You Are the Denominator: Why the ROI on Branded Content Isn't Cutting It

Branded content is one of those phrases meant to disguise the nature of the concept in question. It essentially refers to information paid for by a marketer but gussied up to look like objective knowledge of the sort journalism used to provide before it was driven to the margins of business survivability.

It is, therefore, not without some karmic justification that this experiment in advertising subterfuge may be foundering on the shoals of an equally overused application of what passes for commercial wisdom.

We refer of course, to that wildly popular, if frequently misinterpreted business metric, ROI or return on investment. ROI purports to measure the degree to which funds invested in a project, service or any other initiative are returning to those who chose to put their money where their hopes were. It is popular among executives ostensibly because it is considered an untrammeled reflection of effort, a pure manifestation of the capitalist system at work. But it is also a favorite because, frankly, it can be manipulated to show whatever the user - quite often a financial executive wants it to show.

This is not to say that everyone using ROI cheats, but rather that the assumptions going into the calculation can be adjusted to reflect what the incumbent sees, however close to or divorced from reality that may be. In simple terms, it is a fraction made up of a numerator and a denominator. In order to increase the numerator, the return, all one has to do is reduce one's assumptions about the denominator. Branded content offers marketers something all business people love, which is the perception of control. But the denominator, the amount they have to invest to generate a return, is pretty high relative to the returns this tactic has been able to produce so far. Marketing strategists could cut the investment, but the real development costs are what they are, meaning that what's left in the denominator is, well, you. (or them if you prefer to think of it in a less personally threatening way).

So, one can imagine why branded content and ROI deserve each other: they are both artificial constructs based on a lot of hopeful assumptions. That they may ultimately prove incompatible is just reality intruding where it is expected but not really wanted. JL

Jack Neff reports in Advertising Age:

Marketers are finding content is far from cheap, and that "owned" and "earned" media don't mean you don't pay handsomely

Part of the allure of branded content is that when people share it in social media or it's hosted on websites, marketers aren't paying media companies to distribute it.
A Gartner survey earlier this year found marketers now spend almost as much on content creation and management as they do on paid online display. And they're spending almost twice as much on the infrastructure behind digital content -- such as website operations, video production and social-media marketing -- as they do on paid display and search combined.
Hence, efforts to measure and improve return on investment for content are on the rise. Procter & Gamble Co., which spends 25% to 35% of its U.S. marketing budget on digital, according to Chairman-CEO A.G. Lafley, has been particularly focused on content ROI, according to people familiar with the matter.
Barefoot Proximity, Cincinnati, part of Omnicom's BBDO network, which handles such content-intensive multibrand P&G sites as HomeMadeSimple.com and PGEveryday.com, along with such clients as ExxonMobil, uses an in-house system to measure content ROI. It draws on Google Analytics to find how well content reaches people broadly -- and new site visitors specifically -- and how well it generates engagement, based on such factors as topics, authors and language.
Barefoot CEO Chris Evans calls it "content Darwinism," with the idea that content constantly evolves to work better.
Marketing tech companies are putting more emphasis on content ROI, too. Idio Platform, a content-optimization player, recently hired Damon Ragusa, founder and chairman of multimedia marketing-ROI measurement player ThinkVine, as president. Idio has begun working with MXM, formerly known as Meredith Xcelerated Marketing, which handles such clients as Unilever, Kia Motors and GlaxoSmithKline.
The systems don't yet measure ultimate sales lift from content, at least outside of e-commerce or direct marketers. Rex Briggs, CEO of Marketing Evolution, said the first step is just measuring cost per "impact," or person reached. During an exercise at a panel in Sweden he analyzed the data of more than 100 marketers and found costs per impact ranged from 50¢ to $50.
"I feel like a doctor telling them they've got cancer when they see this ROI," Mr. Briggs said. "You see people turn white as a sheet, especially if they're sitting next to their boss. But it's one of those calculations you have to do."