Friday, June 24, 2005

Advertisers want to see what kind of bang their buck buys

Philip Wrigley was seated in an airplane, the story goes, when somebody asked why his company spent so much on advertising when its chewing gum was already so successful.
He replied: "For the same reason the pilot of this plane keeps the engines running when we're already 29,000 feet up."
For decades, marketers have assumed a clear and causal link between advertising and sales -- in part because it is so difficult to measure the return on investment for advertising.
But a recent trend toward clients squeezing marketing costs and demanding proof that ads are worth the price is a hot topic at this year's Cannes Lions International Advertising Festival.
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"Advertisers want to understand: What am I getting for my money?" said Doug Checkeris, president and chief executive officer of Media Co. in Toronto. ". . . Our measurement tools -- what we measure, how we're able to measure it -- are still pretty rudimentary."
The issue of marketing ROI leaped to the forefront last year when a consumer products analyst at Deutsche Bank published a research report concluding that many television commercials have a negative return on investment.
Then in January, a three-day conference was held in Miami under the title "The New Era of Accountable Marketing."
So it's no surprise that accountability is also a big issue in Cannes, where 8,000 members of the ad industry have gathered to celebrate the business and eat pricey dinners on expense accounts.
Agency people complain that many clients are trying to turn advertising into a commodity, when a lot of them see it more as an art. They grumble that until recently they negotiated rates with a client's chief executive officer or chief marketing officer. Now they're dealing with procurement officers, like any other supplier.
Andy Berlin, chairman and CEO of U.S. agency network Red Cell, said he has even heard of examples where clients are putting limits on how much an agency can pay its own employees.
"No longer are you in a marketplace where you're bidding for the best idea or the highest quality people," he said. "You're in a marketplace where you're making commodities out of all the ideas that are supposed to be differentiating."
But he said there are ways to break free of the client's attempts to drive down costs.
Mr. Berlin's company has negotiated unusual deals with some of its clients, where Red Cell pays the entire costs of making and placing ads, but receives a sizable chunk of the profits.
At a seminar on return on investment at the ad festival, Keith Reinhard, chairman of DDB Worldwide, said he doesn't understand why so many agencies get afraid when clients want proof that their marketing investment is paying off.
He praised companies such as Procter & Gamble that have changed the way they remunerate agencies to focus on results. Agencies get paid more if an ad does well than if it bombs.
P&G's approach proves it's possible for marketers to make sure they are getting a return on investment, Mr. Reinhard said.
And despite DDB's belief in industry award shows, Mr. Reinhard said he is not convinced that the ads that win awards at Cannes always have the best return on investment.
Benoît Bessette, vice-president and national client leader for Cossette Communication Group, said Bell Canada is becoming more focused on return on investment and involving procurement people in the negotiations.
"It's legitimate for clients who invest millions of dollars a year to make sure they are getting a return," he said yesterday in Cannes.

1 Comments:

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