The agency community hasn't been in a hurry to answer the ultimate question of accountability: Does our advertising actually work? At best, we've claimed credit for marketplace success ("Well, sales rose dramatically, so the campaign obviously worked") and taken cover during a slump ("There's much more to sales than advertising alone").
Our business needs a real metric based on the inarguable value of advertising.
Here's a hint: It's not ROI. ROI is a measure that's been extracted from finance and strapped on, none too securely, to advertising and media. While the concept is right, the value of the measurement collapses upon examination. Too much happens between the commercial pod and the store shelf -- packaging, distribution, promotion, pricing and more -- to isolate reliably the precise impact of the advertising.
But that doesn't mean we can't measure the effectiveness of our efforts. More importantly, we have to. Client budgets today aren't getting any bigger, and the digital space, which does have hard-and-fast metrics to measure the value of advertising, is driving calls for similar measures in the "real world." Given that the best defense is a good offense, it would be smart for the agency community to develop its own metric, before one gets shoved down our collective throats.
What should this metric look like? First, it needs to be grounded in something that everyone agrees advertising impacts. Second, it must be something for which the research muscle already exists. Finally, it should be simple and straightforward.
Ad Value Ratio (AVR) puts advertising performance on the right platform.
We came up with AVR at ONE/x, an agency I co-founded this spring with Jason Wulfsohn and Duffy Humbert, a new venture that was built upon our work with consumer electronics brand Vizio. We developed AVR to provide a framework for evaluating campaigns -- could we assign a quantitative value to putting the right messages in the right media?"
What began as a tool has quickly showed itself to be an operating framework with the potential to put advertising on a higher level.
AVR is grounded in awareness -- something that no one disputes advertising affects. Awareness tracking is commonplace; it's a fixture on any list of industry best practices. And awareness is simple to understand, yet broadly defined; it's the measure of what advertising does best.
AVR is derived from a fraction, with the percentage increase in awareness on the top, and the percentage increase in the ad spending on the bottom. A ratio of 1 or higher indicates success. For example, a 20 percent change in awareness atop a 10 percent increase in the budget yields a ratio of 2, which is good. The reverse gives you a ratio of 0.5, which is not.
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