CAUTION: Do not abuse the word ROI

Kshitiz Randhir Shori, Director, Asia Pacific Sales, Jivox Software
Thanks to Google, the word ROI has gained so much popularity that suddenly there are a number of start-up online companies opening their offices and trying to win clients on terms like ROI without knowing the fact that this very lure of winning clients on ROI is nothing but a deadly trap with more chances of losing clients than retaining them.

I am certainly not against the term ROI; indeed ROI is the backbone of every business, a measurement of success or failure. But what I really dislike is the way it’s being misused in our industry especially by some of the new start-up online agencies. For them the use of ROI is limited to generating a x number of leads, calculating the cost per lead and presenting such reports as value for money, as an online strategy, and as a media plan. We all are proud and lucky to be part of an industry which is brutally transparent, easily measurable and traceable but it seems this level of transparency is being negatively exploited to earn quick bucks and as a result is working more against the agencies than in favour of them.

The trouble begins when we go overboard in using the term ROI and go beyond CPM and CTR’s. Now a days, the media plan doesn’t end at No. of Impressions, CPM and estimated CTR but we added two more advertiser friendly metrics namely CPC, Estimated Leads and CPL (courtesy Google ad words), by this approach we are indeed striking more deals and adding more number of clients but at the same time we are unable to retain them because of their growing unrealistic expectations and this ROI model is becoming more of a curse in disguise.

And what are those unrealistic expectations? Linking ROI to metrics like Cost per lead or Cost per Conversion and worse, not thinking beyond such terms as definition of ROI. I mean how can we fully control cost per lead? How can we be held accountable for something on which we have no control? As an online media agency, our job is to strive to reach an optimal exposure frequency where awareness becomes consideration and consideration, in turn, yields a conversion. To move from awareness and to get into the consideration mindset, a lot depends on product positioning, product acceptance in the market or pricing etc.

What some advertisers fail to understand or consciously do not want to understand and what we as online agencies fail to make them understand is that, internet media has a lot more to offer as ROI than just plain numbers. We all know that we have an edge over Print/TV; even with all the TAM & TNS scores of the world, no other medium is as measurable and as interactive as online media. Yet we succumb to advertisers claim on media reach being miniscule as compared to offline media, I agree we are too small but we are far too effective in reaching out to 30 million internet users, ok if you persist, 15 odd million active users. Users whom we can engage, influence and try get into their consideration mindset and all this can be tracked and measured that is value for money and clients need to understand this.

Advertisers need to recognize ROI not only in terms of direct response but also as increase in share of voice, to ensure positive ROI, we need to use this medium to constantly engage the users with the brand to create brand loyalty, to be and always remain in the consideration set for eg. www.sunsilkgangofgirls.com , www.theaxeaffect.com, Nokia. I mean, look at the levels they have reached in terms of engaging the users, every second, every minute they are building brand ambassadors like you and me, vouching for the brands and disruptively spreading the message across other people. Can we ever directly measure the impact of such brilliant creative thought and media execution? May be not, as this approach is slow and time consuming, it requires in depth thinking, patience and a lot of money to keep generating new ideas to engage the user.

Very few agencies manage to present ROI in its right perspective while others just link ROI to the number of leads generated, their media plans always talk about expected CTR’s, leads and cost per lead.

For advertisers, investing in online media is like investing in a good mutual fund with a systematic investment plan, wherein the advertisers must invest a certain percentage of their total marketing budget but very importantly on a regular basis. This is important to constantly engage with the user and remain in their consideration mind set. The investments should not be on ad-hoc basis with the sole purpose of driving immediate response as in that case the response will always be unpredictable and fluctuating just as in the case of investing in direct stocks, some investments will reap benefits while some will not, leading to a point of saturation.

Online Media is an investment opportunity. Therefore, think like a venture capitalist. Invest in innovation.