Hey friend – Rob here.

I recently went back to my vault of notes from the IPA Eff Test, something i do now and then.

And boy do i have a nerdy new set of fun ways to think about effectiveness, hand-rolled just for you!

I did this because a recent conversation emerged in our private community, on objectives and KPIs.

So here's how i usually talk about it with clients, and yes this should be even before you brief the work.

Broadly inspired by the wisdom of Binet & Field, who if you don't know of them – go look them up.

Below i'm gonna cover:

1. How the process works
2. What ROMI (AKA ROI) really is
3. Why you need to focus on profit, not sales
4. Why attribution models are faulty as shit
5. Types of objectives and how to organise them

If you find this feels boring, i won't blame you.

If you don't, then you're on the right track.

Let's get into it.

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1. How the process works

It sounds basic AF, but any measurement project needs to follow a simple process:

• Establish objectives
• Establish effectiveness measures
• Collect the data
• Correct for other factors
• Calculate ROMI
• Present results

Shout out to the "correct for other factors" point in particular, which most of us overlook.

I know why we do it, it makes our jobs look much more impactful, but it's also faulty.

If an ad campaign correlates with sales growth, that's better than it not correlating, for sure.

But the real question is, what else might have influenced those sales?

• Greater distribution?
• Product improvements?
• Promotional discounts?
• Natural sales seasonality?

This stuff matters, not because we want to undermine the role of campaigns and content.

But precisely because we want to prove their real contribution to the bottom line.

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2. What ROMI (AKA ROI) really is

Another point on this is how you demonstrate true Return On Marketing Investment.

Which is not to be confused with Return On Ad Spend, which is a paid media metric.

The real kicker is when you're able to demonstrate that:

• The work paid back
• The work generated return higher than other potential areas of investment

So for example, the real gangster move of an IPA-level paper is not just when you link ads to sales.

It's when you prove this had greater impact than simply investing in, for example, new products.

The formula goes like this:

• ROMI = (net incremental profit generated by the activity / cost of activity) x 100%

And yes, by "cost of activity" we must include production costs as well.

From memory, examples like Audi and Cadbury have successfully done all this with their papers.

And they demonstrated that the single biggest contributor for increase in profit was the communications.

Oh yeah, speaking of that...

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3. Profit, not sales

Anyone can increase sales by putting prices down.

The real gangster result is whether you generated incremental profit, i.e. greater shareholder value.

This also makes things harder, but more rigorous, when we evaluate claimed results out there.

Awareness went up by X% and sales went up by Y% is ok, but nowhere near enough.

• Were those profitable sales?
• Did you maintain margins or discount like crazy?
• An even better question, did you manage to raise prices and still maintain demand?

That last one is called "price elasticity", and we don't spend nowhere near enough time talking about it.

Bottom line, the role of brand building in many cases is to help you command and justify higher prices.

Which, in turn, means you have healthier margins, and therefore a healthier business in the long run.

This stuff ain't rocket science.

Though sometimes it feels harder.

Now, let's talk about attribution.

Oh, attri–fuckin'–bution.

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4. Attribution models are faulty as shit

In principle, they make total sense.

The last thing you tracked is the thing that closed the sale.

The problem is that this usually means most of your performance is tied to paid search or paid social.

But what primed people to want to search for you or recognise you before deciding to respond?

That's where brand building comes in, and attribution rarely accounts for it.

A useful analogy for this comes from supermarkets.

If we say last touch attribution is all that matters, then the single biggest driver of sales for a supermarket is the fact it has doors in the physical store, or a basket checkout piece of software on their website.

Doesn't look so credible now, does it?

But there's also a danger of simply relying on ROMI, because it tends to go up as investment goes down.

So you can effectively have greater looking ratios while the business is actually doing worse.

Bummer.

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5. Types of objectives

There are many schools of thought on how to think about objectives and KPIs.

I tend to group them broadly as two buckets: commercial, and communications.

Commercial is the money making stuff.

Communications is what people take out of you comms.

For this to work, you need evidence that an increase in comms takeout leads to money being spent.

Which ties to another fun topic called "category entry points", which i will do a summary of soon.

But for now, let's stick to simple things: commercial and comms objectives.

Each with their own sets of measures, of course.

Commercial measures can be organised by things like:

• Sales (value or volume)
• Market share (value or volume)
• Profit (see above re: margins)
• ROMI (as a measure of efficiency, but not the only thing that counts)
• Market penetration
• Product/service trial
• Product/service loyalty

By the way, one note on something that took me ages to properly wrap my head around.

• Market share = your share of the market relative to competitors
• Market penetration = your share of buyer activity among specific segments

So you can have, say, 13% market share, but a 28% penetration among families with young kids.

Or 47% market share, but under-indexing on market penetration with 18-34s.

Crucial point for when you see these terms, so you know what they really mean.

Comms objectives and measures are the things that precede these more money-related things.

• Brand awareness
• Brand image
• Brand consideration
• Brand recall
• Brand buzz/fame
• Brand differentiation
• Claimed loyalty
• Claimed purchase intent

This is where advertising and content typically play, and without measuring them, you got very little.

(Sorry, case studies where the 'effectiveness' part just says you go 10 million video views!)

Also worth noting that objectives and measures of success need to be, among other things, specific.

• Less of "we want to grow brand awareness"
• More of "we want to grow brand awareness from 15% to 18% by December 2024"

Another useful way of looking at it is to consider soft vs hard objectives.

Soft objectives are things like the above, which is what people say they think or feel or will do.

Hard objectives are the proof is the pudding, i.e. the result of soft objectives delivering real action.

Something else that was super clear to me by the time i was done was how objectives flow in a business.

Meaning, one manager's strategy can become the next manager's objectives, for example:

• The managing director's objective is to increase profit by 10%
• To achieve this, they will have two objectives:
  • Increase sales by 15%
  • Decrease costs by 5%
• But then, increasing sales by 15% becomes the objective for the sales director
• And decreasing costs by 5% becomes the objective for the production director

Neat, huh?

Another part of comms objectives may involve staff perceptions:

• Feeling you belong
• Agreeing with brand's vision
• Willingness to recommend to others

Which, by the way, is one of the under-discussed roles of brand purpose: its ability to attract talent.

One for another deep dive, some other time.

This is already getting long.

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Why all this matters

Look, sometimes i open conversations on measurement by saying something self-deprecating:

But the evidence is clear: IPA data shows that clear objectives quadruples overall effectiveness.

No clear objectives means you leave a helluva lot of money on the table.

And are inevitably a victim to a lot of uncomfortable questions about what your impact really was.

It's how brands like Lidl, Baileys, Audi, Cadbury, McCain, Guinness or Specsavers have won big time.

And learning from examples like them and The IPA, not just LinkedIn hot fads, is how we can win too.

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That's all for now

I hope this was useful, it certainly blew my mind when i wrapped my head around how it all works.

I just wish someone had taught me this at 25, instead of accidentally needing to learn about it at 35.

But hey, hopefully you'll get ahead of me now as you go about your journey too!

Keep swimming,

Rob

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👋 Need help with your comms, campaigns or content? I can help y'out, just email me at rob@salmonlabs.co. Salmon Labs is the strategy studio that helps savvy brands swim upstream. 100% salmon. 0% spam. Rob Estreitinho Building Salmon Labs > Work​ > Writing​ > Call me maybe​

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