The Quandary: How to Prove ROI to CEOs?

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NEW YORK ( -- Issues of performance measurement and media effectiveness continue to bedevil advertisers, according to chief marketing officers speaking today during an Advertising Week in New York City panel.

The economic recovery is still tenuous enough to make budgeting a challenge for marketers, said the panel, which included James Speros, U.S. chief marketing officer for Ernst & Young; Paul Guyardo, Kmart's chief marketing officer; Jim McDowell, vice president of marketing at BMW of North America; and Joseph Perello, president of the New York City Marketing Development Corp.

The panel was conducted by Advertising Age.

A cautious market
"The market will be cautious" in this climate, Mr. Speros said. While spending in some advertising categories such as the Internet will continue to grow, many advertisers may hold the line in other media, he said. "We will see some bright spots, but it's hard to broad-stroke it now."

The CMOs agreed that in this environment, chief executives are increasingly concentrating on measuring return on their marketing investments. Doing the same can save a CMO's job, they noted.

Understanding the CEO
"That way, when they're coming at you, you're armed with the facts," Mr. Speros said, adding that CMOs tend to use "proxies" to measure their success, figures such as brand awareness and purchase intent, while CEOs are focused on tangible results, such as sales numbers.

"We have to learn the language of the CEO," Mr. Speros said.

That focus on results is causing changes in the media mix, the panelists said. TV seems less effective, while cheaper, more targeted media are rising in importance.

Kmart's credit card
Mr. Guyardo noted that Kmart plans to launch a credit card partly to build a database of its customers, which it has not been able to do because many of its shoppers pay in cash. The retailer is also partnering with research groups to analyze its customer base and figure out key subsegments to target. Additionally, the retailer is looking to ramp up its in-store marketing, "a huge marketing opportunity," he said.

But while most panelists said their use of TV is changing, no one would admit to the demise of the 30-second TV commercial. However, marketers are looking for new ways to keep TV viewers from tuning out.

'Invited' media
"People are getting extremely good at blocking [ads]," Mr. McDowell said. That's why BMW has looked for other media, which are "invited" into consumers' homes, like the groundbreaking BMW Films on the Internet, he said. BMW still does TV ads, but "we love TV that is so immediate that you're not tempted to TiVo it," he said.

Advertising on TV is not going away, Mr. Speros said. The industry has built an infrastructure worth $18 billion and "someone's going to have to pay for the programming."

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