Adding the ‘R’ word to ROI; and Cannes right-sizes

Dominic Mills explains why ‘Responsible ROI’ offers the media industry much more intellectual rigour and scrutiny. Plus: the verdict on the Cannes Lions relaunch

I think Zenith back in 2002 was one of the first agencies (of any kind, not just media) to seek to publicly own ROI. Now every Tom, Dick and Harry is piling into the space, and on the whole this is good.

At the time I thought Zenith’s ROI land grab was interesting; on closer inspection it turned out to be a disappointment since its definition of ROI was through the narrow lens of media rather than business outcomes.

It looks as though Zenith has now reframed its stance in a wider way with – ta da! – ROI+.

But a simplistic vision of ROI can be a bad thing in medialand, because you can easily boost it in the short-term simply by cutting spend – and I have no doubt that many a client-agency team has played this game together – but the risk is that you lower it in the longer term (say over a three-year period).

So I like the concept of ‘Responsible ROI’, as introduced by Thinkbox last week at its ‘Profit Ability’ (a pun verging on the naff for me) morning at BAFTA.

Thus Ebiquity’s Andrew Challier (pictured) made the point that while properly allocated media spend could boost profit in the short term (of course, led by TV – but we’ll come to the details in a minute), the application of ‘Responsible ROI’ focuses on scalable profitability in the longer term, is underpinned by short- and long-term measurement, and optimises both for brand and business growth – i.e. sustainability. You can see his summary here on the stream about 1.08 hours in.

Of course, the other thing that underpins RROI is a strong intellectual rigour and an unyielding scrutiny. And every time I hear anyone knock advertising and media as fluffy and woolly, I think they should come and see stuff like this.

Challier, his Ebiquity colleague Dr Nick Pugh (a PhD in optimisation, no less) and Gain Theory’s Matt Chappell demonstrated that the industry is capable of deploying both the intellectual authority and the heavy lifting that would blow the socks off any CFO.

Who wouldn’t be impressed by what Pugh calls the hill-climbing algorithm, the methodology that determines the point at which media spend is switched from a channel showing a diminishing returns curve to one which is rising or falling less steeply (er…did I get that right?).

The actual details of the study – essentially proving that TV is both the most effective and least risky channel – are summarised here, with a headline figure that claims TV is responsible for 71% of all advertising-generated profit.

And while it makes a powerful case for TV – all the more important as the likes of ITV’s revenues continue to drop – it also makes a strong case for other channels, notably radio, print and online video.

The latter, while reinforcing its stakeholders’ digital assets, pretty much does the same for those of the sworn enemy (i.e. Facebook and Google) too. Very generous of Thinkbox.

As an aside, I always think there’s a palpable tension during such media-owner ROI presentations. If the figure is too low, then the occasion is effectively rendered null and void. Too high, and the unspoken thought is ‘Well, they would say that, wouldn’t they?’ or the study is dismissed as lacking credbility.

I get the sneaking feeling that Thinkbox would sometimes like to chop a few percentage points off the top-line numbers to avoid giving the sceptics ammunition.

But while most audience attention was fixed on the big coloured balls on the top of the charts showed by Pugh, my attention was also caught by the bottom.

Why? Because that’s where the figures for online display were. Indeed, online display came bottom (or bottom but one) of all the charts, whether by time-frame or advertiser category. Yes, it didn’t even do particularly well for those advertisers looking for a short-term sugar rush.

The first question then is why does it do so badly (note, Ebiquity included retargeting here)? Poor creative is one reason, I’d guess; low viewing rates (leaving out viewability) is another – Ebiquity estimates only 10% are actually viewed; and low CTRs, at least by humans.

The second question is: why does it get so much spend and, as far as I can tell, increasing amounts? The answer, I suspect, is that none of the rigorous inspection that is applied to higher-cost media goes on something so cheap and cheerful.

It’s what you might call IROI (as in Irresponsible or Idiotic).

Cannes: reluctantly right-sizing

Last week saw the relaunch of Cannes or, as I prefer to call it, the right-sizing. You will recall that the Lions festival earlier this year marked its annus horibilis, as it faced a storm of criticism.

Essentially, driven by greed and hubris, it had become vastly over-blown. Think of it, not quite as the Goldman Sachs vampire squid analogy, but as a giant leech, a vastly bloated enterprise greedily sucking the blood out of the industry. Now it feels trimmed back to a reasonable and sensible size.

The new-look Cannes has been generally well received – read a typical review here.

I agree: it has headed off most of the criticism. The length has been cut from eight days to five; 120 sub categories of awards have been dropped; a piece of work can be entered into just six categories – thus preventing the multiple category winners of previous years; separate festivals like Lions Entertainment and Lions Innovation will be part of the main event; and the scoring system by which agency and networks of the year are decided has been overhauled in such a way as to reward Lions winners over shortlisted entries.

Better still, in response to the stinging criticism of cost, the festival has teamed up with Cannes the city to introduce fixed-price menus, fixed-price taxis and free wi-fi. And there’s more focus on making Cannes affordable for younger agency and client staff.

But watching the two senior Cannes executives presenting the changes – you can see the video here – I was struck by the complete lack of contrition with which they set out their stall. There was no sense that, as they left the Croisette last June, tail metaphorically between their legs, that they were staring down the barrel of a customer revolt.

No, to watch the video, you’d believe all the changes had been instigated entirely voluntarily. Arrogance? Or just that old never-apologise-never-explain mantra?

We wait to see what changes will be made to the awards entry pricing – another cross for the industry to bear – but Cannes has also cut delegate prices, in one case by €900.

But this is not quite the generous deal it looks. Worked out on a per day basis (I’m sure that’s one way procurement will look at it), the 2018 Classic delegate ticket comes in a €650 (excluding tax) a day, versus (on 2016 prices, because I can’t find this year’s) a previous €381. This just feels, well, slippery, certainly bearing in mind that the organisers’ fixed costs for a five-day festival will be a lot lower than those for eight days.

Still, that’s a minor quibble for what is clearly a sizeable correction, and mostly a good one.

I also discovered one thing that surprised and impressed me about Cannes behind the scenes. Awards judging is monitored for accuracy, cheating, national/group block voting etc by accountants PWC (not the same team as does the Oscars, I hope) in order to assure integrity of process.

The Cannes team also works hard to protect the judges from bullying and intimidation by peers and colleagues.

And you thought it was all good, clean, if excruciatingly expensive, fun.