ROI on Experiential vs. Above the Line Advertising

I love getting emails like the one below. If you have similar questions, I hope you know that you can always write us and ask anything. We offer an unlimited number of free, 30-minute consultations on anything related to measuring experiential marketing. 

A few weeks ago a business acquaintance wrote:

Hi Chris,
Hope you are well. Long time, but I have a request for you for some information, which may have some work attached to it. Still in development stages so nothing confirmed
We have a client that is looking for some comparison info for the ROI on Experiential to Above the Line advertising. Along the lines of what is the difference between $4m spent between experiential and traditional advertising. From this they may want to build this into the budget to track and report on the reach they are getting.
Let me know if you can help and I know the info is a bit thin on the ground but any questions give me a shout. If there is anything more to come out of this will definitely get in touch to get your expertise.
Look forward to hearing from you,
xxxxx

I wrote back:

On 06/05/2011, at 9:40 AM, Chris Clegg wrote:
Hi xxxxx –
Can you tell me the product or product category.
Thanks,
Chris Clegg
T: 207.619.2297
P.O. Box 15044
Portland, ME 04112-5044
(This message sent from a mobile device.)

The response

On 5/5/2011 7:45 PM, xxxxx xxxxxx wrote:
Hi Chris,
Telco and broadband internet services. Is that too broad?
Cheers
xxxxx

It wasn’t too broad at all. Here’s what I wrote back:

That makes sense.
First off, it’s a hard question. Asking which marketing tactic will generate the greatest return is like asking which stock you should buy to get the greatest return. It depends on a lot of factors, and those factors can change overnight. I believe the same conventional wisdom applies. The best answer lies in diversifying your “portfolio” of marketing tactics, measuring them all in a similar way, and balancing the portfolio as needed to minimize your risk and maximize your gain.
That said, telco is a great industry for experiential. It has a high revenue point, especially with bundled packages, with recurring revenue. If you can get a household on a triple-play and establish their loyalty for two years or more, it’s not unheard of to bring in $1,000 plus in revenue from a single sale.
I have measured a lot of telco experiential and have seen a wide range of results. I have seen $350 small events deliver 109 household sales. I have also seen $50,000 per month mall events deliver two sales. So much depends on the market to message match, loop qualification, what the local competition is doing, the time of year, and how well the agency is balancing where they apply the direct costs (on assets that generate traffic and sales, or not).
You might need to be ready to expect experiential cost per acquisition at 90 to 135 per sale, which on a sale that can generate several hundred a year in revenue, is a great ROI. Conversion rates are much higher for experiential – Sometimes three to four times higher. But this needs to be balanced with the challenge of reach. A free standing insert will reach hundreds of thousands of people, but deliver only a 0.17% conversion, if you’re lucky. A good experiential campaign might reach 10,000 people for the same cost, but convert 7% to 8% of them. (This assumes you are properly managing the loop qualification issue and are choosing your venues carefully.)
I’d say this: telco/ broadband is not a market for an agency that does not know what they’re doing. There are a lot of ways to mess it up. Most telco companies in the U.S. are very data-driven firms and will know quickly when things are not working out. It’s a far more challenging execution than, say, a traditional event, because it’s an information-based, short-sell, so the staff needs to be experienced and awesome. However, if the agency does know what they’re doing in this particular area, they can run circles around any other type of marketing and generate an ROI that far exceeds other marketing tactics.
I do a fair bit of work modeling out what specific marketing can be expected to deliver based on benchmarks. If you’d like to get into the specifics, we can discuss tactics, budgets, and specific reach, GRP and conversion estimates to see what the options look like.
Hope this helps,
Chris Clegg
Sr. Analyst | Client Services
Portland Marketing Analytics
T: 207.619.2297
cclegg@portma.com
http://portlandmarketinganalytics.com

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