ROI

Still Waiting for the Bigger Bang.


Still Waiting for the Bigger BangSince it’s my birthday and the 4th of July this week, I’m invoking blogger’s privilege, raiding the archives, and republishing this still-relevant, evergreen post from February 2007.  Wishing you all a great 4th of July and — someday — independence from the click-through!

Is this any way to run a new paradigm?

For a bunch of high-flying visionaries, we web ad folks sure have a hard time letting go of old ideas. Empowering technology and consumer behavior are consistently way out in front of our advertising and ROI models. And don’t look now, but were in danger of falling two full laps behind. Back in the web’s bronze age – ’97, ’98 – an ‘interactive online ad’ was one that you could – get this – actually click on and be transported to the advertiser’s website! And what wonders then ensued: you could be informed, entertained, interrogated, sized up, processed and transacted with. You could play games, answer polling questions, search for product information and even interact with the company via chat or e-mail. The banner? Well, not much to say about the banner. It was the digital equivalent of that guy in the big collar and his dad’s tie who hectors you at the mall and tries to get you to take part in some ‘research.’ You know: the one you try desperately not to make eye contact with.

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Then along came a set of intervening, empowering technologies. Improved bandwidth, Flash and some smart creative vendors conspired to create radical new on-page ads: ads that could inform and interrogate you, size you up, process you and even transact with you. These ads demanded no exit from your existing web experience; they simply expanded on contact and invited interaction within the ad itself. Suddenly there was less and less need for the advertiser to even have a website. So naturally this prompted a radical reexamination of the click-through as our defining metric and ushered in a new golden age where ROI would be expansively defined and creativity would flourish.

Ahem… well…

Ten (now 16!) years have gone by and everything has changed. Everything, that is, except our crack-like dependency on the click. In recent months I’ve spoken to dozens of marketers, agency execs and publishers and it’s become dismally apparent that nobody’s really moving on. Maybe the click-based success of Google is effectively blocking the sun on this issue, but we’re still living in collective darkness. It’s impossible to realize the true depth of web ROI when we always default to a metric that says we fail 975 of every 1000 times we touch the consumer.

So despite all our bold, visionary talk, I figure our ROI modeling is trailing the technology and the actual behavior of our consumers (remember them?) by at least five years, if not more. And guess what? Another twister is forming that’s going to rearrange the furniture yet again. Video content and advertising is already here; Ajax, widgets, applications and other dynamic content delivery technologies will soon challenge the very notion of the page view and current understanding of consumer interaction. Will we still be talking about click rates five years from now?

Why are we still on the pipe? Probably because it’s easier to be simple than it is to be right; it’s simpler to follow our clients than it is to lead; and because for all our supposed edginess and vision, we’re really just a bunch of risk-averse conservatives. Look up: the true future of digital marketing is happening at warp speed. It’s a lousy time to be working with stone tools.


The Negotiation That Matters.


This week I was forwarded a promotional e-mail from a sales rep at Undertone who offers his client the “Standout Brand Guarantee” — a promise that if a pre-discussed brand metric is not met on a campaign then Undertone will hand back up to $50,000.  Last year we heard a similar pledge from Meredith Corporation:  Its “Engagement Dividend” would use Nielsen Homescan data to show that ad campaigns run across its magazine properties would actually lift product sales.  And then there’s Universal McCann, the agency that’s leading the way in negotiating pay-for-performance compensation deals with its clients:  UM actually wants to get paid based on the effect of its work in driving agreed upon measurement for clients – rather than fees, commissions or both.  Whether any of these three actions ends up being the harbinger for a new model, I’m not sure:  there is bound to be pushback and hairsplitting around all of them.  But they are all tied to a critical sales lesson.

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Historically terms like pay-for-performance and guarantee have been non-starters for digital sales organizations, it’s usually been because some brain-dead click-based metric was being imposed on them by a disingenuous buyer.   It wasn’t about having skin in the game… it was all about getting skinned.   But while sales leaders and reps have bitched about lowest-common denominator metrics and payment, few have offered any alternatives.  In each scenario the seller (Undertone, Meredith, UM – it is ‘selling’ its services to marketers) is taking charge of the conversation about ROI very early in the process.   By agreeing to own an outcome, they are putting themselves in position to decide what that outcome should be and how it will be measured.  I think you’ll see more companies taking steps like this in the immediate future, if only because the alternatives – getting paid in bulk for page views/impressions and arguing over click rates – are so unpalatable.

But to localize the idea even more, I encourage every digital sales person to begin proactively negotiating the nature and measurement of campaign outcomes at the very earliest stages of the sales discussion.  If you wait for the RFP (never a good idea, by the way) to tell you what’s being measured and how, you’re already screwed.   For the past 17 years we’ve left the definition of ROI up to the direct-response oriented ad buyer, and look where it’s gotten us.   Truth is, most clients don’t have the background or the vision to really say how digital marketing can help them.  Helping them define and rank the potential outcomes is something we owe them.

Take a stand.  Get creative.   Seek to drive the ROI conversation early and you’ll naturally occupy a stronger and more valuable place in your customer’s esteem.  And you’ll find you’ve built a more sustainable base of business for yourself at the same time.


ROV: Return of Value


In workshop after workshop, digital sellers ask me variations on the same question:  In a marketplace that’s so seemingly commoditized and anonymous, how can we fetch a fair price for what we offer the marketer? The answer lies in what I’ve come to refer to as ROV:  Return of Value.

This is not to be confused with ROI — Return on Investment — which has become little more than a set of rigid math standards increasingly disconnected from real value. (The brainpower and resources already squandered in years of optimizing click through rates is an intellectual tragedy.)  Return of Value isn’t an arbitrary set of numbers the rep is handed by the media buyer, but rather a set of challenging business standards the seller sets on his or her own.

In short, Return of Value is the sum total of all the ways in which you reward your customers for doing business with you.  It’s representative of the ongoing commitment to truly making a difference in the customer’s business, and a proxy for determination, hard work, service, attention to detail, generosity and value creation.  There are probably dozens (if not hundreds) of ways in which sellers can return value to their clients every day.  Here’s a starter list:

Selfless Insight: The best sellers are those who constantly and consistently send their customers business insights that are not tied directly to an immediate sale.  They go outside their own organizations and industries and seek out these insights, becoming an intellectual agent for their clients.

Analysis: Great sellers also return value by always offering analysis.  In a world where we are drowning in “what just happened,”  they offer the life raft of “here’s what it means.”  Marketers may have a headcount problem, but they have a braincount crisis.  Become one of the small handful who are willing to share a point of view and you’ll find a seat in their boardrooms.

Predictability: The dirty little secret of the web is that stuff breaks every day, and the whole system is somewhat out of control.  You can return value by bringing a predictably excellent level of service to your customers;  by taking personal responsibility, advocating for their needs internally and overcommunicating.  In our world, “no surprises” is an incredible luxury.

Curating Networks: Returning value can also be about the people you connect.  While many salespeople are crippled by their own desire to control the customer relationship and shut out others, the great ones are constantly connecting their customers to one another and to outsiders who can bring value of their own.  Be the the driver of a quality network for your best customers.

If you’re truly committed to returning value (and both that commitment and its execution are within your own control) and your business and margins are not growing, then its possible you’re calling on the wrong customers.  Marketers and strategic agency leaders consistently reward those who return value with higher CPMs, frequent access, better information and greater confidence.

And if you’re a seller who falls back on “the numbers are the numbers and there’s nothing I can do about it” … well, then you’re probably right about that.