One thing is certain: The call for accountability on all ad spending is clear. Measurability and proof of ROI are no longer expected just of online advertising. Agencies that specialize in traditional TV, radio and print also must prove that what they're doing is working to keep the ad dollars flowing.
Where there used to be a wall between ads that build brand and those that drive response, today there is an edict to prove return on investment for every ad dollar spent. While perhaps precipitated by a troubled economy, this shift to an ROI-positive advertising approach is exactly what the ad industry needs.
Here are five changes agencies can make now to put them more in line with an ROI-positive approach that both builds brands and drives results --- changes that will help make their fees and revenue less vulnerable to client budget cuts:
1. Become partners with your clients by tying a portion of the agency's compensation to results. Go further by doing the same for agency team members. Everyone should be motivated to achieve the campaign goals.
Without this level of accountability, agency/client relationships suffer. Attaching some level of quantifiable accountability provides an enormous amount of peace and mutual respect within a partnership. This establishes concrete criteria by which the campaign will be measured and its success judged. To do this, consider all expenses and factor in the campaign's results to calculate a cost per new customer.
For this to work, the client needs to offer the agency inside access to key company-wide performance indicators. If no advertising were running, how many calls, website visits, or in-person visits would the company receive from prospective customers? From what geographic areas? How many would result in sales?
2. The creative talent must work hand-in-hand with the analytics team. Creative must drive sales, and agencies must be able to prove return on investment.
Of course, everyone wants their creative to be effective at generating sales or meeting some other business objective. But, in practice, most creative agencies are not deliberate about tying those ads to specific results.
What I'm calling for is actually a major shift in an industry with an entrenched culture of keeping creative divorced from precise measurement. In the new age of accountability, anything that cannot be proven -- with numbers -- to lift the bottom line, is in danger of being cut. Advertising is about growing business; numbers ultimately determine success.
3. But don't think you have to sacrifice the brand on the altar of results. Force the analytics team think about the brand. A successful campaign will both build brand and drive sales -- in fact, you can't do one without the other.
As you get clear data on what's working and what's not, it's easy to slip into short-term thinking -- relying on the numbers too much and ignoring the bigger picture. That can destroy the long-term value of the brand.
One of the huge benefits of an ROI-positive campaign is that it becomes self-supporting. Brand awareness is built through the frequency afforded by increased media budgets that are rapidly scalable due to this positive ROI.
4. Members of the creative team should review and analyze results regularly to optimize ad placement as they go. They should know where and when they're getting results, and know the cost of each new customer.
Gather the data from your campaigns and compare it to your baseline. Analyze it and make the incremental changes as you go. Make note of the peculiarities that may have existed for that time period, and make allowances for those.
The result of this work is that you'll become confident in the decisions you make daily about how to most effectively allocate budget across networks, shows, days, dayparts, and even your creative mix.
5. Include performance goals in the creative brief. Designing an ROI-positive campaign begins when the creative process begins.
If a campaign is designed (from start to finish) to combine the specialties of both creative brand-building and precise measurement strategies, it can generate positive ROI -- whether it's for TV, print, online or any combination.
The good news is there's a significant opportunity today for ad agencies that can offer their clients both strategic counsel and creative development -- and ROI-positive advertising. Contrary to popular opinion, "strategic" and "creative" are not mutually exclusive. Clients should insist on both, and agencies that develop both disciplines will set themselves apart in an increasingly competitive marketplace.