ROI in Advertising Study

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ROI in Advertising Study
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What is ROI?

• Achieve awareness and consideration goals
• A quantitative measurement for purchase intent.
  Provide metrics that define success other than
  delivery of media goalsbusiness based
• Did the cash register ring? Did the consumer
  request information? Did the website receive
  more traffic? Were more trips booked?
• ROI is difficult to measure. Correlating one ad
  campaign to an increase in sales is tenuous at
  best.

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ROI Consensus

• The ability to correlate sales with advertising
  expenditures
• Increase in sales vs. the cost of advertising

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Why is ROI/Ad Effectiveness Hard to Measure?

• Many components
• Creative
• Advertising is an Art not a Science
• Only 30 seconds
• Developing Ads is harder than developing a TV
  Program
• Formats must be lively, engaging and fresh
• Target Audience
• Background research to determine target may be
  off
• Could buy the right media and the target might be
  wrong
• Competitive Set/Marketplace concerns
• Hard to anticipate competitive environment
• World events (war, death of pope) change media
  landscape
• Media Landscape
• Many options
• Focus on TV

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Despite Challenges

• Agencies deliver effective ads that build brands!

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TV Effectiveness Research Conducted by Court TV

• Non-Program Time
• Time Spent Viewing
• Length of Tune
• Engagement/Attention
• Audience Retention
• Ad Effectiveness

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Why conduct TV Effectiveness Research?

• Were our efforts meeting needs of advertisers and
  agencies?
• Certain audiences seemed more receptive to these
  ad effectiveness messages
• TV Ad Effectiveness is a component of ROI
• Wanted to add TV to this dialog

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ROI Council
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Ideal World vs. Discreet Media Evaluations

ROI
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Ideal World vs. Discreet Media Evaluations


PRINT
ROI
TV
ROI


RADIO
ROI
ONLINE
ROI
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Key Issues

• Is estimating ROI possible? Have agencies and
  advertisers developed unified metrics?
• What is measured in estimating ROI of different
  ad campaigns? TV ROI in particular?
• Which media platforms are currently viewed as
  delivering ROI?
• Does discrete job function impact how ROI in
  advertising is defined or applied to business
  decisions?

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Objectives

• Break ROI into components
• ROI in Advertising
• ROI in TV Advertising
• Understand whats currently measured for ROI in
  advertising not on how the metrics feed into
  models
• Benchmark for Future ROI Studies

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Study design

• MediaPost
• Joe Mandese
• Internet Research Group (IRG)
• Dr. Carla Sarett

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Study design

• Internet Research Group designed a survey, which
  was distributed to the ROI Council members in a
  working luncheon session.
• Input from Council Members was integrated into
  final questionnaire
• Survey conducted online using databases from both
  Court TV and MediaPost. e-mail invitations were
  issued by MediaPost with a link to a separate
  site.
• Survey respondents were instructed to answer all
  questions in survey thinking about one specific
  account.

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Sample characteristics

• Screening criteria
• Full service or media buying agency no creative
  only agencies.
• Media Planner, Media Buyer, Advertiser or Account
  Executive were eligible respondents.
• Sample included
• 156 Media Buyers
• 168 Media Planners
• 48 Advertisers
• 19 Account Executives
• About a third were Senior Level Executives with
  titles of CEO, President, SVP, VP or Group
  Director.
• Almost half had worked over 10 years in
  advertising or marketing.

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Growing emphasis on ROI
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Advertisers appear to place more emphasis on ROI
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Advertisers and agencies agree that ROI
evaluations are changing media plans
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Advertisers appear ahead in measuring ROI

• How much progress has your company or agency made
  towards establishing a unified set of metrics for
  estimating ROI across different types of
  advertising campaigns? n 343

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50
Advertiser
Agency
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Progress in measurement across campaigns

• For an understanding of ROI in advertising,
  advertisers need a way to look across different
  media platforms (e.g., TV vs. online) with the
  same metrics
• About two-thirds of our sample say that they do
  not compare the ROI in advertising in different
  media platforms with the same metrics on a
  regular basis
• About one in five say they never compare ROI in
  advertising
• About the same number do not know about the issue
• The process of understanding ROI is not yet fully
  developed and it may be that the underlying
  data are not yet available

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Advertisers compare media platforms regularly

• How often does your company or agency compare ROI
  from advertising in different media platforms
  with the same set of metrics?

