ROI 2.0

Image Source: http://blog.oktopost.com/social-video-roi-why-it-matters-for-marketing/

ROI: The  Performance Indicator 

As a business development professional in the business documentary film industry, one of the main  concerns my clients have is what is the Return On Investment (ROI) of a certain  film project; and like every other client interaction, I begin to  lay out a what type of monetary ROI they will receive based on their upfront investment in the project. 

According to Investopedia a ROI is:

A performance measure used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments. To calculate ROI, the benefit (return) of an investment is divided by the cost of the investment; the result is expressed as a percentage or a ratio. 

The New ROI

This is what I was taught in undergrad and also by managers at the companies that I have worked for in the past. However, after reading Understanding The New ROI of Marketing in the Forbes online site, it gave me a more broad perspective of a more relative version of the ROI performance indicator. 

The article points out that ROI no longer only means return on investment, but return on impression. This is more of a softer metric than a hard dollar metric and when both metric indicators are used simultaneously  it serves as a great tool for marketing executives to have a 3-D view of true campaign performance.

The Affects Of The Social Web

The metric of return on impression is the result of the dynamic nature of the web. Now that the web has a social element, the sharing of text and video content has become a norm to users. 

According to blogger, Jeff Blulas, the social web is the third phase of the Internet's evolution which has followed the portal phase around 1995 (such as Yahoo and AOL) and search phase which commenced in earnest in the late 1990's (including Google and Bing).

He also noted that Facebook  users are sharing 4 billion items on the Facebook social network everyday, which is double what it was a year ago. Ultimately, this trend will continue and predicts that it will double again in 12 months. 

This does not even include the new apps they are developing that will make sharing easier.

The Implications For Marketing Executives

This has huge implications for marketing executives who have to make decisions about creating content and marketing strategy. Especially  if they solely depend on looking for a dollar value return on investment.

There is five elements that the Forbes article lays out that make up the soft metrics of the Return on Impression:

(1) Eyeballs-the number of people that actually see your content.

(2) Perceptions-this deals with the consumers perceptions of the brand.

(3) Opportunity-this looks at the indirect opportunities your content will have in relationship of your marketing investments

(4) Engagement-this looks at the number of conversations and word of mouth situations the marketing creates.

(5) Objectives-this looks at the long term objectives that positions the company for long term success. A metric that is hard to determine in the short term.

What are your thoughts?

• How will this affect you as you put together a marketing budget?