5 Ways to Measure ROI of Your Media Spend in 2012

Albert Einstein Quote

I came across a really good article in Fast Company providing 5 Ways to measure ROI of your media spend in 2012.  As more media goes digital clients are seeking to measure the effectiveness of the spend.

Here is a link to the entire article:


Below is a quick summary, but check out the full article it is a good read:


5 Steps To Measure The ROI Of Digital Media Channels


This blog is written by a member of  the Fast Company expert blogging community and expresses that expert’s views alone.
Are you measuring the interplay and overall performance of your combined paid, earned, and owned digital media channels? Here’s a 5-step process to discover which elements are driving the most value.

Below is a five-step process that you can employ to create a holistic, cross-channel score for your own ecosystems.

1. Define what success is.

Is it:

a. Improved customer retention

b. Causes of demand generation

c. Understanding loyalty

d. Message calibration

e. Offline sales


2. Collect all of your paid, earned, and owned metrics into a single data repository.

Owned Paid Earned
Visits OLA View Through SEO
Page Views OLA Click Through Google+
Social Acc’ts SEM Facebook
Email Sponsorships Blogs
Surveys Twitter


3. Develop a statistical modeling framework that distills multiple channel metrics into single measurement scores for paid, earned, and owned by doing something like the following:

a. Rotate and orthogonalize interrelated data streams within an ecosystem channel.

b. Utilize data reduction techniques to determine the underlying movement within the channel.

c. Further reduce the dimensions of the data to determine the cross ecosystem channel impact on consumer connections.

4. Choose or develop a technology platform that facilitates the following:

a. Frequent data extraction from channel sources

b. Interfaces easily with known earned analytics providers (Radian 6).

c. A transparent database system for storage of cross-channel data with easy access for QA, ad hoc analysis and modeling.

d. A dashboard UI customizable to enable your “definition of success.”

5. Dig into your new ecosystem’s connection scores to determine what touch points are working for consumers and where your growth opportunities lie.

Mapping these indices across time, product-use stages and/or other client-driven dimensions provides additional context and allows brand managers to monitor how connectivity to the brand varies over the consumer journey.  An example of the results would look something like the following:

Total Trial Purchasers Repeat Purchasers Loyalty Members
Total 54.14* 57.91++ 47.48 57.02
Owned 52.61 48.99 55.33+ 53.51
Paid 51.27 68.38+ 36.95~ 48.49
Earned 58.54++ 56.38 50.17 69.08+

+ scores represent high scores for the media within a consumer group.

++ scores represent high aggregate scores.

~ scores indicate potential problem areas.

*This example uses stacked index limit of 150

The above case is an example of modeling connection indices across the paid, earned, and owned channel spaces for a product warranting minimal pre-purchase research by the consumer. Indices are mapped across the dimensions of consumer groups. How much influence does the channel category have on trial purchasers, repeat purchasers, and loyalty program members for a given time period? The higher the index score, the higher the channel’s influence is on the specific consumer group.

To begin with, it’s apparent that all channels in unison have the most influence on trial purchasers, at 57.91, and that earned media has the highest influence overall at 58.54. Going a level deeper, we can see that trial purchasers, possibly induced by digital couponing, are influenced most by paid media, at 68.38. Repeat purchasers are most influenced by familiarity with the product and may shop via owned channels at 55.33. Loyalists, who may be playing an active role in marketing your product via blogs and Twitter, are most influenced by earned media at 69.08. Finally, areas needing additional investment or message adjustment can be identified as in the case with paid media’s relatively pale effect on repeat purchasers at 36.95.

Taking this example one step further, let’s say our definition of success is the influence of the brand’s digital ecosystem on offline sales. A powerful aspect of this model is its ability to establish casual relationships between the index and lower funnel, online and offline conversion activities.

For example, by applying the Granger Causality method to a CPG client’s transactional data, we were able to determine how index levels could forecast purchasing behavior. With this approach we identified causation between the Connection Index and product trials, repeat purchases and even product shipments. Causality would most likely be different across verticals but we strongly believe this may be an opportunity to demonstrate, with rigor, the link between discrete digital activities (i.e. social) and offline transactions that can eventually lead to ROI.

There is significant business value to be gained by stepping through a thoughtful integration process of your paid, earned, and owned digital channel categories. This is exciting territory, and it provides a range of opportunities to help advertisers realize the true value of each channel.

So let’s toast to all the great marketing accomplishments of 2011 and put our heads together to solve the challenges awaiting us in 2012.

Image Credits: [Images: Flickr users kenteegardinlubermelhopremasager]

Article Credits: BY FC EXPERT BLOGGER STEVE KERHOTue Jan 3, 2012


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