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ROI in advertising is not just about costs

• When asked to evaluate their 2005 goals, agencies
  and advertisers do not place costs or lower CPM
  at the top of their list. They are most
  concerned with getting their message to the
  target and achieving sales goals.
• Advertisers were more interested in sales goals
  than agencies
• Lower CPM is not even a top-ranked goal for 2005
  it has about the same importance as buzz
• Planners especially value building brand image
  before lower CPM
• This means the return in ROI is driven by desire
  to boost the upside and move the needle, with
  cost efficiency probably taking a back seat.
• Getting results may be more important than how
  you get them

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2005 Goals targeting, not CPM
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Measurement is key, but inconsistent

• We asked agencies and advertisers about how often
  they measured specific outcomes of advertising
  campaigns (always, often, sometimes or never.)
• We find that NO one outcome is always measured
  for campaigns.
• This may be due to varying campaign goals but
  also due to limitations on data.
• But most are measuring the basics, like impact
  on sales revenue, media plan delivery and
  campaign awareness

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What is measured

• How often does your company or agency compare ROI
  from advertising in different media platforms
  with the same set of metrics?

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Are traditional TV spots less relevant?

• One starting point in our study was to see
  whether media buyers, planners and advertisers
  were re-evaluating traditional TV.
• Our study suggests that few are downgrading TV in
  their buying plans.
• More respondents rate traditional TV advertising
  cable and network as delivering higher ROI
  than other media including product placements
  and TV sponsorships.
• Online is surprisingly close to TV in our study.
• But print lags far behind.
• Buyers and planners differ in some of these areas.

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Cable and network TV highest perceived ROI

• reporting platform delivers 4 or 5 on 5 point
  ROI scale

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Key differences between buyers and planners

• reporting platform delivers 4 or 5 on 5 point
  ROI scale

Buyer
Planner
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Do different TV networks yield different ROI?

• TV networks offer audiences different kinds of
  content, and create different kinds of audiences
  and present advertisers with different
  opportunities.
• We asked buyers, planners and advertisers how
  often they compared the ROI or effectiveness of
  TV advertising across different networks with the
  same set of metrics.
• Our study finds that most advertisers, planners
  and buyers do not compare networks in this way
• Fewer than one in five say they regularly do
  this.
• Over half say they never do this, or do not know.

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Are different networks compared in terms of ROI?

• Thinking about your particular account of brand,
  how often does your company or agency compare the
  ROI or effectiveness of advertising across
  different TV networks with the same set of
  metrics?

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TV builds brand, but does it build sales?

• Buyers, planners and advertisers report that
  building sales revenue is their most important
  concern about ROI in Advertising.
• They also rate both cable and network TV as
  delivering the highest ROI in Advertising.
• Our study finds that the return expected of TV
  advertising is more about brand building and
  campaign recall rather than merely increased
  sales revenue.
• TV is not perceived as effective in integrating
  online with TV.
• This might suggest that different media platforms
  yield different returns on their investment.
• Further study might answer this question.

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TV effectiveness

• How effective do you feel TV advertising is in
  accomplishing the following goals for your
  account or brand?

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For buying TV, its about achieving the target

• About half of buyers, planners and advertisers
  cited making advertising more effective as the
  most important reason for focusing on ROI in TV
  Advertising
• For buying TV, achieving the demographic target
  is rated as the most important element --
  outranking factors such as quality of viewing
  experience of exposure to the ad
• Cost of the buy remains a lower ranked concern in
  terms of stated importance in buying
• But the metrics that are actually used suggest
  that CPM outranks more subjective factors like
  quality of program environment or audience
• Despite press attention to clutter concerns,
  metrics on exposure to the ad message are not
  well-used

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TV ad buys its all about targeting

• Rating 4/5 on 5 point scale in importance and
  impact in decision to buy TV networks and
  programs

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Use of quality metrics is low

• How often do you use the following metrics in
  helping you select which TV to buy networks or
  programs?

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Conclusions

• Agencies and advertisers are serious about
  figuring out ways to evaluate ROI, and are
  starting to change media plans based on these
  evaluations
• Buyers, planners and advertisers do feel that
  estimating ROI in advertising is a realistic goal
  and have developed unified metrics
• Evaluating ROI is not driven by cost pressures
  alone it is about figuring out ways to improve
  the results
• Traditional TV spots are still seen as delivering
  the highest return on advertising investment
  with Cable TV now edging out Network.
• And this seems to be based on TVs traditional
  role of brand building and creating memorable
  advertising campaigns
• And not as much based on CPM or Sales goals for
  evaluating TV effectiveness

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Conclusions

• Advertisers take the lead in driving ROI
• Agencies are supporting advertiser strategy goals
• Both buyers and planners are aligned in
  supporting advertiser goals
• Differences exist between buyers and planners
  perceptions of media platform ROI performance
• Differences exist also in execution
• Buyers (17) are beginning to use the tools to
  evaluate TV in accordance with Advertiser
  objectives
• But there is still an opportunity to utilize
  these further

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Questions for Further Research

• Explore ROI in other media platforms
• Understand why buyer/planner differences exist
• Explore further how quality metrics can lead to
  enhanced ad effectiveness
• Dig deeper into ROI issues that may exist by
  product category
• Evaluate how perceptions of ROI change over time
  as the advertising industry develops more
  advanced metrics