Half Of Media Buys Driven By ROI, TV, Online Dominate

Three new letters - ROI - have officially joined the lexicon of media planning and buying terms, and they're beginning to rival such traditional criteria as the CPM and GRP in determining how advertisers and agencies allocate their media budgets. In fact, nearly half of advertisers and agencies altered their 2005 media buying plans based on some form of ROI - or return on investment - analysis, according to findings of a first of its kind study released Tuesday during the second day of the Advertising Research Foundation's annual convention in New York. While the study didn't detail exactly how ROI analyses are impacting media plans, it suggests advertisers and agencies are moving away from a "commodities" oriented view of media and that TV and online are perceived as delivering the best ROI values.

The findings, the first from a series of planned studies conducted by the ROI Council, a task force of 16 leading agencies organized by Court TV, found that 44 percent of marketers and 31 percent of agencies "regularly or often" utilize at least some form of uniform ROI metrics to compare advertising across different media platforms.

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The study, which surveyed 168 media planners, 156 media buyers, 48 advertisers and 19 agency account executives drawn from a combination of lists including MediaPost members, found that advertisers are much more developed in their ROI efforts than agencies are, and are beginning to alter their media choices on that basis. Sixty percent of marketers said they changed their 2005 media plans based on ROI criteria, compared to only 48 percent of agency executives.

"It would look from the data that advertisers are taking the lead on these goals," said Carla Sarett, head of the Internet Research Group, which was commissioned by Court TV to conduct the research.

More than two thirds (69 percent) of marketers and 50 percent of agency executives said their companies had made "progress" in establishing a "unified set of metrics" for estimating ROI across various ad campaigns and media.

The vast majority of both groups - 75 percent of marketers and 59 percent of agencies - said there would be a greater emphasis on measuring ROI in advertising in 2005.

The chief criteria in ROI evaluations are "impact on sales revenue," "media plan vs. media delivery," "awareness of campaign," and "change in market share." Despite the industry focus on CPMs - cost per thousands - "cost per lead/sale" criteria ranked near the bottom.

Not surprisingly, media planners and buyers said their chief 2005 ROI goals focused mainly those types of criteria - delivering a message to a target audience, finding the most appropriate content for a brand and target, achieving sales goals and greater market share. "Lower costs/CPM" ranked near the bottom, though buyers (58 percent) were keener on this form of ROI than planners (44 percent).

The "nitty-gritty" of how ROI is "actually operationalized by media planners and buyers."

IRG's Sarett, who presented the findings during a panel discussion on ROI at the ARF conference with Court TV's Debbie Reichig, said it begins to reveal the "nitty-gritty" of how ROI is "actually operationalized by media planners and buyers."

While future studies conducted under the auspices of the ROI Council are expected to drill into specific media, the benchmark study shows that TV still dominates perceived ROI, followed by the Internet, radio and magazines.

Asked to rate each medium's delivery of ROI, cable TV was cited by 57 percent of the respondents followed by network TV (54 percent), online (45 percent), radio (36 percent), TV sponsorship (35 percent), magazines (30 percent), live event sponsorships (27 percent), newspapers (23 percent), product placement (20 percent), outdoor (18 percent) with new media (excluding online) at the bottom (11 percent).

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