Time Shifting
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An Old Refrain THE DESIRE to measure the effectiveness of advertising has existed for a long time. In 1990, texts on KPI were already been published. At the same time, the massive use of econometric models for marketing and media planning was on the rise. In conjunction with the growth of the digital realm, also attribution models came into play, and are nowbeing utilized for several years. All these are paramount elements for evaluating the performance of communication expenses, and for anticipating successful solutions. ‘KPI, econometric and attribution models’ are still on the increase as Google search hits. There is boundless literature, in which the customer journey is always pivotal. Where do we stand? And most importantly, which way should we be heading? The two approaches The analysis of communication effectiveness has two different objectives: 1. to assess whether the investment has actually generated a return greater than the costs; 2. to verify the efficiency of each tool. In the sea of technicalities in which advertising control often drifts, there are some key points that can change the perspective, and consequently, the result. These variables are obvious, and therefore often underestimated. Let us begin from the most extensive and important standpoint: the return on investment. 1. Return on investment evaluation In a business perspective, the return on investment must be higher than the costs. Whether print, digital, or OOH, the goal remains the same. If I spend 100, I wish to get an overall return of at least around 104-106, hoping to reach the final 115-120, net of inevitable mishaps.
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Transcript of Time Shifting
AnOldRefrainTHEDESIREtomeasuretheeffectivenessofadvertisinghasexistedforalongtime.In1990,textsonKPIwerealreadybeenpublished.Atthesametime,themassiveuseofeconometricmodelsformarketingandmediaplanningwasontherise.Inconjunctionwiththegrowthofthedigitalrealm,alsoattributionmodelscameintoplay,andarenowbeingutilizedforseveralyears.Alltheseareparamountelementsforevaluatingtheperformanceofcommunicationexpenses,andforanticipatingsuccessfulsolutions.‘KPI,econometricandattributionmodels’arestillontheincreaseasGooglesearchhits.Thereisboundlessliterature,inwhichthecustomerjourneyisalwayspivotal.Wheredowestand?Andmostimportantly,whichwayshouldwebeheading?ThetwoapproachesTheanalysisofcommunicationeffectivenesshastwodifferentobjectives:1.toassesswhethertheinvestmenthasactuallygeneratedareturngreaterthanthecosts;2.toverifytheefficiencyofeachtool.Intheseaoftechnicalitiesinwhichadvertisingcontroloftendrifts,therearesomekeypointsthatcanchangetheperspective,andconsequently,theresult.Thesevariablesareobvious,andthereforeoftenunderestimated.Letusbeginfromthemostextensiveandimportantstandpoint:thereturnoninvestment.1.ReturnoninvestmentevaluationInabusinessperspective,thereturnoninvestmentmustbehigherthanthecosts.Whetherprint,digital,orOOH,thegoalremainsthesame.IfIspend100,Iwishtogetanoverallreturnofatleastaround104-106,hopingtoreachthefinal115-120,netofinevitablemishaps.
Gettingahighreturnoninvestmentmayappeareasy,orconversely,animpossiblechallenge.Italldependsonmanyfactors,aspermanyspecializedtexts(eg.https://www.amazon.com/Long-Short-Balancing-Long-TermStrategies/dp/085294134X)Frommyside,Iwouldliketofocusonthreesimple,intuitiveandneglectedvariables,ofteninfluencingROIresults.Theyare:a.Investments(ie:thecostswedecidetoenter)b.Return(theresultweexpecttoachieve)c.Time(thetimeframeinwhichtheresultisachieved).a.InvestmentsAllcommunicationexpensesaregroupedundertheentry‘investments’.Thenumberofrelevantentrieshasconsiderablyincreasedovertheyears:fromthecreativity+media+productiontrio,toanarticulatedlistincludingdifferentareasofspecialisation.“Today,asweknow,communicationrequiresmorespeed,tools,knowledge,andlongerworkinghoursthaneverbefore”.HastheROIevaluationinthedigitalerachanged?Insomeways,yes.Withregardtoadvertisingexpenses,nowadaysamoreimportantroleisplayedbythoserelatingtotechnologyandcontrol.Asitalwayshappensintimesoffastandcontinuousevolution(asitalsowasinthe80's),operatingcostsincreasetoo.Consequently,thereisanincreaseofinvestmentsneededto‘catchup’withthefastdevelopingmarket.Inordertoreachthesamenumberofpeople,moreworkinghours,technology,control,andofcourse,morespeedthaninthepastareneeded.Butwecanreachthecommunicationrecipientsbetterthanbefore.Wesaidthatwe'can’doit,notthatwe'manage’todoit.Infact,theROIhelpstounderstandwhetherthepossibilityhasactuallyturneditselfintoconcretefacts:iftheinvestmenthasbeenprofitable,withactualresultshigherthancosts.b.ReturnGivingarundowntothepointofanexcessivesimplification,effectivecommercialcommunicationprovidesthefollowingresults:
q purchaseintheshorttermq brandstrengthening(whichinturnsalsocontributestothepurchase,andwhosefinancialreturnis
merelydeferred)q alloftheabove.
