ANALOG DEVICES, INC.
Measuring Marketing ROI: A Business Case Demonstrates How Advertisers Can Use the Web to clearly articulate ROI
Original Text can be found at www.businessconfessions.com/mroi.pdf Robert DeRobertis, Jessen Wehrwein, Jennifer Mitchell & Robert Berube 11/7/2008
Measuring Marketing ROI: A Business Case Demonstrates How Advertisers Can Use the Web to clearly articulate ROI by Robert DeRobertis, Jessen Wehrwein, Jennifer Micthell & Robert Berube @ Analog Devices is licensed under a Creative Commons Attribution-No Derivative Works 3.0 United States License.
Measuring Marketing ROI: A Business Case Demonstrates How Advertisers Can Use the Web to clearly articulate ROI Calculating the return on investment (ROI) for advertising, and the ability to clearly show how it correlates to increases in revenue has been an age old problem in the business world. In a recent meeting a colleague of mine made the observation that the equation for ROI can be “a wish times a guess divided by a lie”. In order to make the best business case, an over enthusiastic marketer might be tempted to bias the statistics to make their proposal look good, particularly when there is a high degree of uncertainly and judgment on the numbers. This is human nature. Clearly, calculating ROI is an important element in determining business success. In the past, companies have typically run advertisements to gain “awareness.” Awareness can be defined as efforts that expose customers to the breadth of products and services that a company provides to meet their needs. The only way to measure increased awareness was through annual brand tracking studies which provided clues into the market’s perception based on the effectiveness of several activities. However as marketing dollars become harder to come by, the question had to be asked “how should we spend and optimize the precious dollars we have available for advertisement and how can we measure the ROI?” With that, could advertisements do more than build awareness? Could advertisement help to build preference? Could advertisements generate revenue? Success Metrics: Strategy Followed by Process Twelve months ago, a team was created at Analog Devices to develop and implement an advertising strategy for the Blackfin processor that was measurable, with ROI as the key calculation used to measure success. The team began the process with a number of facts known from previous activity: 1) The first step a customer takes in designing in the Blackfin processor is to download free software from our website (called a test drive) and evaluate the capabilities of the product. 2) When a customer takes the step of downloading and using a test drive they are transferring ownership of the decision to use the product and build a preference in using the Blackfin processor. [An analogy is when a person buys a pair of shoes; you typically don’t buy unless you try them on. After trying on the shoes, if the shoes fit well and look good, you transfer ownership in your mind and decide to buy the shoes.] 3) There is a measurable ratio of customers who evaluate a test drive and then begin using the product in a new design. This business is measureable and can deterministically forecast annual revenue in an 18 month window.
Measuring Marketing ROI: A Business Case Demonstrates How Advertisers Can Use the Web to clearly articulate ROI by Robert DeRobertis , Jessen Wehrwein, Jennifer Micthell & Robert Berube @ Analog Devices, Inc is licensed under a Creative Commons Attribution-No Derivative Works 3.0 United States License.
4) The top two influencers that cause a customer to select these products are: a) Recommendation from other engineers and b) Information on the manufacturer’s website. The team set out to implement a marketing program that would cost effectively drive customers through a process of building preference for Blackfin, and ultimately to embed this technology into their next product. The strategy was to achieve the goal with a new advertising campaign that could be measured monthly, allowing for quick adjustments to be made to optimize the campaign as needed. The “Blackfin Is Where?” Campaign The team worked through a creative process and ultimately selected the “Blackfin is Where?” online advertisement campaign. The campaign’s goal was to drive customers to the website, and once there, convince them to download a test drive, the first step in beginning the process of evaluating Blackfin. When considering what to show to convince customers to view the ads, the team looked for compelling customers whose products epitomized innovation -- innovation created using Blackfin technology. The team chose to promote the strong brands of Audi (A5) and Hitachi (Digital Video Recorder). The team also chose to demonstrate innovation with an internet phone (GIPS) and a portable media player (Gemei). These ads used video to highlight the innovation of our customer’s products, and then link to a landing page with relevant application content where the customer was encouraged to “learn more about how Blackfin Helped Audi Drive Innovation” and “Get Started with a free test drive”. Freeze frames of the Video Ad
Measuring Marketing ROI: A Business Case Demonstrates How Advertisers Can Use the Web to clearly articulate ROI by Robert DeRobertis , Jessen Wehrwein, Jennifer Micthell & Robert Berube @ Analog Devices, Inc is licensed under a Creative Commons Attribution-No Derivative Works 3.0 United States License.
