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Friday, 18 April 2014

Speaking the language of ROI

From: Reporter's Notebook

Researchers were encouraged to learn the language of the CEO and CFO at Esomar Congress in Amsterdam today. Danny Russell, marketing strategy director of Sky, said this means translating percentages and margins of error into pounds, euros and dollars.

Russell said the industry needs to start giving as much attention to communication as it does to data and methodology. “Ultimately to make change you have to influence the CEO and the CFO – and the CFO is always the best friend of the CEO. Loathe them or love them, we have to speak their language, because ultimately they’re the ones who are holding the purse strings, taking the decisions. Their language is about return on investment.”

Sky’s marketing spend of around £200m “attracts the attention of our finance teams”, he said. “As soon as we start getting into our communications, our finance teams are all over us, because they want to know what the return on investment is. They want to know if they could spend that money better elsewhere.

“Quantitative researchers are supposed to love numbers, the only problem is they love them to the nth degree. What’s really interesting about the finance guys who you’ve got to influence, is that they work in orders of magnitude. Is this a £3 million opportunity or is it a £3 billion opportunity? Get stuck into the numbers, give it a bash. Move away from percentages and start working in pounds or euros or dollars. I think finance guys will give you an awful lot of leeway.”

On the other hand, the difficulty of getting hold of financial data (something Russell says is “virtually impossible” for agencies) is an obstacle to proving ROI. The only solution, he says, is to engage with the finance people.

Russell spoke with Fiona Blades of Mesh Planning about how the agency helped Sky introduce a new way of tracking the effectiveness of its communications – by getting research participants to report by text message whenever they see a piece of Sky advertising.

The broadcaster’s previous communications tracking, he said, “just wasn’t up to the job”. Data was only available three to four months after the start of a campaign – but Sky bosses were getting impatient after just three or four days. “I’m not saying it’s right, I’m not saying it’s wrong, it’s just the way it is. We will pull campaigns after a week. We will invest more money after two weeks. We needed a methodology that was going to be able to keep up with the demands that finance were placing on us.”

Results for poster advertising showed that less money could be spent to the same effect because some of the creative executions were not being noticed nearly as much as others. Sky also realised that some customers were becoming overexposed to its advertising, and was able to reduce media expenditure by 20%, Russell said. The research helped tweak the timing of its campaign for the launch of the Sky Atlantic channel, and highlighted that Sky’s advertising on its own channels was poorly integrated with its advertising in other media. Fixing this problem saved “millions”, Blades said.

Russell said: “Some of the learnings have prevented us from doing certain things, but it’s also encouraged us. In the example of our recently announced price freeze, it’s enabled us to have the confidence in delaying another campaign and keeping on with the price freeze.”

As well as using an approach that allowed an optimisation plan to be put together after just 10 days, Mesh worked closely with Sky to make sure they were communicating their findings in the most useful ways.

Russell said Mesh’s work had already paid for itself this year, but Blades made the point that research suppliers can’t deliver ROI by themselves. “You can deliver the best research findings in the world, but if they don’t get used, there’s no value,” she said. “Return is always co-created.”

Readers' comments (1)

  • ROI from research? The maxim "use it or lose it" applies. (If I buy an appliance and never take it out of the box then it's no one's fault but mine if I've wasted the money.)

    But ROI needs to be judged before the research is commissioned, not after the event.

    The supplier's responsibility is to answer the client's brief as best they can within the client's budget and timing constraints. Only the client can know if allocating funds to a given piece of research is the best use of resources - not least because only the client knows what other uses the money could be put to.

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