As marketers attempt to better understand how to best harness brands, as well as how to most effectively use their resources, the term ROI – Return On Investment – has skyrocketed in popularity and cliché uses.
Many salivate at the prospects of being able to drill down to zip codes, neighborhoods, and individual households in order to surgically target advertising campaigns and then provide an accurate measure of the response. This has been the appeal of platforms and brands like Pandora, Google, and others that promise no wasted impressions, as well as the ability to laser focus on key prospects.
But none of that takes into account brand engagement or audience relationships – key factors in advertising and marketing effectiveness.
This topic was recently the centerpiece of an AdAge article that challenged the notion of ROI because of its inherent limitations. While metrics are a way to measure the impact of a single campaign, a more meaningful connection with brands goes to the heart of engagement and the fan experience.
The CEO of Epsilon and author of Igniting Customer Connections, Andy Frawley, effectively makes the case that marketers may be missing the boat. Frawley’s substitute for ROI is ROE2 which stands for return on experience x engagement. His claim is that evaluating campaigns based on basic ROI data – ex: how many car owners in zip code 60601 saw an ad – fails to take into account how consumers feel about brands. And variables like service, responsiveness, connection, and those little extras are simply not accounted for in ROI metrics.
This goes to the heart of why consumers often favor brands even where price points are less competitive, and barriers are higher. But the payback is the brand experience. We pay more and even stand in longer lines at Whole Foods, Starbucks, and Apple Stores. We tend to forgive them when they stub their toe by coming out with a product that is perhaps not up to their standards. The benefit is in knowing these brands know you.
It’s not that these companies have more money, staff, research, and resources than you do. It’s that they are obsessed with providing an emotional experience that speaks to this notion that they know you. At yesterday’s spring Apple event, there was a series of announcements about new MacBooks, a partnership with HBO, and of course, the debut of the long-awaited Apple Watch. While this new revolution in smartwatches is loaded with exciting features, CEO Tim Cook got to the heart of why consumers are going to stand in line for this next product in a long line of Apple successes:
And radio brands have this same ability create that higher level of engagement – online, on social media platforms, in person at events, and while consuming content on the air, in podcasts, and via videos. A station that matters in the lives of its listeners can make you happy, elevate your mood, surprise you at times, and provide a local connection you can’t get anywhere else.
Radio has brands that offer these Technicolor experiences, and when they’re on their games, they’re providing much more than a music format and a playlist. The combination of personality, social interactivity, community involvement, and a reflection of one’s lifestyle are all factors where radio can provide that ROE2 – all factors that play a role in heightening the experience and the engagement. This is what more radio stations used to be about. And it’s the stuff that radio stations need to be about again in order to navigate the competitive ROI waters that dominate marketing-speak.
In the next couple of days, we’ll take a deeper dive into what ROE2 can mean for radio on both the sales marketing and social engagement fronts and why it is so crucial for the industry to focus on its strengths rather than being hounded by its inherent challenges. Pandora, satellite radio, and other competitive threats have taken advantage of radio’s baggage, while the industry has done very little to position and capitalize on its core strengths.
Andy Frawley has it right. Radio can make your day, it can stir you up, it can remind you of the first time you heard that song, and it can reinforce why you live in the greatest town in the world. We’ve referred to these qualities as “emotional triggers” in our Techsurveys that have helped quantify radio’s true ROI – the ability to move a listener, and not just play the hits.
Radio will forever be more repetitive musically and will always play more commercials than the other guys. Those are givens. But what radio brings to the table in the form of experiences, emotions, and engagement cannot be duplicated even in this dynamic media environment.
We’ll look at radio from the sales and social angles over these next couple of days to truly understand the medium’s ROE2 and how your station can unleash it.
Your comments, as always, are welcome.
Jacobs Media has consistently walked the walk in the digital space, providing insights and guidance through its well-read national Techsurveys.
In 2008, jacapps was launched - a mobile apps company that has designed and built more than 1,300 apps for both the Apple and Android platforms. In 2013, the DASH Conference was created - a mashup of radio and automotive, designed to foster better understanding of the "connected car" and its impact.
Along with providing the creative and intellectual direction for the company, Fred consults many of Jacobs Media's commercial and public radio clients, in addition to media brands looking to thrive in the rapidly changing tech environment.
Fred was inducted into the Radio Hall of Fame in 2018.
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So riddle me this. While we all agree these steps need to take place they come with risks. Talent is messy. Content can be a turn off if you don’t like it. Who is going to step over the line? For example, in my home market the classic rock station is boring as hell. Most of its talent is digitally imported. Yet, the station is frequently top 5 M25-54. How do you convince the corporate overlords to add “sizzle”? That equates to expense. While that may increase the ROE there is no guarantee it will provide ROI – and isn’t that all that matters?
Steve, that Top 5 25-54 jukebox may be making its ratings goals, but ask their sales team how those numbers are translating into revenue. Only the great brands will survive in an environment of infinite options and choice. So the question is, how many of these truly lame, personality-less stations will be thriving in 2020? And if that’s too far down the road for broadcasters, it’s time to start looking for retirement communities.
