Opinion: Metrics that matter and the ‘Real’ ROI
The author feels that with today’s rapid ‘datafication’, marketers now have more metrics to choose from than they know what to do with
Mar 12, 2021 03:36:00 AM | Article | Nikhil Shahane Share -
Plenty gets tossed about on the topic of various performance indicators and ROI. The digitisation of the world has given marketers so many new acronyms to choose from that it’s become harder to keep track of them all. ER, CPC, CPL, CTR, CTOR, time spent, stickiness, page depth, CPM, COCA or whatever else that catches one’s fancy. The plethora of ‘X must-track metrics for all marketers’ listicles out there clearly shows that many marketers and pundits unnecessarily tie themselves up in knots.
As Michael Porter puts it, “The essence of strategy is to choose what not to do.” The situation is further complicated when even more abstract concepts such as ‘Brand Purpose’ are thrown into the mix. Sure, they can either be great tools to drive value and thereby measure ‘Real’ ROI (not without its own issues) or become wonderfully elaborate rugs under which to brush failures. With companies slated to be spending 17% of the budgets on analytics as per cmosurvey, it is important to be clear on what to measure and what to ignore.
So what is ‘Real ROI’? And how does one lock in on the metrics that matter, both short-term and long term? This will depend on what business you’re engaged in and what your long term and short term goals are. Ultimately, everything boils down to how much business you can generate through the activities you conduct, but when it comes to marketing we can all agree that some of this pays off only in the long run. To stay on course and also measure in the long run, one can undervalue or overvalue one’s efforts in this regard.
Burger King is a great example: unlikely anything except gain of market share against total spends would determine their ‘Real ROI’, however, each campaign had key metrics such as total people engaged or converted, total PR generated, overall sentiment, total sales generated, etc. These would be metrics for each campaign that ultimately helped ascertain whether meaningful progress was being made towards ‘Real ROI’. The reality is that very frequently ‘Real ROI’ can be quite nuanced and is something that has to be custom-defined for what you want to achieve with each marketing or advertising activity. CMO Fernando Machado put it best: “Not all campaigns will do everything, but they should be doing something in the direction of the objectives you have.”
To illustrate with an example, a recent project we were involved in forced us to define our success metric as the total number of people who changed their behaviour in a particular way. Given that there was no accurate way to measure this in the short run, we further abstracted it to the number of people who interacted with our communication in a very specific way that would indicate a tendency towards a shift in behaviour – with comments on social media, reflective of the same. The ‘Real ROI’ in this case was the total number of people that we could effectively bucket into this category. Counting and bucketing comments wasn’t easy, measuring success is hard work!
Media metrics (social and otherwise), vanity metrics, costs per Xs, among others, became indicators tending towards this one ultimate goal.
So why is this important? Starting with an end goal in mind is pretty obvious, but ensuring that it’s nuanced and well-articulated is something that gets skipped over in the hustle of our advertising lives. Machado says, “In the beginning, you need to prove the case, make sure everyone is aligned, telling them, “This is our strategy and this is how we will match success.”
Defining the ‘Real ROI’ for a specific activity or campaign helps make the strategic approach a lot clearer, the creative outcome is infinitely sharper and most importantly, the creatives not just quantitatively, but also qualitatively measurable. Continuing with the Burger King example: in February of 2020, Burger King decided to play a prank on Ronald McDonald on Valentine’s day. Gaining market share is ultimate ROI, of course, but the use of their #LonelyNoMore would have been their primary metric and the real ROI here would have been in how much free PR they got from the whole exercise.
Obviously, having metrics that matter in the long run will ensure your clients stay with you even if things don’t necessarily seem to work out as planned. If this isn’t good enough for you, there’s a very good possibility that when it comes to review time the clients, and agency partners alike, will appreciate having an honest conversation where it's easy to identify what to repeat for future success and what to add to a list of ‘Dont’s’.
Who is responsible for defining and articulating these metrics or the ‘Real ROI’, you ask? While everyone can chime in with their thoughts on what the ‘Real ROI’ should be, the burden lies on the suits. Business (agency and client) plus strategy. The business teams have an understanding of what’s going to make the accountants happy and the strategic team understands what’s going to move their audiences in the right way to make the accountants happy.
How does this ultimately impact the work or the business? In this day and age of short term interests, buzzwords and so much data, there’s a tendency to shift our focus away from what may be really important. Sometimes this could also be a function of confusion due to the sheer number of stakeholders and everyone looking out for themselves. Having a handle on the ‘Real ROI’ on any activity helps to have a more meaningful and long term perspective on all the work being done. Ultimately only adding to the business would be considered ‘Real ROI’, but the truth is that adding business is in itself a long term goal, and there are meaningful pit stops that one must make along the way. As touched upon earlier, giving your business team an honest picture of what worked and what didn’t while also giving your creatives a way to evaluate and more scientifically approach their craft are also ways to improve the quality of your work. Not just on further iterations of that specific activity, but also take that freshly gained perspective and apply it to other work. That’s how you increase your success ratio across all the activities and projects that you undertake.
So what’s the TL;DR?
Meaningful Metrics and Real ROI are something that we should all be cognizant of, especially in this day and age of short-termism and data overload. It’s something that adland has managed to confuse, to everyone’s detriment. While there’s no cookie-cutter solution, having these honest conversations on what matters v/s what doesn’t make for a better industry in the long run.
Mark Ritson says that our understanding of metrics is broken and it’s time to get back to class for a “101 on market orientation”. The good news is that it’s not that complex, it’s about going back to basics and focusing on the metrics that matter!
The author is chief operating officer, 21N78E Creative Labs