Tuesday, November 11, 2008

Hell hath no fury

The following is a reprint of the Ad Nauseam column which appeared in the November 11, 2008 edition of the Metaverse Messenger.

Asking advocates of social network marketing and virtual world promotions about the Return on Investment (ROI) can be as controversial as walking into an Al Qaeda hangout and asking their opinions on B’nai Brith. But then this is nothing new. Promoters of non-traditional advertising have always been a bit touchy on the subject. To illustrate, let me give an example from before the days of the Internet.

Many years ago I was commissioned to analyze a software program for a large diamond company. The company spent a fair amount of time sending informative and unsolicited articles about diamonds to newspapers, magazines, radio and television stations in the hopes that some of these would be published and aired as actual news stories. Although it didn’t cost them much, it did put a certain drain on resources, and they wanted some idea of their ROI. The purpose of the program, which had been designed in Europe, was to measure the value of published articles in terms of advertising dollars. They chose me because I had previously worked with them through the advertising firm I'd been with and they knew me as a systems analyst with marketing knowledge.

My job was two-fold. The first phase consisted simply of analyzing the program in terms of its actual operation. Did it work? Were there bugs? Could the bugs infect the users and make them sick? That kind of stuff. The second phase consisted of actually examining the purpose of the program and its effectiveness. Could it, in fact, give them some idea of their ROI?

Well, phase one was no problem. It was picky and time-consuming, but it was nothing I hadn’t already done a hundred times before with software for the ad agency, some of which I’d written in the first place.

Phase two, however, began to feel like a Philip Marlowe novel: a minor, seemingly straight-forward mystery that rapidly escalates into a far-flung conspiracy involving hidden motives and faceless men uttering threats from the shadows.

The core of the mystery involved the algorithms being used to determine the monetary value of press releases used by end recipients. If, for example, an article explaining the traditional method of determining the right price for an engagement diamond (yearly salary divided by six) was used in a newspaper or television spot, what did that represent in terms of advertising dollars? (Keep in mind that because these were ostensibly “news stories,” they didn’t really mention the diamond company, and therefore their value would be less than a similar sized advertisement.) At first everything looked fairly conventional. Values were given not only for the medium (newspaper, television, radio), but also for each particular medium (
Toronto Star, CityTV, CHUM). A quarter page story in a weekday edition of The Globe and Mail would receive a score of, say, 0.4, while the same story in the Saturday edition would receive a score of 0.6. This would then be multiplied by the value of a quarter page ad in the same edition. The result would be the value of that story in advertising dollars.

The problem was, the more I looked, the more it seemed that many of the values, to put it kindly, were completely arbitrary. As with all advertising, audience is of particular importance. A full page story about engagement diamonds in a publication aimed at teenagers would have far less value than a quarter page story in a publication aimed at people in their twenties. And while there was some sense to the program’s determination of values for print media and radio, when it came to television I had the feeling the software writers had picked values out of thin air.

Although I had some expertise in the day-to-day mechanics of the advertising industry, I was by no means an authority, and so I began consulting with the head of traffic (advertising buys) at JWT where I maintained a good relationship, even though I was no longer working there. The idea, of course, was that he could clear up the ambiguous data. Instead, where I had merely been somewhat puzzled by what I’d found, he, on the other hand, was completely mystified. Not only did the values I’d been suspicious of make no sense, he told me, but neither did many of the values I’d accepted as basically valid.

When I took this to the project manager she seemed remarkably unsurprised, leading me to think that she’d been harboring suspicions which had led her to hire me in the first place. When she told me that the software was already in use in Europe, I asked where they were getting the figures from. She said she’d try to find out. The next day she got back to me, much subdued, and told me that the project was going to go ahead and could I please wrap up my report and get it in to her.

All in all, a very peculiar experience, but also a very valuable one in terms of marketing. I learned that hell hath no fury like the proponent of a non-traditional advertising method whose ROIs are examined too closely.

Today we have a whole host of new marketing techniques ranging from viral YouTube videos to promotional events held in virtual worlds. And while a good number of consultants are more than ready to explain the vast potential of these new media, anyone who asks about the actual ROIs is liable to be skewered to the wall and branded a reactionary.

That doesn’t mean that there isn’t value to be found in these wild and wooly media; merely that trying to determine it is a bit harder than trying to determine the state of North Korean leader Kim Jong-il’s health.

Next week we’ll look at some of the prevarications as well as the straight-shooters in this modern mine field.


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