We started this discussion in last month’s “Pyramid Scheme” post and it will continue with Coleman’s Warren Kurtzman in the coming weeks. Thanks for keeping the conversation going, Steve.
Oh, I’m 100% with you, Fred. I see this happening in the smaller markets but the big boys are mostly McDonald’s. As for the sales question. They’ll tell you the market is down – and it is compared to 5-10 years ago.I would love one major group to take a step in this direction.
Quietly, Steve, I know of companies that are beginning to drink this Kool-Aid. They won’t be sending out a press release, but they are pushing their brands to raise the bar, look for and hire talent, and be more than just jukeboxes. It’s a process, but as time goes on, market conditions will force these actions. Thanks again.
Fred,
I’m glad to see that you are discussing ROI. I think it’s a very important discussion for the radio industry to have.
I think the Ad Age column declaring that marketing ROI is dead is incredibly premature. (You would never see me making a bold claim in a headline just to attract clicks!) ROI isn’t just about more data, such as the number of car owners who saw an ad. It’s about using that data to connect the marketing initiatives all the way back to the sales. You have to capture the entire trail, which is very hard to do!
The reason I think it’s premature to declare ROI dead is because the tools and strategies that allow you to do this — championed by Google Analytics, Hubspot, Marketo, Eloqua, etc. — are still very new and a little unwieldy. My sense is that even the companies who are using these tools are just beginning to understand how powerful they are.
And this functionality is just now starting to migrate down into small business solutions. For example, Mailchimp, a small business email service provider, just introduced marketing automation in the last year.
The bottom line is that more and more advertisers are going to start asking for better data with the goal of drawing the connection between marketing and revenue. The radio industry has a choice:
1) It can provide that data and the tools that its clients are asking for, or
2) It can try and convince its clients that they don’t really need that data.
Both roads are difficult, but I vote for option #2. This will involve a long, hard, honest discussion with Nielsen over the shortcomings of its ratings system. Nielsen may be grandfathered in, but it’s no longer meeting the needs of advertisers, and that is going to hurt our industry. I think radio needs to seriously consider finding a new data partner. Or even developing its own.
Opps. Meant to say I vote for option #1. Radio should provide the tools and data clients are asking for.
Seth, thanks for engaging on this important topic. I did not mean to suggest that ROI isn’t meaningful. But the flip side is how the great radio brands are being commoditized as a result. I wonder if in everyone’s haste to embrace the data that a lot of engagement is being lost. In many ways (and here comes the Nielsen part) it is reminiscent of the way that many stations overreacted to what they thought the PPM meter worked. In the process, they inadvertently walked away from branding and fan engagement opportunities.
Car dealers (the example we both used) need to move vehicles off their lots. And ROI targeting may be an efficient way to do this. But ultimately, brands need to be built – whether it’s the OEM and their models, or the local dealer and their excellent service and beautiful showroom.
I like your second option as well. Our sellers – maybe more than ever – need to learn how to sell radio’s assets. Paul will address this in his installment tomorrow. Let me know how it reads.
And thanks again for taking the time to add to this conversation.
Apologies, meant to say “#1.” (Hate it when I flub the dismount.)
Looking forward to seeing what Paul has to say. Glad the industry is discussing this topic.
Radio’s sellers need to learn how to uncover and solve their clients problems more than they need to sell radio’s assets. There isn’t anything new or unknown there and reach/feigned localism don’t sell any product for anyone by themselves.
The truth is that radio has abdicated many of its traditional assets so it might be best to avoid recounting the laundry list in favor of becomming a tool in creative problem solving, rather than the solution itself.
Bob, perhaps so. And there’s no question that not solving client problems is something we have addressed in recent weeks. Paul weighs in tomorrow on how this looks to him from the sales meeting POV. Stay tuned.
To the point on the importance of the connection stations make with audiences, I was surfing three separate stations today, and there were differences in the potential audience engagement at each station.
On one Eastern station a jock mispronounced the name of a prominent local athlete in that market, and on one satellite station a jock did the same with a world-famous actor.
On a station in the Central Time Zone, the jocks told relatable personal stories about the artist they were about to play. One jock on that midwest station thanked his partner for keeping the volume “cranked up loud” on the previous tune, because he said “I always feel like they can tell out there if we’re listening to the music loudly in the studio.”
Details can mean a lot in audience engagement.
It is, in fact, in the ear of the beholder, Dave. It is amazing how those little things can say a lot about engagement and relating to the average listener. Thanks for the insights.
hi Fred
Send in the clowns
We need to get on with the circus even though 2 of the 3 rings is under construction, and the elephants are gone, we never did have Dumbo fly except in the movies. Thank you for being a Ringmaster, I know the new Circus will have amazing new stuff, and the clowns will still jam into a VW, the new Volkswagen is bigger thank GOD.
P.S.
Did you notice the fat lady didn’t sing?
PAL joey