Tuesday, July 17, 2012

What Is ROI? Exactly.


The Association of National Advertisers (ANA) recently released a survey of 224 of its member executives regarding social media.

The result?  

Sixty-two percent say that the inability to prove ROI is a top concern.

Fair enough.  But I’m going to bet that of those 62%, there were probably ten definitions as to what ROI is.

Return On Investment means different things to different marketers.

Apparently what it doesn’t mean is to stop advertising on platforms where they can’t figure out what their ROI is.

I say this because according to the same ANA survey, online video jumped in the past year, rising to 80% of all marketers.  That’s a 16% rise from the previous year.

What’s ironic is that online video has the opportunity to provide the most accurate ROI measurements of any digital format.

Two prerequisites for this to happen.

The online video cannot be a forced view.  The viewer needs to initiate the playing of the video.

And two, the advertiser needs to be willing to trade off efficiency for effectiveness.

Click-to-play video “reaches” far fewer people than forced views (pre-roll) does.  Pre-roll is about efficiency, not effectiveness.

Most advertisers equate ROI to efficiency – what were my GRPS versus how much did we sell?

Understandable, because in the past, reach had some bearing on sales.

But on the digital platform, it doesn’t.

Until advertisers realize that efficiency and effectiveness are not the same, digital platforms will never deliver the ROI advertisers truly are looking for.

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