March 23, 2009

ROI: Manage Your Expectations

What Really Is: Return On Investment?

Traditional channels are grappling with both the economic landscape and the countless new tools available. The ones having the most difficulty are those working in industries predicated on inaccurate mass marketing metrics.

A billboard may have given some in the past the impression of success. Or at least gave them the ability to sleep soundly at night.

It's Not Enough Anymore

I worked in the radio industry for many years and depending on the market, each radio station would be rated two to four times each year. During those ratings periods, stations would clamor to yell and scream the loudest in order to get noticed enough to be written down in a ratings diary by less than 1% of the population. Then the ratings company would ‘average’ audience numbers for each market. It's even more anitquated than that, but I won't bore you with the details.

I worked at The Edge in Toronto which targets Males 18-34. Less than ten thousand people would receive ratings diaries and decipher radio tuning habits for five million. That's a sample of .002%.

It's akin to me asking you to decide what everyone will eat at a particular restaurant for an entire year. Once you accommodate vegetarians, allergies, those who don't like spicy food or any cultural biases, your only logical choice is lettuce. Boring, unseasoned, lettuce. Yummy, huh?

Think of that the next time you wonder if the station has more than ten songs or why they keep saying their name. Neither is true, but perception is reality.

More Of The Same

If you ran a music label and wanted the next Coldplay, the chances of you signing an act that is a bit out of the norm are nil. There is too much risk in that; there is no road map or guarantee. Imagine a marketing company suggesting to a client that traditional channels are not their only option? How often do you think the client will pick the ‘sleep at night’ option?

Traditional Mass Media Is Not Dead
Online Is Not The Gold Rush


Radio, television, newspaper, and outdoor advertising options remain alive and will work if used properly. What is essential to ROI is managing expectations. However, one billboard or a few dozen radio commercials will not set you up for endless success. I lost count of the number of clients that would say to me “radio doesn’t work” after a one-week campaign. At that point, you may as well take your spouse on a vacation – at least you’d have some memories and pictures to add to your Flickr account.

A four-piece reggae classical punk band, a spicy Italian meal, a company embracing Twitter, or an adventurous radio station can all work but only when mainstream guesstimates are thrown away.

Count The Receipts

If you realize spending millions on a TV spot during the Super Bowl is less effective than building a community, you are well on your way to managing expectations, return on investment and living in the real world.

What are your thoughts?

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