Theory's

The fifth parameter – Habit – describes the long term impact of converting new users – basically a measure of trial and repeat.  They may be completely new to the brand, or they may be existing users for who marketing has helped them discover new opportunities for use.

Going beyond ROI to help marketers take action

Identifying the first four parameters defines the budget required, the phasing strategy, and optimal investment.  For example, knowing that for your brand consumers need to see 4 exposures, 2 of them in the last 7 days throws up a completely different approach than if consumers just need 2 exposures, just 1 of which can be seen anytime within 2 weeks of the purchase decision.

Planning on norms, benchmarks and experience can lead to some serious inefficiencies.  Let’s look at the following simple example.

graph-1

graph-2

The base plan from the agency seemed OK – continuity was deemed important, and running with a broadly constant level of weight.  However, the AdModel tells us that, to trigger a response from those active in the market, we need:

table

Using this insight we can deliver a 30% increase in the ROI.  Based on science, not hunch.

As you can see, some big improvements in efficiency, just by understanding how media is working for you.  And this is for just one channel – the same efficiencies can be seen across the media and marketing mix.

This approach has been tested across all verticals and across all continents.  If you want to move away from reporting just an ROI, to dynamically improving your marketing investments, it’s time to rethink your approach.

John Webb will be speaking at EffWeek 2017, presenting a new green paper on measurement strategy

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Effectiveness Week 2016

“Just what the industry needs, great collaboration between clients and agencies on the topics that drive business growth.”

Bridget Angear, Joint Chief Strategy Officer at AMV BBDO

“It’s great to see the IPA in the UK bring the whole industry and particularly the trade bodies together to focus on effectiveness. This new Marketing Effectiveness initiative will enable people across the industry to work together to build on best practice.”

David Wheldon, Chief Marketing Officer, RBS

“Effectiveness is a team sport, so it was great to see the industry in the widest sense, come together. In an increasingly diverse and fragmented world, only by using all parts of the brain will we solve effectiveness challenges and design our campaigns to deliver short and long term value. That’s why what happens next is important – if the IPA can help facilitate progress on this with a long-term initiative around Marketing Effectiveness, we’ll definitely crack it.”

Bart Michels, Global CEO Kantar Added Value and Country Leader Kantar UK

“The time spent at #EffWeek was extraordinarily effective. It was great to hear the diverse views from all areas of the industry. All tied together with the common themes of accountability and effectiveness.”

Andrew Canter, Global CEO, BCMA

“It has been a privilege to be part of the inaugural Effectiveness Week. The agenda is one which we at O2 UK feel passionately about. To see and hear perspectives across the industry demonstrates how the breadth of marketing effectiveness is increasingly being valued within businesses. Data, insight, social, customer experience, test and learn, ROI, these are all fundamentals and were covered expansively at the event”.

Sandra Fazackerley, Marketing & Consumer, Telefónica UK Limited

“The full week of effectiveness events brought into clear focus the need for marketers to use data and insight to achieve the key business objectives of growth and profits. Marketers today are in a better position to quantify their knowledge of customers and measure the ability of investments in marketing to increase brand and shareholder value.”

Chris Combemale, Group CEO, DMA