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The ROI of Putting Your Pants on in the Morning?
Categories: ROI

Phil Johnson had some food for thought on Advertising Age. He writes about “The Dilemma of Measurement and Accountability.” Excerpts below. See http://adage.com/smallagency/post?article_id=139799 for full article.

As a technologist who’s been stymied by bean counters when the ROI made perfect sense. I’ve also been a business person who’s seen ROIs thrown out the window to get technology for technology’s sake, I want to know how have you measured the unmeasurable?

“A couple of months ago I had lunch with Scott Monty, a friend and former PJA manager, who is now director of social media at Ford. He was telling me a story about a speech he had recently given where someone in the audience kept challenging the ROI of social media. …he got exasperated and finally said, “What’s the ROI of putting your pants on in the morning?”

Some things just seem like a good idea, including program measurement and accountability. The dilemma I see is that while agencies have gotten religion about the discipline of measurement, these efforts have not necessarily increased the value of agency services. Listen to the agency buzz, and we’re all masters of measurement and analytics. Every agency worth its salt claims to not only solve its client’s business problems but has the data and case studies to back it up. By the same token, CMOs cite producing measurable results as their No. 1 priority.

That’s all great. CMOs want results and agencies deliver. Shouldn’t everybody be happy? Not so fast. The other buzz out there is that agencies are getting killed on price and are frequently viewed as a commodity service. That’s no way to treat someone who helps drive your business success. Maybe agencies are not measuring enough, or measuring the right variables? Maybe the measurement is fine, but the results just aren’t good enough? In any case, there’s a gap between what agencies are saying about the ROI of their programs and how they’re valued in the market.

Direct agencies can argue that they have solved this problem, and digital agencies get high marks for raising the bar on analytics. But right now everybody suffers from the same price erosion and competitive pressure. While we debate the merits of one approach over another, billions of dollars are gushing straight to Google and contextual advertising. According to Ken Auletta in his recent article in the New Yorker about Google, they “provide an answer to the adman’s legendary line: I know half of my advertising works, I just don’t know which half.”

Posted by Kathy Sandler on Monday, October 26, 2009 at 12:01 AM

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