Sales Tracking for R.O.I Planning

Sales Tracking for R.O.I Planning

Instructions/Descriptions

Sales Tracking for R.O.I Planning

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R.O.I. Planning—Exam Question–optional

Advertisers sometimes use sales tracking to develop R.O.I. for various media options. For example, such an analysis might yield a result that says magazines generate $1.25 in sales for every media dollar invested as opposed to television which yields $1.05. In this example, magazines would be deemed superior on an ‘accountability’ or R.O.I. basis.

Discuss whether or not you think this R.O.I. approach represents a good way to select media and why. You might favor an R.O. I. approach or a more traditional approach to selecting media or some combination of the two. In your discussion you might take into account such considerations as:

1. Should sales be the final standard by which to judge media?
2. Is there a problem with using R.O.I scores that are based on historical results?
3. Does a simple top-line ‘score’ help us understand why a particular campaign achieved a certain sales result—so that we could better understand and predict what approach might succeed in the difficult to predict future?

Issues to consider

R.O.I. Approach— ‘Pro”

1. Sales are the ‘bottom-line.’ Generating sales is what advertising is all about. Therefore, using sales to measure and judge media choices is entirely appropriate.

R.O.I. Approach – ‘Con’

1. Sales results are ‘historical’ (at least one year old) and may not reflect current conditions. Thus, the brand in question may have changed its campaign (creative) and leading competitive brands may have changed their creative as well. Presumably creative (copy) has an effect on how a particular media vehicle (TV, magazines, etc.) will perform.
2. Spending level in a given medium almost surely affects performance as well. Thus, TV may score a 1.05 at one spending level and the same campaign in TV might score a 1.25 with more dollars supporting the campaign. Thus, it would seem that past performance at one spending level might not be a good predictor of future performance at a higher spending level.

Assigning a score that is in effect a performance grade may stop us from thinking about how a medium works to achieve its results. ‘Planning by the numbers may stop us from thinking creatively about such things as: how a particular creative selling strategy may suit a particular medium, how a certain campaign may benefit from synergy using two particular media types, how different spending levels may be more appropriate in certain circumstances, etc.

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The intent of this question is for you to weigh the above pros and cons (as well as others that may occur to you) in your mind and express your own point of view as to the advisability of applying an R. O. I. approach to media selection and planning.

Note: This question refers to Lesson 10—Market Mix Model

Sales Tracking for R.O.I Planning

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