Thursday, January 09, 2014

Branding is a Form of Non-Transactional ROI

One question often asked by CMOs is what is the ROI of branding?

It’s a question that doesn’t come with an easy answer.

The reason is that branding is a form of non-transactional ROI.  When it leads to a transaction, it happens down the road – without any direct correlation to the costs incurred to create the advertising.

Is this changeable?  Is there a way to allow branding to offer more of a transactional ROI?

One definition of branding is to build a relationship over time.  How much time is needed to build the relationship varies by individual and by brand.  But we do know that some time is necessary. 

So, the immediate objective of any branding campaign is to get the consumer to spend more, rather than less time, with the brand.

Time spent with a brand is measurable.  And, as we all know, what can be measured can be monetized.

The one immediate ‘transaction’ that marketers can expect from their brand advertising, in return for dollars spent to create that brand advertising, is time spent by the viewer with that brand advertising.

The more time spent - or involvement - on the part of the viewer, the better the return on the dollars spent to create the advertising. 

There are two budgets that comprise a marketing budget — media and production.  Both have their own return on investments.  

The media budget’s return is how many viewers did they get for dollars spent.

The production budget’s return is how much of the viewer’s time did they get for dollars spent.

By tying in the production budget to viewer time spent, marketers can achieve a return on investment for their production dollars.

Not based on the amount of money a consumer spends.   

But rather, on the amount of time.

With branding, the currency the consumer spends is time.

And, in the long run, time is money.

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