ROI may be the true field of dreams.
When a local advertiser is asked what they want most from their marketing campaigns, the majority of them want positive ROI. Fair enough.
This seems like a relative no-brainer. Who wouldn’t want to see some kind of positive outcome from the dollars spent? There’s just one little problem: they don’t know how to measure it.
Over 2,200 local advertisers were recently given a list of aspects around marketing and were asked to choose the ones that were hardest to establish and easiest.
The chart below shows that “calculating return on investment” was chosen by the most local advertisers as the hardest aspect to establish. In fact, nearly 1 out of 3 respondents chose ROI establishment. Not surprisingly time and money came in second and third, not far behind in percentage rankings.
SOURCE: Borrell Local Advertiser Survey 2017
There are other clues in their answers that may help us understand why ROI calculation is so difficult. Take a look at those aspects they claimed to be among the easiest to establish: Determining who to advertise to and reaching a targeted audience. Does that strike anyone else as a tad odd?
“We know who we want to reach and we know how to reach them, but we just can’t calculate ROI.”
It could happen, I suppose. They could mean they know how to target AN audience, just not the RIGHT audience. Or they know their advertising is working, but they cannot affix a value to it.
When asked in a local advertiser survey how they measure media effectiveness, it was clear to see that not just one method held sway. However, there were some pretty standard answers:
- Tracking some kind of offer
“Each advertisement typically targets a specific product. I track sales of that pre, during and post campaign to compare.”
Restaurant, $1-2 million revenue
- Surveying customers
“Talking with customers, asking how they heard/know about us.”
Massage Studio, $500k-$999k revenue
- Homegrown formulas
“The basic formula is cost of the campaign / # of discrete views of a proposition / # of customer inquiries in a 30 day sales cycle / # of units sold. It’s not how many cars we sell off a campaign, it’s the average of how much it cost per each transaction.”
Auto Dealer, $5 million + revenue
Local advertisers wrote over 10,000 words to describe how they measure media effectiveness, and there was not one clear method. Could this be an opportunity for a local media company?
Perhaps – but the first question should center around what is the business trying to achieve? When asked to cite the goals of highest priority, acquiring new business was chosen by 4 out of 5 local advertisers.
Okay…..They know who to target and how to target, they want to acquire new business – but there is no clear way for them to measure ROI from a media company – the one thing they really want. So, it is only to be expected that local businesses would have some concrete advice for media companies regarding what they could do to help them, right?
Not so much.
When presented with the question: “What could your advertising/media partners do to help you assess if your programs are working?” a striking number of responses fell into the “I don’t know” category.
THIS is the opportunity.
Local advertisers are learning fast. They know stats around impressions, readership, viewership, and listenership does not equal sales. They have learned firsthand as they placed their own Facebook ads and boosted posts. At first, they were enamored by the metrics returned but have since seen a discontinuity between that and actual lift. It might be working, it might not. The ability to gauge that is out of their grasp.
Local businesses need help. Their own definitions of what is easy and hard to accomplish can seem at odds. They admit freely they do not know how to measure ROI and they have few suggestions for media companies around how to provide it.
Talk to your advertisers. Establish measurable goals. Hold your own media accountable. Show the monthly results. This is the key to establishing ROI.
If you build it – they will come.