Is Africa ready for advertising ROI measurement?

This paper was presented by Joe Otin, Media Research & Monitoring Director, Synovate Pan-Africa, at the 2011 PAMRO Conference on August 24th 2011 held in Dakar, Senegal.

Media research organizations in Africa are failing to drive insights that will justify the incredible growth of advertising expenditure on the continent. According to the World Bank’s annual “Doing Business” report, sub-Saharan Africa is, on average, the most difficult place to do business in the world. And the lack of credible data to base investment decisions on should not be left out from the list of challenges.

This has led the captains of industry to make decisions using the thumb suck model, and point their fingers to the sky to see which way the wind is blowing before making a call on investing in a certain area of business. To say the least their instincts have developed quite well as we have seen many businesses succeed grandly and grow profitably. Though this model has been the practical thing to do where data is lacking, the increasing competition seen in most categories brings new obstacles to growth.

Africa is seen as the last frontier for business, providing wonderful opportunities for global businesses, which are either increasing investment in existing enterprises or launching new branches to grab the market opportunities that exist. Justification is needed to increase resources which are invested for a return, and the most effective and efficient wins. It is impossible to win without accurate insight.

Advertising agencies in the west are now basing their remuneration on measured results and multinational companies are beginning to use that model in Africa. This model is partially fee based and partially performance based. A percentage of the fee is based on resources used to implement the advertising strategy, the overheads and time taken, and the rest of it paid on achieving defined results, with bonuses offered on exceeding the stated results. This is a challenge to the traditional model of ad agency remuneration which has relied on ‘opportunity-to-experience’ measures, that is to say, how many people have been potentially exposed to the message through the implementation of a media schedule. This performance based remuneration model falls flat on it’s face if sophisticated modelling and analytics are not in place.

Michael Lotito, CEO of Media IQ, a New York media auditing company says, and I quote “either agencies are going to agree to be measured and compensated by performance metrics like ROI, or they risk losing business to competitors that do”.

The esteemed companies in this gathering, the PAMRO members, have done a tremendous job to provide audience measurement for over 2 decades in Africa. The development of media research on the continent is a consequence of the market need for information to base media planning and development on. The multinationals were the first to express this need and now there is an intense education process going on with the local companies on the value of the existing data and how to use it to drive efficiencies in their media investment. If that is true, media researchers cannot rest on their laurels, and indeed there are still many countries that do not even have that basic data, hence the need to expand our networks.

The real opportunity lies in advancing the achievements made in media research so far, and in the original values of being customer led, we cannot ignore the current need to assess the performance of advertising, agency by agency, project by project, sector by sector. I hasten to qualify this pronouncement which may appear to be a gross simplification of the issue.

The continent is vast and so is the distance between the top earning companies and the majority of small and medium sized firms that are in various stages of development, and hence their needs are varied. But looking at the need for media research at the moment, among those companies that use it most, points to an obsession with eyeballs.

Advertising is defined as any form of paid communication designed to bring attention to and engender positive perceptions about an organization, good, service or idea by an identified sponsor. Advertising is generally focused on motivating target markets to make a purchase or take another specified action. Advertising Effectiveness is defined as the degree to which an advertisement or advertising campaign achieves its stated objectives. Advertising effectiveness is typically gauged by measuring a campaign’s impact on sales, brand awareness and/or market share.

The challenges of measuring advertising ROI in Africa

Advertising ROI measurement will be possible through a collaboration of the stakeholders. The data required to do the analysis are located in a host of “disconnected” places in addition to the usual syndicated reporting services. They reside in records of manufacturer shipments, retail sell-through and inventory, retail advertising, circulars, direct mail, point-of-sale merchandising and assortment plan-o-grams. Unfortunately there is little or no combination of these pieces of data and you find many advertisers in Africa unwilling to provide the information required to do this type of analysis, stating that the data is ‘confidential’. Or they just don’t have the time to pull out the data and run the kind of analysis required. You also find that media research companies are engrossed in providing numbers without insight and have not undertaken the initiatives to fuse the data and deliver powerful insight to unlock business growth.

Devising practical analytics for Africa

To measure the ROI media research companies need to develop straight forward and practical analytic models which can pull together certain bits of data. The analytics should take the following into consideration.

1. The counting of eyeballs is only one measure of the effectiveness of media planning, and the objectives of any advertising plan goes beyond just reaching audiences, but aims to get a desired action or change in perception.

2. The calculation of indices that reflect the dynamics in the real world based on input, output and ultimately outcomes.

3. The ability to project outcomes based on the variables, because the advertiser exists in a progressive world and needs to look into the future to assign resources to receive a return.

4. Capturing definitive case studies that narrate both effective and unsuccessful advertising campaigns and thereby providing a basis from which the industry can learn and act accordingly, and ultimately strengthening the industry.