Ofthesethreeresults,itisactuallythethethird-themixedone-thatcomprisesthelargestnumberofinvestments:ononehand,itgeneratesanimmediateincreaseofpurchases,andontheotherhanditspreadstheirfinancialreturnovertime(contributingtowhatweusuallyrefertoasbrandequity).
Theoverallevaluationofthesuccessofacommercialcommunicationtakesintoconsiderationthemonitoringofbothsystems:salesincreaseandbrand-relatedvalues.Therefore,acomparableKPIsystemisnecessary,includingbothpurchasemetrics,andtheotherdefiningbrandequityindicators.Beforeventuringintothecomplexworldofbrandequity,let’sjustcombinethesalesindicatorstothebrandingones,expressedthroughthetwofundamentalKPI:•brandawareness•brandprofile/reputationc.TimeAtthispointaquestionarises:whatisthetimeframeneededtomeasureresults?Timeisthenecessaryvariableinordertoframetheperiodinwhichtoobtainandevaluateresults.Asweknow,communicationcanactdifferentlydependingonitsdefiningvariables.Measuringsuccessdoesnotonlymeansettingobjectives,butalsosettingdeadlines(andtherefore,identifyingtoolstobeused).Notmakingclearaboutwhenwewanttogetresultsmeansnotbeingabletoevaluatetheeffectivenessofcommercialcommunication.Ifmeasuredatthewrongtime,asuresuccesscanappearasafailure.Andviceversa.Infact,timehasatleast4connotations,whichdirectlyinfluencecommunicationperformance:First:experientialRosatistates"timeisthefabricthatshapesexperience"(1).Digitalrealityhasincreasedthepossibilityofplayingaroundwithspaceandtime.Settingatimelimitmeanstofocusonsuitableoptions,andbetterexploittheirpotential.Second:commercialTheabilitytobuyatcompetitivepricesisstronglyrelatedtotime.Availabletimetoidentifythemostcost-effectivesolutions,timefornegotiations,andtimeconstraints(calendar)Third:mediaplanningTheparadigmshiftisimportant.Shiftingtheattentionfromstarttofinish.Fromoutputtoresult.Fromthemomentwewantthecommercialcommunicationtostart,totheonewhenperformancewillbemeasured.Besides,thetimevariableseemstohaverevolutionizedallfieldsofknowledgebuttraditionalmediaplanning,whichmoreoverisstillunderperforminginstandardizingthetemporalmetricsofresearch.Fourth:companypolicyLaunches,seasonalpurchasing,restocking,stockprices,andalsoheadquarterdeadlinesmakeitnecessarytogatherthefirstevidencesbeforespecificdates.Therefore,thereturnoninvestmentcannotdisregardthetimevariable,whichisactuallythemostimportantelementofall.Anexampleoftheimportanceofthetime?Trytoimaginehowdifferentlysettingadeadlineornotsettingit,whetheritisaboutwork,loveorsports,canimpactourlives.
2.TheefficiencyofcommunicationleveragesMeasuringtheefficiencyofcommunicationleveragesisstandardpracticealsoinItaly.Althoughwhatismissingisoftentheabilitytoorganizeinformationandputitinorderofimportanceaccordingtoobjectives.Incompaniesandagencies(butalsoonthedesktopofanindependentprofessionallikemyself),thereisoftenabingeofnumbersthatlosessightoftheultimategoalofthemeasurement:understandingwhetherwehavereachedourgoal.Thisisaccompaniedbyanoppositereaction:theabsenceofverificationduetolackoftime.Therefore,ifitistruethatcompaniesandagenciesshouldhaveinplaceanautomaticcalculationsystemforallcommunicationindicators(performanceindicatorsaremuchmorestablethanonewouldthink),itisonlythechoiceoftheobjectivethatdeterminesthemainKPI.Anindicatorwhichisimportanttogetinabrieftimeperiod,andwhichrequiresdailyupdatesinordertomonitorrealtimeefficiencyoftheutilizedlever.Inconclusion:4recommendationsThedesiretomeasuretheeffectivenessofcommercialcommunicationisasoldasadvertising.Themarkethascapitalizedimportantcontributions,butonlywhenalargenumberofbusinesseswillbewillingtofeedandusebigdata,clearanswerswillbecomeavailable.Meanwhile,wecanmakegood-verygood-useofmetricsandtoolsatourdisposal.AsfarasIamconcerned,hereare4recommendationsthatIwouldinsertinbusinessBestPractices:
q Investments?allitemsincludedq Returns?simultaneouslymonitoringbothsalesandbrandingq Time?let'smakeitthebestallyofourcommunicationq KeyPerformanceIndicators?let’sdifferentiatethem.
Afewforthemanagement,inordertoassesstheachievementofglobalobjectives.Manymorefortechnicians,toevaluatetheefficiencyofeachleverage.
ThankyouforyourattentionandbestwishestoallPaolaFurlanettoDec2016(1)ontime:postbyLucaRosati,‘Playingwithtime.Timeanduserexperiencedesign’;JosephPineandKimKorn,‘InfinitePossibility’.0comments
