ROI is NOT Dead Yet

A couple of years ago, our business began to change drastically, fueled by the realization that direct response metrics were not the only way by which to measure the effectiveness of online campaigns. Whereas in 1997, we thought we had invented a new medium that would always be evaluated by metrics like Cost Per Click and Cost Per Acquisition, just one year later we realized that we had done everything exactly backward.

Direct response television emerged from the TV business well after TV was established as a branding medium. In 1998 and 1999, the interactive media business witnessed declining response across the web and, out of necessity, began to look seriously at using the web as a branding medium. Once we realized that Click Through Rate could easily kill our business, we started to make a conscious effort to move away from using CTR as a measure of success.

But like many changes we've experienced in this business, the pendulum has swung too far in the other direction. Abandoning Click Through Rate does not give us license to spend money recklessly on online branding initiatives. Just because we've made the wise decision to stop measuring everything on a "click to buy" basis does not mean that we shouldn't concern ourselves with Return on Investment.



A while back, I wrote a column about one of the first deals I worked on in which the goal for my client was moving the needle on certain brand-related metrics. I ended up walking away from that deal, because the rep had told me that I wouldn't be able to expect that it would pay out on an ROI basis. Several readers had written back to me, commenting that they couldn't believe that the rep had made that statement. Truth be told, that rep's biggest mistake was confusing his nomenclature. What he was telling me was that my click rates and my cost per acquisition alone wouldn't make the deal attractive. But I still found it appalling that a sales rep was telling me that I couldn't expect a decent return on my investment, so I bailed.

That rep's approach, however, was indicative of something that has been bugging me about the direction of the industry over the past year. Our aversion to accountability and our remembrance of the tough post-CTR years have led us to be somewhat bearish on the notion of optimizing our campaigns on brand metrics. No one seems to want to reintroduce the notion of accountability online where branding is concerned.

Perhaps we're afraid of what we might find out. Or maybe we want online media to enjoy the same freedom from accountability that traditional media seem to have. But that's not the direction that the media industry as a whole is moving in. Instead of leading the charge for accountability, we've become timid.

Companies like Dynamic Logic and Millward Brown introduced products that help us measure the qualitative aspects of online media years ago, yet I haven't heard of any case studies in which an online planner moved more media weight to Site X because the site was able to move the needle more effectively than Site Y.

The truth is, while CTR nearly killed our medium, we still learned a lot from implementing the ROI model. We all wanted to adopt new metrics after CTR and CPA, but what we're doing now is tantamount to throwing out the baby with the bathwater. Too often, I see planners making the mistake of failing to hold online media accountable when they attempt to brand online. We should still be mindful that if a placement on Site X costs twice as much as the same placement on Site Y, Site X will have to perform at least twice as well as Site Y in order to be comparatively efficient.

And I'd like to start hearing more about how tools like AdIndex provide direction as far as where to emphasize media weight and how to optimize branding campaigns. Remember that we're still in a down market. Brand advertisers still adhere to the old notion that half their advertising is wasted and the problem is that they don't know which half. If we can start to give our clients direction as to which half it is, we can lead the charge for accountable advertising. Let's not waste that opportunity.

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