reveries - oprah-sized r.o.i.

FEBRUARY 2005

New Pontiac G6: About $30,000
One For Every Oprah Audience Member: 276
Cost to Pontiac: About $8 million
To Be The Most Recognized New Car in 2004: Priceless

The question is, was Pontiac's mega car giveaway on Oprah last September a "priceless" marketing initiative? Did Pontiac's buzz-worthy stunt on Oprah move enough metal to justify the expense?

Over what time-period? Did it pay out? Was it more effective than other possible programs? Was it a short-term stunt or a long-term, brand-building marketing coup?

You just know that Pontiac's ad manager is being asked these questions weekly. You can almost hear the dialogue:

		Mary: We generated tens of millions of dollars in free media!
		Tom: But how many cars sold can we attribute to it?
		Mary: Oprah is so excited; she wants to do it again!
		Tom: Great, and can we justify doing it again?
		Mary: Ellen DeGeneres called to inquire!
		Tom: And what would that cost?
		Mary: We've been shipping the cars to the original 276 audience members all across the country, and we're getting great local media coverage!
		Tom: And are their neighbors buying any G6's?

As it turns out, Oprah-sized ROI would be in the petite section. In its first six months, the G6 is selling only "about 86 percent as well as the Grand Am," the car it replaced, according to the Detroit Free Press. In any case, it's easy to hear the cat-and-mouse conversation going on because we marketers have been trained on it.

A survey of marketers by Reveries actually found that even though marketing professionals care about overall franchise health, the clear, number- one factor in measuring ROI is, of course, sales lift. Overall, the survey's findings reinforced much of what we already know:

		1. Measurement is more important than ever.
		2. What to measure is up for debate.
		3. How to apply the learnings is only beginning to be understood.

Shoulda, Woulda, Coulda

Slightly over half of all respondents said that marketing ROI should be based on both short-term incremental sales gains and longer-term franchise health. So, there needs to be a balance between the two, or some sort of combination of short- and long-term objectives.

But interestingly, only about a quarter of respondents are actually now doing both. The majority is simply measuring short-term incremental sales gains to validate current marketing efforts.

We all know that the long-term is important, but, for survival purposes, we've got to deliver results now. It's the ‘what have you done for me lately?' syndrome.

Move some metal. Stack ‘em high and let ‘em fly. Book it, print it, ship it.

Why is this short-sightedness so prevalent? Is it because of Wall Street? Aggressive CFO's? Limited resources? Smaller budgets? Jaded consumers? Demanding retailers?

We think a big problem is the current planning process. The Reveries survey shows that over half of respondents say that the annual budget approval process dominates marketing planning. And only 17 percent of respondents said that the budget process and focus on ROI did not inhibit innovative thinking.

Maybe innovative ideas don't look so innovative in black-and-white in the budget-forecast binder.

Why is this? Why does budget planning inhibit innovative thinking? Maybe it's because innovative ideas come along opportunistically and can't be budgeted in. Maybe innovative ideas don't look so innovative in black-and-white in the budget-forecast binder.

Maybe it's because this year's budget is meant to be an incremental evolution from last year's budget, precluding very much in the way of new thinking. Maybe its because "risk" and "budget" are more like antonyms than synonyms. Maybe your efforts are so consumed with getting the budget right that there's no time left for new thinking.

(Again, just imagine the Pontiac pitch internally at GM to get involved with Oprah. “You're going to do what? Give away almost 300 cars? Are you crazy?”)

One telling verbatim explanation from the survey: “Yes, innovation involves risk. When measurements focus on return only, the environment is risk-averse, diminishing the opportunity for innovation.”

Quite right. We asked how best to get results, and got back a long list of suggestions, including:

		Grass roots
		Increased spending
		Non-traditional media
		Innovative distribution
		Authentic messages
		Innovative products
		Creating a total experience

Pursuing such methods, and the multitude of other possibilities, requires some innovative thinking and some risk, and likely resides outside of the budget process. In fact, not a single survey respondent volunteered "the budget process" as a great way to deliver better results.

Look at the well-praised iPod. What a balance of brand building and sales-driving activities. In balance.

Westin's "Heavenly Beds" are another example of innovative thinking that is helping the Westin brand and also putting "heads on beds," as they say. They've changed the game in the hotel business, and everyone is racing to catch up. And, somehow they figured out how to pay for it.

A question, then, is how to conduct the budget process to plan for predictable results, and also do a little marketing R&D to get those unpredictable results? That's the trick. (And if you have any suggestions or answers, please email them to me at jim@zipatoni.com … I'll email back all the answers I compile, and post them on Reveries.)

One easy way to start is to post this chart on your wall when you go into budget planning, and categorize your spending and your initiatives by quadrant. (If you'd like a full-size version of this chart -- again email me with your name and address and we'll rush one out to you).

Where your money is and where your activities are concentrated, and where they should be -- that's your job!

The horizontal axis is time -- from the immediate up to the future. When do you have to deliver? Do you want results now or in the future? Or both?

The vertical axis is results- from top-line sales growth (ROI) to franchise health (ROE). Do you want sales or brand-building? And, really, in what balance?

Too much focus on the "now" and there won't be anything left in the future. Too much on the future and you'll be fired before you enjoy the fruits of your labors.

So map out last year's actuals -- initiatives and dollars. Then map out this year's and see if there was much movement. What did you repeat that worked? And look at what you repeated that didn't work so well.

There is room to improve your efforts in whichever quadrant(s) you currently inhabit. This should constitute 60% of your efforts at least. Fix what you're currently doing.

Then, look in the quadrant(s) that are less occupied. Is there room there for better marketing activities? If you spend 40 percent of your time exploring the virgin territories, you will definitely find better ideas.

Think about it -- ubiquitous white ear buds everywhere you go for Apple, clearly the most comfortable beds in the lodging business for Westin ….

Who doesn't want that?

Click here to view the survey's results.

Jim Holbrook, president and ceo of Zipatoni, began his career at Procter & Gamble in the early 80s, getting his first position by refusing to leave the lobby until they granted him an interview (it took six trips but he got the job). Later, at Ralston Purina, he launched Purina O.N.E., led the Purina/Wal*Mart business team, and spent a day with his idol, Mr. Sam Walton. Jim eventually became chief executive of the Beech-Nut baby food subsidiary and assistant to the chairman of the board of Ralston Purina. In 1996, Jim became enchanted with the lure of Zipatoni (having been a long-time client) and helped lead the agency from a 60-person creative boutique to a 200-person force in the industry.