It would seem that, when it comes to delivering ROI (or not), there would be two major types of experiential marketing: that which does deliver ROI and that which doesn’t deliver ROI.
But, in a classic turn of logic that can drive CMOs crazy, experiential marketing as a discipline is routinely presented by practitioners as far less black and white. The ultimate result? The general view from the top of organizations that experiential marketing is expensive, is unwieldy, and (most painfully) doesn’t deliver positive ROI.
Yet some c-level executives see experiential marketing differently—praising its benefits and heralding it as one of the most effective channels in their companies’ marketing mixes. In fact, at the same time many marketers are diverting budgets into more easily measured digital marketing, we’re also seeing an influx of investment in live touchpoints along the customer experience journey. The one major factor that results in the perception gap of the ROI of experiential marketing is how it’s measured.
There are three major problems with the way many marketers (mis)measure the ROI of their experiential marketing:
- Objective-Less Planning Frequently, experiential marketing efforts are ideated and executed without consideration for the business objective they are trying to achieve. Without defining how success will be measured and planning against those metrics, results can fall flat.
- Lack of Integration No one marketing channel can accomplish everything, which is the reason for the existence of integrated marketing and communications planning. If experiential efforts live and are measured on an island, they can end up underleveraged in term so of overall reach and undervalued due to a lack of integration with the full customer lifecycle.
- Unsophisticated Measurement While great strides have been made in recent years in terms of the measurement of digital marketing, experiential has lagged significantly. The offline equivalent of last-click-attribution (or worse, no attribution at all) is often employed by companies looking at the ‘success’ of their experiential efforts.
In the spirit of righting some of the missteps marketers take when attempting to determine the ROI of experiential marketing, here are a few principles to abide by:
Pre-Define Success & Metrics If you don’t know what a bull’s-eye is, chances are, you won’t hit it. It’s important to understand exactly what your business challenge is, then develop concrete and realistic metrics defined to demonstrate success.
In the early stages of maturing experiential marketing measurement, the temptation can be to measure everything. Don’t do it. Just because something can be measured, doesn’t mean it should be. We suggest using a categorization system to help organize your measurement plan.
ROI Return on Investment is the best type of measurement to determine the ultimate success of a live experience and demonstrate return in terms of business value. This is the type of measurement that often holds up best when considering Marketing Mix Optimization.
KPIs Key Performance Indicators are helpful diagnostic metrics that have to do with the key drivers of ROI. These measures are most helpful to provide actionable optimization recommendations and to compare one event against another.
Insight Measures that fall into the category of insight are often event specific and less helpful for comparison between events. They provide planning teams with a level of visibility into how to plan the details of an experience, including factors such as creative messaging, layout, staffing, location and more.
Integrate or Die If your experiential marketing team is still thinking about events as stand-alone occurrences, positive ROI is highly unlikely. Why? Because live experiences are intensely costly on a cost-per-engagement basis and it is extremely difficult for a positive return to be accomplished based on a single engagement.
Experiences matter to consumers, but to properly farm value from them, they must be part of a larger communications ecosystem. Here are a few places to start:
Consider how the phenomenon of consumers bringing their own devices everywhere should interface with and affect your live event.
Some of the most effective marketing initiatives today are rooted in an experiential element seen by few, but experienced by many online. Consider how to capture compelling video and other forms of content to be spread and shared by a broader audience than those there in-person.
What’s your follow-up strategy to an event? Ensure that an appropriate lead nurturing program that includes timely email, digital advertising and social media is in place so that your bond with the consumer continues over time.
Report Correctly, Optimize Intensely
When it comes to reporting, we suggest ensuring that the right metrics are reported to the people they matter to: ROI to the C-suite, KPIs to senior marketers and insights to the teams planning and executing. Experiential marketers don’t do themselves any favors when they’re in front of a c-suite talking about brand love, anecdotal consumer interactions and social chatter that were a result of their live event.
Instead, they need to think longer term—and in the context of Customer Lifetime Value. Live events are unique in that they are more costly at a moment in time than many other brand touchpoints, but deliver more value over time through the creation of a stronger value proposition and relationship with customers.
But maximizing the ROI output of a live event in today’s real-time world requires more than proper measurement and reporting—it also takes data-driven optimization. In a McKinsey study of more than 250 engagements in five years, clients that made data-based decisions to optimize their marketing increased their ROI by 15% to 20%. Experiences should get smarter every time they happen. Gone are the days of lock and load advertising with fingers crossed along the way. We can do better than that.
It’s not that experiential marketing cannot deliver ROI, rather that it’s more difficult to demonstrate the ROI it delivers. Unlike digital channels where data is easily captured and properly attributed to the value it represents, experiential requires a more sophisticated mindset and a shift away from heritage thinking about the channel. Indeed, live experiences are some of the most powerful when it comes to changing behavior and bonding with consumers for much more than a moment in time. As Confucius said: “I hear and I forget. I see and I remember. I do and I understand.”
The same principle is true for marketers – it is only once they’ve properly determined the ROI of experiential marketing that they fully understand its value.
Ben Grossman is vice president, strategy director at Jack Morton Worldwide.