• by July 19, 2004

THE RETURNS ARE IN AND THEY'VE JUST CONFIRMED THAT RETURNS ARE IN - You don't need to be a marketing guru to know that returns are hot. Everyone knows that ROI, or return on investment, has become the obsession of most corporate marketing departments, brand management teams or the agencies that service them. But ask 54 of the nation's leading marketers to define exactly what they mean by ROI and how they should measure and account for it and you're likely to get 54 different answers. At least that's what the folks at Forrester Research found when they teamed up with the Association of National Advertisers to field a survey of ANA members on the topic of marketing ROI.

"There's no consistency," Bob Liodice, president-CEO of the ANA said upon today's release of a joint ANA/Forrester study, released during today's ANA Marketing Accountability Forum in New York today.

While they couldn't always articulate exactly what marketing ROI is, the study found some consensus among marketing execs in terms of how to benchmark it, with the overwhelming favorite being the ability of marketing activities to generate incremental sales. But while two-thirds of ANA members cited this attribute, a somewhat greater percentage (78 percent) felt it was either "somewhat" or "very difficult" to measure, while 70 percent considered it that difficult to define.

The findings are somewhat surprising given all the talk surrounding ROI and the buzz surrounding marketing mix modeling firms and emergence of econometrics as the hot new marketing science. But for all the talk, the vast majority of marketers still do not appear to be applying such science. Only six percent of the ANA members surveyed said they currently utilize such specialists, though 40 percent said they plan to in the future.

The marketers cited a number of organizational and cultural impediments to developing such approaches, including an inability to respond quickly enough to ROI data to make it actionable (85 percent). Another two-thirds (67 percent) cited the difficulty of changing established practices and budgets. Another less significant, but still important, factor was the quality of data that's available to analyze the returns of marketing investments. Nearly half the marketing felt it was hard to obtain such data, while more than 40 percent said the data wasn't granular enough.

And it may be a good thing - or a bad thing, depending on your perspective - but media did not factor prominently among the elements marketers used to measure ROI. Reach/frequency ranked 10th among 15 criteria measured by Forrester, while gross rating point delivery ranked 11th and post-buy analyses ranked 13th.

Honestly, we take that to be a good thing. Even though media folks like to think of themselves as being the center of the marketing universe, the reality is that media should not be held accountable as the primary contributor to marketing ROI. It's an important factor, for sure, but given all the other elements in the mix, it's far from the exclusive one. In fact, we prefer the definition of media ROI conceived by San Francisco media shop Red Ball Tiger, which has been popularized by Carat chief David Verklin: return on involvement. Delivering consumers who are involved with a marketer's ad messages is important, and it's something that can realistically be measured as a return on media investments. Curiously, it was not listed in the ANA/Forrester study.

Which of the following, if any, is closest to your company's current definition of 'marketing ROI?'

Incremental sales revenue generated by marketing activities:  66% 
Changes in brand awareness:
57%  
Total sales revenue generated by marketing activities:        55%  
Changes in purchase intention:                                55%  
Changes in attitudes toward the brand:
51%  
Changes in market share:                                      49%  
Number of leads generated:                                    40%  
Ratio of advertising costs to sales revenue:
34%  
Cost per lead generated:                                      34%  
Reach/frequency achieved:                                     30%  
Gross rating points delivered:
25%  
Cost per sale generated:                                      23%  
Post-buys comparing media plan to actual media delivery:      21%  
Changes in the financial value of brand equity:
19%  
Increase in customer lifetime value:                          17%  
Other:                                                         4%  
None of the above:
2%  

Source: Association Of National Advertisers/Forrester Research survey of 54 ANA members.