Think BR: Getting the real measure of return on investment

By Marius Cloete, brandrepublic.com, Monday, 19 November 2012 08:30AM

The PPA's Magonomics study is more than just an outright claim for magazines' effectiveness, writes Marius Cloete, head of research, PPA.

PPA Magonomics study: magazines on average showed the highest ROI of all media

PPA Magonomics study: magazines on average showed the highest ROI of all media

Anyone who works in magazine media will tell you there are two conversations they are repeatedly having at the moment.

The first being the upbeat conversations about what they are doing with digital, and how exciting the whole tablet market is for the future of media. Fair enough.

The second, and slightly more awkward one, is often with those militant digital media types and other doomsayers who will gladly tell you that print media is dying and that we will soon be living in a glorious world where the only way is digital.

In day-to-day iterations of this latter conversation it can be difficult not to dismiss these people outright rather than engage with them in a meaningful way. Predicting the death of any medium is a short-sighted and foolish practice and, while it’s been going on for decades, it’s never been borne out by history.

After all, when television became entrenched in homes wasn’t it supposed to replace trips to the cinema? Didn’t video kill the radio star? And what about the anachronism that is theatre?
In the 90s we were all told about the environmentally-friendly future of the paperless office, yet every Thursday morning our office manager uses me as a pack mule to help shift all the paper we send off for recycling.

And a mere four or five years ago, linear television was also facing imminent death due the onslaught it faced from streaming, PVRs and video-on-demand. That prediction also didn’t pan out in quite the way we expected, with linear viewing pretty much holding close to an all-time high these days, sitting comfortably alongside all the innovation that the digital age brings.

The inconvenient truth is that at no time in history have consumers actually turned their back on any type of mass medium. The trend has consistently been for greater diversity and pluralism in our media choices (can you name one that has actually died out completely?), and yet there are certain folk, both within and without our industry, that are keen to set up a divisive, diametric battle between the forces of print and digital.

Let’s also be clear that the traditional paid-for printed magazine model is under a degree of pressure and publishers are rapidly evolving onto more platforms, but the printed medium itself actually remains in remarkably good health all things considered.

In 2011 there were still well over 1.2bn copies of magazines sold or distributed in the UK. And that’s only the 600 or so consumer magazines that report their ABC figures annually - there are more than 7,000 magazines still published in print format in the UK, in case you are wondering.

Advertisers can rest assured that the medium also still packs a wallop when it comes to advertising performance. According to the recent PPA Magonomics study conducted by Mindshare’s Business Planning Unit, magazines on average showed the highest return on investment (ROI) of all media across the 77 FMCG campaigns analysed.

The study found that magazines deliver an ROI 11% higher than television and 22% higher than online.

Now I realise that ROI studies are a dime a dozen and that many media have proclaimed themselves the king of ROI. What makes the Magonomics study more interesting, however, is that it is not just another outright claim on ROI - the study goes further to scrutinise the drivers of ROI and the PPA is happy to admit that the stated level of ROI for magazines is artificially high.

Why would we dare admit that the ROI figure we’ve just released is artificially high? Well the interesting bit about this study is that it included diminishing return curve analysis to track whether media investment was assigned at the appropriate level to generate the maximum and most cost efficient level of sales from each.

Most other media were found to be invested, appropriately, at the level just prior to when returns start to diminish, except for magazines.

This comparatively low level of investment keeps magazines at a point where each additional pound invested has the strongest sales impact possible. So when we carried out the analysis, magazines delivered fantastic ROI compared to other channels.

We were, of course, curious to learn at which point the ROI for magazines started normalising, or dropping off to the level of TV at the very least. In each of the campaigns we looked at, investment in magazines had to at least be doubled before ROI dropped down to the same level as TV.

A rather tantalising result for any media, new or old. And if the early indications from the PPA’s recent work on tablets and publishing (The TAP Report) is anything to go by, the performance of print’s digital stablemates could be even more powerful.

Marius Cloete, head of research, PPA

This article was first published on brandrepublic.com

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