The ROI Holy Grail

It’s jargon gone ballistic. You hear so much ROI  – and IMHO see so little ! Sure , it’s practically impossible to determine the returns from your Marcom spend in the finance /accounting  sense of the term (= net profit / investment , and on a Net Present Value basis at that strictly speaking !). But then as it is a finance/accounting  term with a specific and well defined meaning , why not use another ? Or at least why not use it less  indiscriminately?

Recently I came across an ‘ROI’ report for a sponsorship produced by an agency that specializes in the stuff. It turned out to be essentially  a savings statement which gave the % discount off rate card costs after assigning weights to specific components of the exposures. A very good savings statement . But ROI ?

It’d be ROI – if the end objective were to buy media space !

A bit like calculating the returns from your stocks as the savings on brokerage ?

Meanwhile , an excellent The Economist special report on the gaming industry

Cheers

Book worming down ?

Borders is shutting down – another casualty of the new era opening  another chapter in the ongoing “books are dead” story. (Needless to say , by book i mean of the physical paper variety ! ) (Read WSJ report here)

Borders’ (and others’) main problem  is more about channel than product – physical books are still the overwhelming leader. It’s more about the impact of E-commerce as their emerging distribution channel. While again bricks-and-mortar are still 2/3 + of the market , that share will only decrease steadily. In the long run , the picture will more than reverse. And E-books will continue to grow at mega rates too until  the physical and digital sizes converge.

This will be over a longer time span of course. And it’s unlikely that physical books will disappear altogether. Not for a couple of generations at least ? But now you can at least conceive of a time in the distant future when it just might. Who knows,  human faculties could transform that way.

Even though it won’t be in my lifetime (thankfully) ,it’s still painful to imagine. Not that there’s anything inherently superior or arguably even natural in physical paper books. It’s just a sentimental thing. Nothing beats the comfort and pleasure you get from them : the sight of the printed word, the smell of paper , the sound of rustling pages , the feel of  turning  a leaf …..

Cheers

The Digital Blind Spot

By now there’s nobody in your circle who doesn’t use the internet, very few who don’t use it heavily – and hardly anyone who remembers seeing any of the ads!

This is a blind spot:  first, in the literal sense of missing the ad from an audience POV and second, in the current conversations on  Digital from the industry standpoint. Because this quite pervasive if ‘layman’ observation is given a wide miss in all the shouting that is on at the moment. Or at most, it’s covered under the ‘you-only-pay-for-what-you-get’ umbrella.

What prompted this post was the latest “never notice them” I got at a party recently when I was speaking about the Digital revolution in our industry. I’ve heard a lot of this by now and from a diverse range of people (though regular internet users all). But this one from a very digitally clued-on, gadget-and-games loving Investment Banker in his early 30’s was what really spurred it. It was time to look it from an outsider / ‘layman’s perspective. (To paraphrase  David Ogilvy : the ‘layman’ is not a moron , he’s your target audience !)

Ceteris paribus, ad avoidance is the norm: you avoid ads when you can. It holds true across media. For e.g, there’s a roughly 30% drop on average in TV audience during ad breaks. The difference though comes from the way media consumption plays out in each case. Two important elements of the process rarely get factored into the current conversation about Digital – namely, audience state of mind and communication format.

The constraint of online formats is easier to understand: the static banner occupying 1/10^th of a cluttered screen, or that pre-roll TVC playing on a little window with low wattage laptop speakers on. That straight away puts a limit to impact and recall.

But audience state of mind when consuming media is as big a point. Audience passivity is underrated. It’s actually one of the most valuable things there is in this line. It renders the remaining 70% (or 50%, or 25%, if you prefer…) of the TV audience who stayed with the ad break pretty much captive. The guy takes what’s coming on the screen.

With online, there’s a more active sense of purpose. The natural consequence of that are things like closing that Pop Up box when logging into E-Mail or completely ignoring the ads when updating your Facebook status or relying only on the unpaid-for Google Search results when hunting for information. It’s the flip side of interactivity and choice.

Combine the two elements and you size up that blind spot pretty well. It’s where that guy at the party was coming from. In a nutshell, your audience is more actively focused on something else and what you’re trying to distract them with is just not powerful enough to either distract them at all or to distract them enough.*

The internet (and the digital revolution in general) is one the most profound developments in human history. It’s a game changer. To labor on that point would be a banality. Its impact on business has been colossal. It has impacted the business of marketing communications.

But my hunch is that the impact on communicating to consumers online and changing / shaping their attitudes and behaviors – big as it is, hasten to add – is not as big or to the same extent. It’s more ‘incremental’. (see a previous post on this). There is a difference between consumers’ consumption / adoption of the digital life and their consumption of digital advertising as it stands now.

Operative word being ‘as it stands now’. Because the true power of ‘Digital’ will be unleashed the day rich content (read full-on video) is delivered on a mass scale, economically and without a technical glitch  in a big , easy to operate , switch on-off box (read TV set or tablet device ) to consumers in a lean back / passive mode. The power lies in its becoming more an all-pervasive distribution technology than remaining a ‘medium’.  And that day is coming. No doubt about it.

Cheers

* PS :

Metrics like CTR (3%? 9%? 15 %?) or Facebook ‘Likes’ (25 million for the Coca Cola page, or 5% of the total FB universe , or 1% of the brand’s consumer universe) could bear all this out but that’d be straying from the point of this post of seeing it from the layman’s POV.

In our region compared to more advanced markets , a lower audience base could be seen as an issue as well. (click here for internet penetration stats). But : a.) that’s not the point of this post. We’re talking about current internet users and b.) the base will only grow – and grow fast.

Just browsing . . .

E-Commerce and the luxury goods sector  Read in yesterday’s FT about Armani  launching a Chinese E-Commerce site . That kind of  sums up the current story on the global luxury goods sector today : China + the Internet ! Interesting to see how e-com is catching on with a sector for which both the physical product and store have always been a key component . The report said that online sales will contribute 5% of total luxury goods sales in 2011.   I think this trend at least in some ways will challenge some long standing assumptions / received wisdom about what really constitutes the appeal of these goods in terms of exclusivity , pricing , etc. As also bring to the  fore a very basic tenet we may tend to forget sometimes :  irrespective of the selling plank (say , exclusivity versus price) , you  go where the sale is.

A few months ago , The Economist carried another interesting piece on e-commerce becoming more – what else ! – Social. (Read here)

Google  A couple of posts ago (read here) i touched upon Google expanding into more and more areas of our lives. In the last couple of days , we read about (a) its investment into the O3b Networks satellite venture  -  a $1.2 Bn project including $ 410 mn in equity from a group of companies led by SES and including HSBC , Liberty Global and Google which aims to provide internet access by satellite to 150 developing countries through wholesale deals with telcos / providers -  (b)  and then about Google Translate getting into patent application services free of cost  for the European Patent Office . Both are perfect fits. Over and above direct financial  returns on the O3b investment itself is the bigger picture – higher the internet penetration , more the reach of Google. Then , from the EPO deal will come  experience and the physical volume required to hone and improve the translation product. No such thing as free lunch after all !  

UAE Peoplemeter Project   This one is going ahead then , is it?  (Read here ) A welcome bit of news but one will wait to eat the pudding first ! I see that still no dates are mentioned. And of course its still status quo on the parallel (and more important) Project Illumination project for KSA. Oh , waiting for the day when we cynics will be made to feel foolish !

In the attached Ballpark 8  file : top e-commerce sites by base and updated nos for Amazon and Google

Cheers