5. Establishing benchmarks that illustrate the boundaries of effective use of media investment and form the basis for any advertising campaign and it’s measurement thereof.

6. Providing a bank of historical data that can uncover trends, used for projective techniques, benchmarking, setting industry standards and sector reviews.

7. Ultimately the aim is to measure the effectiveness of current activities and providing justification for proposed courses of action.

Examples of successful measurement of advertising ROI

Gerard J. Tellis, a professor and director of the Centre for Global Innovation at the Marshall School of Business at the University of Southern California, wrote an article in the Journal of Marketing Research titled “How Well Does Advertising Work?”. Gerard analysed more than 750 estimates of how sales or market share respond to advertising; these studies were published between 1960 and 2008. The estimates spanned a broad sample of brands, product markets, time periods and countries.

It is a shining example of in-depth use of available data to scrutinize the effects of advertising and provides valuable insight for marketers including: –

1. Surprisingly, about half of all ads are ineffective. It may be because firms continue campaigns past their period of effectiveness, persist with ineffective ads or just fail to test if their ads work. Given that so many ads are ineffective, the ads that do work are twice as effective.

2. The average effect of advertising is half as much as previously believed. A 1% increase in advertising expenditures leads to a 0.1% increase in sales or market share. A 1984 study suggests that a 10% increase in advertising leads to a 2% increase in sales; this study found only a 1% increase in sales.

3. Market context can affect advertising’s impact. Advertising tends to work better for durable goods than for non-durables, for pharma products than for other products, and for new products over mature products.

4. Advertising effectiveness is generally higher in Europe than North America. This could be due to over-advertising in North America relative to Europe or due to more clutter in North American relative to Europe. In looking at large, emerging markets, such as China or India, for example, one would probably get higher responsiveness to advertising than in the U.S. In general, newer markets are more responsive to advertising than more mature markets.

This powerful demonstration shows how data can be used to guide the advertising industry, and I recognize that it would be a mammoth task to do a similar thing in African markets, but it is never too late to start.

At Synovate we have developed an analytical tool which provides tremendous value to our clients and benefits from the continuous audience measurement and advertising expenditure data that we collect. We analyse existing or proposed media plans and examine their ability to meet share of eye/ear objectives in respect to specific target groups. We then compare the results with the advertising investment placed or proposed in each media brand and determine the level of spend required in each to meet the objectives efficiently. This tool, dubbed the Media Fit Analysis, has enabled our clients to change round their media placements in order to enhance the impact of their media strategy.

In 2005 we developed the Media Publicity Index, which is used to measure the size extent and quality of publicity received through public relations activities. This tool considers the communication objectives, the message output, the quality of publicity, the media channels used, and the changes in perception as a result.

It uses continuous tracking of editorial content and the analysis of the same, audience measurement, and finally opinion polling. These results when combined with the Corporate Reputation Index provide deeper insight and relate the public relations campaigns to their effects in the real world. The the tool benchmarks peer and competing companies and has helped Coca-Cola raise the level of their publicity by up to 150% in the last 5 years thereby raising the goodwill towards the company within Kenyan communities.

But the ultimate insights have come through the latest studies we do for a large telecommunications company. We analyse data from the syndicated media research, the advertising expenditure data, Brand Health Trackers, Communication Effectiveness Trackers, sales data, and advertising testing. The result is a trend of media initiatives and their outcomes, and specifically looking at advertising and product awareness, event awareness and attendance, advertising recall, sales uplift, brand loyalty and perception. The client has thus been enabled to set very specific goals, plan the resource outlay and accurately measure the outcomes.

6 thoughts to enhanced advertising ROI measurement in Africa

In conclusion, I will state a number of things media research firms need to do to support the advertising industry.

1. Adopt a customer facing approach to media research. Get back to basics and address the issue based on the need;  this is what made us successful in the first place.

2. Innovate and keep ahead of the curve. Use the latest technology and develop systems that are suited to the African context, as well as looking at the systems our clients are adopting so we can feed our insights into them.

3. Combine varied data sets to unlock insights. Develop standard and custom made analytics to input data from various sources and that can produce useful visualizations for the advertising industry.

4. Learn form each other and publish our experiences, concepts and challenges.

5. Develop local case studies. I support PAMRO’s initiative to set up a member portal where case studies and concept papers can be uploaded and shared in order to improve and focus the thinking about media insights on the continent.

6. Finally we need to Challenge the current models of advertising effectiveness studies, through our ad agencies and clients.

I will end with another quote from Michael Lotito, of Media IQ who says “ROI is the Holy Grail. You want to know how your marketing dollars are working for you. People are at the beginning of the journey, not the middle and not the end.”


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s