In search of the ultimate ROI

While the world of advertising has always celebrated the next big thing and earned its dinner by convincing Joe Public to want the next big thing, it’s rather amusing that advertisers themselves have been more reticent to embrace said thing when it comes to the mediums available to them.


In South Africa much of that reticence has been ascribed to low internet penetration levels but many now agree that a tipping point of sorts has been reached, particularly with the proliferation of mobile and smart phones.

Banking and luxury consumer products are now comfortable advertising in the digital space but looking at overall ad spend in the country there’s clearly a number of industries not yet ready to jump in.  Last year South African advertisers spent R28.7 billion of which, the online ad spend only accounted for 2%. If we break down that 2%, business to business or B2B advertising accounted for 30%, followed by banking at 23% and travel and leisure at 14%. With the Food category on the opposite end of the scale only accounting for 1% of the online ad revenue.

Allegedly the question of how to carve up an advertising budget is simply based on Return on Investment. But is it really?


In the main South African advertisers do recognise that there is a qualified and tangible market to be reached in the digital space but just as they might be getting ready to dip a toe in, something entirely new comes along and reinforces the “let’s wait and see” attitude.


Never mind getting your head around which editorial sites are best suited to your product, advertisers need to now contend with social media and what feels to be the never ending arrival of new platforms, most recently Google+ which will no doubt spawn a generation of evangelists and experts within weeks.


Simply put the digital economy is evolving faster than marketing managers are able to convince chief financial officers to invest.


With so much ‘new’ and, for lack of a better term, ‘whiz bang’ in the digital space those selling the next big thing often forget that advertiser’s needs are fundamentally unchanging.  Any advertising medium needs to be able to drive traffic either in the real world with feet in store or virtually with eyeballs to their site, generate sales leads and of course grow brand awareness and reinforce a positive reputation for their brand in public.


Measuring return on Investment or ROI, in traditional advertising mediums has never been an exact science but in the old advertising world there wasn’t really much choice and assumptions along the lines of: this is the top rated women’s magazine and it prints 100 000 copies therefore it is read by at least 100 000 women slipped relatively easily into unchallenged marketing fact.


Many local digital publishers, precisely because their medium is infinitely more measureable have waited for the tsunami of demand to hit as soon as advertisers realised the analytic accountability of the medium. It’s been slow to happen. In part because some advertisers don’t quite grasp how much spend is needed to be effective and the old yardstick of waiting for something to become established before risking budget doesn’t apply online because the landscape is constantly changing.




But perhaps it’s really time for publishers both on and offline, to stop playing ‘my dad’s bigger than yours,’ when vying for advertiser budgets. The truth is even the most modern consumer  lives a life that spans an on and off line world and increasingly even rural consumers are engaging in so called M-commerce, doing their banking online via mobile phones.

Integrating marketing campaigns across mobile, online and traditional mediums will ultimately deliver the greatest Return on Investment both by attracting consumer’s attention and engaging their interaction.


There are some indications that this cross pollination of media channels is starting to take hold in South Africa. Despite accounting for only 2% of the overall ad spend in the country last year, spend on the internet was up 23% vs. the 18% overall growth in ad spend last year from 2009 to 2010 though clearly there’s a lot of ground to make up.


The song was wrong. Video did not kill the radio star. It merely afforded the star access to new channels, fans and with it greater market share.




TEXT BOX: Guide to spend vs reach online


A beginner’s guides to benchmarking your ad spend online.


If you’re looking at advertising on a site with between 10 00 and 50 000 Unique Browsers per month the spend should be based on a Rand per unique browser ratio of 1:1;  implying that if a site has 5000 Unique Browsers per month it would be advised to spend at least R5000 per month.


For Sites between 50 000 and 150 000 Unique Browsers per month the spend should be based on a R/UB ratio of 1:2 implying that if a site has 70 000 Unique Browsers per month it would be advisable to spend at least R35 000 per month.


For Sites with more than 150 000 Unique Browsers per month the spend should be based on a R/UB ratio of 1:3 implying that if a site has 200 000 Unique Browsers per month it would be advisable to spend at least R66 666 per month.


Due to the nature of digital media, prescribing minimum investments is naturally a troublesome thing due to its relatively low cost barrier to entry. It would however be foolish to assume that fractional spending can achieve the kind of reach that campaigns require to generate results. The above is therefore a guide to adequate spend levels required for online to achieve the necessary SOV (Share of Voice) though implementing the right amount of reach and frequency using certain pre-determined ratios based on the amount of unique users the websites generate.


All that said, it’s important to note that all campaign budgets need to be based on campaign objectives, virtually every single online campaign can be tailored exactly to suit a client’s needs and very standard rules exist that can be applied to achieve this.

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