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August 11, 2009
Meeting the New Media Challenge with ROI

One of the great profitability challenges facing today’s marketers is how to make optimal use of the vast array of new media vehicles that have recently appeared and continue to emerge. Should companies use Twitter and if so, how much of their spend should be invested in it? What about mobile ad campaigns or video game advertising or the host of other new media options? The measurement and analysis of marketing return on investment (ROI) can help marketers assess the effectiveness of these vehicles and get the most bang for their buck.

The new media challenge stems from two conditions. First, there are many new media metrics that can be adopted, but no one knows exactly which to use. Second, even when accepted metrics exist, they are not standardized. So, calculating the results based on a single metric often yields two, or more, different results.

The first problem with new media is deciding what to measure. In traditional media, measures are well established. TV uses gross rating points (GRPs); print uses audited subscriber and readership numbers. However, in new media, such as search, mobile, and video game advertising, there are a plethora of potential measures. For instance, online media companies:

● Impression metrics such as page views or visit time
● Message metrics such as ad likability, ad engagement, and message relevance
● Attitudinal metrics such as top of mind awareness, brand imagery, and brand favorability
● Behavioral response metrics such as click-throughs, opt-in registrations, or pass-along rates
● Transactional metrics such as number of sales per session

But which of these metrics should marketers use, and in what circumstances? As yet, comprehensive answers to that question remain unclear.

The second difficulty in new media is that even the simplest of metrics can be a source of confusion because universally accepted standards are not in place. Most notably, Nielsen and comScore are the two major market research firms tracking “eyeballs” on the Internet, yet they are counting eyeballs in different ways, and therefore, are reporting varied results. So, marketers can’t be sure exactly how many people saw their banner ads, and thus, disputes around payment arise, results are obscured. Further, because marketers cannot establish a sound, or at least consistent, basis for their spending, they are reluctant to invest in new media vehicles at the very time that many of their customers are migrating to them or are forced to invest blindly.

As with any other more traditional media, a good way to cut through this confusion is to begin to reduce the noise by focusing on well-defined new media marketing objectives and the measurement of ROI. Cost, and the incremental volume produced by a marketing investment, are easily measured for many popular new media vehicles. Click-through-to-purchase on a banner ad on a Web site or mobile text message can be measured exactly. You run an online campaign, you see if your sales increase, and then use the results as the basis for making decisions on future spending.

Some leading companies are developing their own new media programs to measure returns and guide future spending. Coca-Cola, for example, created MyCokeRewards.com. The company encouraged customers to use the site by placing reward codes on its beverage products. Customers enter the codes on the site, along with basic personal information. Then, the company created promotions for registered members that, in turn, allowed it to collect specific data on their responses in terms of purchasing patterns, lift, and ROI. The results enable the company to create more effective, more profitable new media marketing.

Some new media companies are creating marketing models designed to help companies manage and optimize their spending. For instance, Yahoo Consumer Direct teamed up with ACNielsen to offer marketers a program that not only allows them to reach very specific customer segments online but to measure the responses of the customers based on the tracking of actual purchases. In its “Most Valuable Consumer” program, marketers purchase access to specific, sharply focused customer segments from Yahoo, which distributes the marketers’ banner ads or promotions to these customers throughout its massive online network. Then, ACNielsen enters the picture. It uses its market research prowess to create a statistically significant panel of tens of thousands of people within the customer segment, calculates the offline sales impact of the ads or promotions within the panel, and extrapolates those results over the entire customer segment, which often ranges into the millions of people. The result is an ROI figure that is accurate enough that marketers can use it to predict and improve the results of their online events.

Of course, not all new media lends itself to easy ROI calculation. Like billboards and image print ads, blogging and other social networking activities can be hard to monetize. But even in these cases, the interactive nature of new media offers a better environment to calculate ROI because customers’ actions can be tracked. Marketers who build their ROI capability can take advantage of these benefits and get a handle on new media.

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Leslie Moeller is a partner at Booz & Company where he leads the North American Consumer and Retail practice. He previously headed the firm’s global sales and marketing service offering.

Edward Landry
is a partner at Booz & Company with two decades of experience in consumer industries. He focuses on strategy development, business transformation, and sales and marketing effectiveness across a broad range of consumer businesses.

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