Media Chiefs Pursue Holy Grail, Punch Holes In ROI

by David Kaplan, Apr 21, 2005, 8:15 AM

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The ad industry is fond of quoting the adage, usually attributed to department store magnate John Wanamaker, "I know half of my advertising is working - I just don't know which half!" Now, if ZenithOptimedia Group Worldwide CEO Steve King is right, the odds are more like 1 percent. Given the seemingly endless array of media choices available to consumers and marketers alike, King quipped, "I could be wasting 99 percent of my ad dollars" during an industry panel discussion in New York on Wednesday. The elusive cure for such potential waste, ROI, or return on investment, was also the subject of the panel, entitled "The Holy Grail of Global Marketing: How To Measure ROI," which featured a who's who of international media buying executives. In addition to ZOG's King, the discussants included: Dirk Miller, vice president for corporate marketing communication at European electronics giant Siemens AG; Chris Ingram, CEO of The Ingram Partnership; Murray Dudgeon, CEO of Universal-McCann; and Fernando Rodes, Global CEO of MPG. Finding genuine ROI is a lot like searching for the Holy Grail, the panelists agreed, singling out the shift in marketing organizations that have put corporate procurement departments in charge of media decisions. A running theme: media is both an art and a science and the practice of effective media will always be just out of the grasp of hard figures. "We are really just at the beginning of the journey in search of ROI," Siemens' Miller said. "The first step in the process is that shift in mindsets have to take place. We are going from a cost-based perspective to an investment-based one, where the central issue is finding the right way to allocate budgets." In terms of figuring that out, Ingram noted that there likely would never be a one-size-fits-all formula for divining clients' ROI. In establishing a set of measurement criteria, one has to know exactly what is being measured, as benchmarks for such disparate forces as "sales" and "brand awareness" clearly required different perspectives. Still, King said that media agencies are struggling so much with ROI because they've stuck to an outdated business model for so long. "The business world has undergone huge structural change," King said. "A company like Siemens has, over the past decade, downsized and reorganized. We do business the same way it was done 40 years ago. We still focus on reach and frequency. And for a while, that was enough to satisfy clients. Well, that day has passed." "Measurement is at the core of most of our clients' businesses," added Dudgeon. "The goal is to achieve confidence and in this climate it's hard. I've heard that the average tenure of a CEO in the US is 23 months. That's a short window in which to build trust, so it's the numbers that determine the relationship." Conversely, MPG's Rodes said relying too heavily on various forms of econometric modeling is the death of good media. "ROI is a means to an end, it is a tool and nothing more," he said. "Naturally, this creates a dilemma between efficiency - which is when you do something right - and effectiveness - which is when you do the right thing. ROI will help us do our jobs right, but it cannot help us do the right thing for the client." Ingram agreed, noting, "Methodology and process are important, so long as it includes judgment - and the procurement office doesn't like judgment. They want hard numbers. But with out the art, the science simply won't work, because people's buying decisions are inherently complex and can't simply be boiled down to a simple formula."

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