During the process of creating the online advertisements we learned that the creation of landing pages which provide useful content was a critical element to the success of the campaign. The ad was the hook to get them to the landing page, but the landing page had to fulfill the promise, and its content became the lever to convert them to a test drive. The effort of creating relevant information and populating a web page took an equal amount of effort as creating the online video advertisements. Content such as “Why Choose Blackfin?”, customer stories and technical white papers were created or collected for this web landing page. These landing pages and advertisements collected statistics of access by people to be used in analyzing effectiveness of each ad and each landing page. Image of landing page
Measuring Marketing ROI: A Business Case Demonstrates How Advertisers Can Use the Web to clearly articulate ROI by Robert DeRobertis , Jessen Wehrwein, Jennifer Micthell & Robert Berube @ Analog Devices, Inc is licensed under a Creative Commons Attribution-No Derivative Works 3.0 United States License.
Measuring ROI With the campaign creative and landing pages in place, the next step was defining the metrics we would use to measure the success of the program. These included: 1) How different formats of the ads performed by way of getting customers to click on the ad (Click through rate). We developed two different types of formats, Interpoll ads (dynamic polling) and video ads in addition to different ad sizes and various placements on publishers’ web sites. 2) How different formats of the landing pages caused customers to take an action. What information customers found as useful and caused customers to download a test drive. 3) How different items promoted in the ad performed. 4) How different online media companies performed by way of customers taking some kind of action and ultimately downloading software from the web site (effectiveness of the cost per click), ratio on the number of times a customer saw the ad vs. the number of times a customer took action, which media companies generated the largest percentage of test drives per dollar spent. 5) How many customers landed on the new web pages? 6) How many customers downloaded a test drive? 7) What the trends are month to month and how to adjust to be more efficient in getting a customer to take action 8) The overall cost in creating the program to the number of test drives generated to the amount of revenue potential created. (The bottom line ROI calculation).
Results The program began in October 2007 and continues to run in the market today. The program was modulated through December to take into account the US and EU holidays, and in February to reflect the Chinese holidays. The team determined in the first two months what kinds of ad formats created the best click through rates; how to best evaluate and test information provided by the media companies; how to determine which companies were stretching the truth in the reporting of clickthrough data (which could be validated by our internal analytics program) and which media publishing companies ad sites provided the best performance on getting a customer to download a test drive. Actions were then taken to get more efficient results including re-arranging web page information and wording on the ads.
Measuring Marketing ROI: A Business Case Demonstrates How Advertisers Can Use the Web to clearly articulate ROI by Robert DeRobertis , Jessen Wehrwein, Jennifer Micthell & Robert Berube @ Analog Devices, Inc is licensed under a Creative Commons Attribution-No Derivative Works 3.0 United States License.
Studying the trends for six months, the team found that by increasing or decreasing spending on advertisements, there was a direct correlation to the number of test drives, and there was a direct impact to changes in website traffic. The team also learned how to more effectively spend for advertisement to achieve the goal through targeting online ads in certain ways. They also realized that with a target towards driving a customer to preference, maintaining awareness of the brand can also be achieved through repetition of impressions. Comparing the 8 months of this campaign to the prior 8 months, there was a 24% increase in test drives downloaded from the website. By way of ROI, the calculation was made as follows: ROI %= (total number of test drives downloaded divided by the typical drop off of test drives to design in * the average revenue per customer in the mass market)/ Total dollars spent in running the program. This return on investment is around 50 times the dollars invested into the campaign. Based on the level of dollars invested we can see increasing the revenue for this product by 25% over a design cycle interval of these customer projects. The team has found this method as an effective means to directly link advertisement spending to business results. The team also now has a rigorous frame work to measure new programs and determine the success or failure of future online advertisement programs.
Measuring Marketing ROI: A Business Case Demonstrates How Advertisers Can Use the Web to clearly articulate ROI by Robert DeRobertis , Jessen Wehrwein, Jennifer Micthell & Robert Berube @ Analog Devices, Inc is licensed under a Creative Commons Attribution-No Derivative Works 3.0 United States License.