Media consultancy is advising a business on what to do and how to do it in the media field as part of its business strategy. At Media Audits, we do not advise businesses on PR issues, so we do not touch this area. We work in the marketing field and most of our enquiries are in digital media. That is why we will focus solely on the digital media in this article.
Advertising in digital media has several aspects that create additional challenges for businesses. In our practice, we have encountered and advised on issues such as conversion optimisation, operational implementation, choice of agency/partner, number and choice of media channels, use of innovations, and qualification of staff. We will look at the first three issues in the first part of this article and the rest in the second part.
More than half of the media consultations in our practice are about optimising conversion rates. The most common specific issues are: increasing the number of conversions, our agency is generating too few conversions, our conversions are too expensive. When dealing with these and similar issues, we advise our clients to focus on ROI (return on investment) calculations. We find that ROI calculations are often avoided (for various reasons, which are not essential here), but we advise doing ROI because it is ROI that determines the answers to the questions about conversions. Our fundamental observation is that a lack of clarity on ROI leads to uncertainty about the budget allocated to conversions and, in turn, leads to an under-allocation of the budget for conversions. A more concrete decision on ROI would lead to an increase in the conversion budget, which should lead to answers to the questions raised above. For example, you can increase the number of conversions simply by increasing the budget; you can get more conversions from an agency if you allow it to operate more freely (and with a higher budget); you can get a lower cost per conversion (in the long run) by increasing the budget and finding new advertising and audience niches. But budget increases have to be justified and ROI has to be the basis. So what is an acceptable ROI?
There is, of course, no clear-cut answer. But in almost all of our consultations, clients have too high an expectation of ROI. In other words, if you wanted a simple answer, we would advise you to lower your ROI expectations and invest more in generating conversions on that basis. Can ROI be negative? Yes, and in most cases you can expect a negative ROI at the beginning of the conversion "activity". Also, often a negative ROI can be projected over a longer period of time (e.g. 3-6 months). Determining an acceptable ROI depends on the overall business strategy. A general tip would be to set as low an ROI for your conversion budget as your business strategy allows. For example, if you are just starting to generate conversions, the ROI can be "bottomless", i.e. indefinitely negative, because the goal is to learn, i.e. your staff and agency are learning and you are collecting data. ROI can also be negative if you are trying to capture a market (not giving conversions to competitors). Also, a negative ROI is acceptable if you are focusing on loyalty tactics and you expect to "recoup" the investment from your client within a reasonable period of time. These are just a few of the possible answers as to what ROI would be acceptable, but our advice is to base the number of conversions and the price on the ROI figure. To conclude this (very broad) question, we would just like to add that you should avoid linking ROI determination to "whatever comes out of the campaigns". In our view, ROI is a question of overall business strategy and not a question of market research.
By operational implementation we refer to a group of questions that touch on the process of how digital media buying is implemented. It does not cover the process within the agency, only within the business organisation. And let's limit ourselves to performance digital advertising, because digital advertising for awareness is based on a very similar process to non-digital media buying. Performance media buying has to be based on a different process and it cannot be done the "old-fashioned" way, like awareness media buying. Yes, the performance process is more expensive and one just has to accept that. And no, "a good" digital agency is not an alternative to changing the process in-house. Again, the question is very broad, so we will just touch in passing on some of the advice we tell our clients. Firstly, you need to collect your own data and that means your own staff needs to be data-savvy, you need to have data analysis tools, and the data needs to come from "primary sources" (e.g. directly from Facebook, not from the agency's post-campaign report). The analysis tools should not be adhoc analysis of an Excel file, but automated tools generating indicators in a continuously accessible dashboard. Maybe these are competences that your "regular" marketing staff can have (or obtain), or maybe you need a data analyst position.
Another major theme is important for operational implementation. A process of hypothesis generation and testing is essential when buying digital performance media. That is, every campaign must have at least a few KPIs with a numerical value, i.e. it must be clear whether we have achieved or not. Also, before the campaign starts, anticipate what you will do in the event of KPIs being achieved and not achieved. Let's say you are testing a new digital medium (say TikTok) and if you don't achieve at least 60% of the CPA (cost per acquisition) you have in a more tested channel, you change the creatives (e.g. banner content). Or, if the CPA does not reach at least 30% of the CPA of the tested channel, you stop advertising there altogether. The testing process is not really a one-paragraph description, so we would like to conclude with this general advice - it is essential to always have a clear "idea" of what you are doing in a given campaign, so that when it ends (or is discontinued), you can note in your data whether or not it has worked or not. And so, step by step, you will be learning as an organisation what works and what doesn't in your performance actions.
We will conclude the first part of this article with a question about the choice of an agency-partner. From our point of view, it is usually preferable for a business to use a specialised performance agency rather than a generic media agency that also provides performance services. While it is true that media agencies in Lithuania vary widely in their performance competences, performance marketing is such a technical and specialised field that there is much more expertise in specialised agencies. Last but not least, performance staff is usually much more expensive than in a typical media agency. We propose to launch separate tenders for performance agencies, the process of which can be very similar to the one we describe in our separate article.
We will discuss the other issues raised in Part 2.