Tuesday, July 21, 2009

Is Marketing in India Also Entering the ROMI era

Return on Marketing Investments (ROMI) is a concept which has gained a lot of attention in the last few years, and rightly so. The basic idea behind ROMI is that one should be able measure results of investments made in marketing (read as ads and promotions). On simple terms if I were to spend 1 crore on a TV ad what would be the proportional increase in sale that you can guarantee me??

The difficulty with this idea has been though very good on paper, but how to translate it into practice. Because we have to measure the results in the marketplace , which is not a closed system, marketing expenditure is only one variable in the scene, many other would be operating and influencing the results. A sample of what all can influence your marketing expenditure/investments - competitor reaction, overall economy (monsoons), slow down, .....


I think the problem with the concept has been that we are stuck at two ends of the spectrum, in terms of arguing that you give me a straight forward relationship between the marketing investments and results and at the other saying that it is a creative process and we are not in control so you cannot hold me responsible for results. There has to some effort made to strike a balance between the two positions.

Earlier days it was said "I know half of my ad expense is a waste, but I don't know which half", we have moved on from that situation and there has been a lot of effort in developing marketing metrics, one good resource is "Marketing Metrics:50+ Metrics Every Executive Should Master"

What is the status in Indian market? According to recent news HUL and Coke India are planning to link ad payment to sales. In the news item a Coke official is quoted saying “This model is about paying agencies for results, not activity,” . From the news item it is clear that the idea is still in conceptual stage and it would be some time before some clarity on how it would be implemented.

One more interview which adds to the discussion would Branding Guru John Philip Jones interview where he shared his thoughts on short, medium and long term impact of ads, and many other issues. Interview.

3 comments:

Debashish Brahma said...

Return on Marketing Investments (ROMI) is a concept which has gained a lot of attention in the last few years, and rightly so. The basic idea behind ROMI is that one should be able measure results of investments made in marketing (read as ads and promotions). On simple terms if I were to spend 1 crore on a TV ad what would be the proportional increase in sale that you can guarantee me??


The difficulty with this idea has been though very good on paper, but how to translate it into practice. Because we have to measure the results in the marketplace , which is not a closed system, marketing expenditure is only one variable in the scene, many other would be operating and influencing the results. A sample of what all can influence your marketing expenditure/investments - competitor reaction, overall economy (monsoons), slow down, .....


I think the problem with the concept has been that we are stuck at two ends of the spectrum, in terms of arguing that you give me a straight forward relationship between the marketing investments and results and at the other saying that it is a creative process and we are not in control so you cannot hold me responsible for results. There has to some effort made to strike a balance between the two positions.

Earlier days it was said "I know half of my ad expense is a waste, but I don't know which half", we have moved on from that situation and there has been a lot of effort in developing marketing metrics, one good resource is "Marketing Metrics:50+ Metrics Every Executive Should Master"

What is the status in Indian market? According to recent news HUL and Coke India are planning to link ad payment to sales. In the news item a Coke official is quoted saying “This model is about paying agencies for results, not activity,” . From the news item it is clear that the idea is still in conceptual stage and it would be some time before some clarity on how it would be implemented.

One more interview which adds to the discussion would Branding Guru John Philip Jones interview where he shared his thoughts on short, medium and long term impact of ads, and many other issues. Interview.

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Rajesh Aithal said...

Return on Marketing Investments (ROMI) is a concept which has gained a lot of attention in the last few years, and rightly so. The basic idea behind ROMI is that one should be able measure results of investments made in marketing (read as ads and promotions). On simple terms if I were to spend 1 crore on a TV ad what would be the proportional increase in sale that you can guarantee me??


The difficulty with this idea has been though very good on paper, but how to translate it into practice. Because we have to measure the results in the marketplace , which is not a closed system, marketing expenditure is only one variable in the scene, many other would be operating and influencing the results. A sample of what all can influence your marketing expenditure/investments - competitor reaction, overall economy (monsoons), slow down, .....


I think the problem with the concept has been that we are stuck at two ends of the spectrum, in terms of arguing that you give me a straight forward relationship between the marketing investments and results and at the other saying that it is a creative process and we are not in control so you cannot hold me responsible for results. There has to some effort made to strike a balance between the two positions.

Earlier days it was said "I know half of my ad expense is a waste, but I don't know which half", we have moved on from that situation and there has been a lot of effort in developing marketing metrics, one good resource is "Marketing Metrics:50+ Metrics Every Executive Should Master"

What is the status in Indian market? According to recent news HUL and Coke India are planning to link ad payment to sales. In the news item a Coke official is quoted saying “This model is about paying agencies for results, not activity,” . From the news item it is clear that the idea is still in conceptual stage and it would be some time before some clarity on how it would be implemented.

One more interview which adds to the discussion would Branding Guru John Philip Jones interview where he shared his thoughts on short, medium and long term impact of ads, and many other issues. Interview.

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Sharmila Banu said...

Return on Marketing Investments (ROMI) is a concept which has gained a lot of attention in the last few years, and rightly so. The basic idea behind ROMI is that one should be able measure results of investments made in marketing (read as ads and promotions). On simple terms if I were to spend 1 crore on a TV ad what would be the proportional increase in sale that you can guarantee me??


The difficulty with this idea has been though very good on paper, but how to translate it into practice. Because we have to measure the results in the marketplace , which is not a closed system, marketing expenditure is only one variable in the scene, many other would be operating and influencing the results. A sample of what all can influence your marketing expenditure/investments - competitor reaction, overall economy (monsoons), slow down, .....


I think the problem with the concept has been that we are stuck at two ends of the spectrum, in terms of arguing that you give me a straight forward relationship between the marketing investments and results and at the other saying that it is a creative process and we are not in control so you cannot hold me responsible for results. There has to some effort made to strike a balance between the two positions.

Earlier days it was said "I know half of my ad expense is a waste, but I don't know which half", we have moved on from that situation and there has been a lot of effort in developing marketing metrics, one good resource is "Marketing Metrics:50+ Metrics Every Executive Should Master"

What is the status in Indian market? According to recent news HUL and Coke India are planning to link ad payment to sales. In the news item a Coke official is quoted saying “This model is about paying agencies for results, not activity,” . From the news item it is clear that the idea is still in conceptual stage and it would be some time before some clarity on how it would be implemented.

One more interview which adds to the discussion would Branding Guru John Philip Jones interview where he shared his thoughts on short, medium and long term impact of ads, and many other issues. Interview.

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