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Does ROI drive ad spend?

David Phillips Jul 10, 2017 12:00:00 AM

The reason you're given almost always isn't the reason. 

Your wife may say that it's because of the unwashed dishes that they're throwing cutlery at you, but really it's the perceived lack of consideration that the lasagna-encrusted plate implies (true story).  The dishes are a symptom of a larger root cause.

Unless you can identify the root cause – the real reason - you won't be able to fix the problem and move on.  You may wash the dishes this time, but the resentment will remain.

The same behavior runs true in the business world too.  Which is not surprising when you think about it, given that business is conducted between people, people who are motivated by the same underlying drivers inside work as they are outside of work.  Fear, ambition, a need for belonging, a discomfort with chaos; all these drive us inside our offices just as much as they do in our homes.  We just learn to cover them with things like 'ROI', 'added value' and 'innovation'.  And as with our lives outside of work, unless we discover and look to solve these fundamental drivers, we won't be in a position to solve problems and move forward.

What brought this to mind was what I call the 'broadcast ROI puzzle'.  Agencies and marketers often say that spend will go where advertising ROI can be demonstrated.  This is sometimes cited as a factor behind the flat or declining ad spend on TV and radio.  And yet at the same time, multiple studies in multiple markets demonstrate that the ROI on broadcast is either as good or better than other media.  This then is the puzzle: if ROI drives ad spend, and broadcast demonstrates strong ROI, why isn't broadcast ad spend increasing?

The thing is not the thing.

My theory is that the thing is not the thing.  The call for ROI is the dirty dishes, but there are other factors actually driving the behavior.  That could be the need to reduce a clients' anxiety by demonstrating an understanding of new things, things a client may worry is better understood by a competitor (and what better way to demonstrate understanding than investment?).  It could be neophilia (your new favourite word).  It could be a power struggle between marketing and procurement.  It could be a global mandate to spend a certain amount on 'innovation'.  It could be a need to offer junior staff training and accreditation when internal budgets are shrinking.  (And, in a few cases, it may actually be better ROI).

But unless the real reasons are uncovered, until the thing behind the thing is found, there is a risk of spending lots of time, money and effort unwittingly solving the wrong problem.  The result can be tactical whack-a-mole, where apparent needs are repeatedly met but winning the game remains frustratingly elusive.

A group of media buyers was asked recently about their impressions about different media sellers and how they approached working with them.  After lots of rational-sounding 'things' about training, marketing knowledge, and turnaround times, one brave soul mentioned one extra thing.  The good ones brought donuts; the bad ones didn't.  My guess is that they mentioned this not because they particularly liked donuts, but that it implied something more significant, a 'thing behind the thing' that made an important impression.

It may be easy to scoff at the donut comment, but my advice is to take it very seriously.  To see it as a great clue on the way to finding a real driver of behavior, the thing behind the thing.