"Many companies are looking to streamline and start with cost-cutting when they have a problem. However, ROI is a good business practice and it should be done anyway even in a normal economic situation," said Arvind Sethumadhavan, CEO for Asia-Pacific at Advanced Techniques Group (ATG), a global consulting agency for marketing return on investment and optimisation.

"The objective of implementing ROI in companies is to ensure the most effective and optimal marketing investment," he told the Business Leaders Forum in Bangkok.

ROI represents the total economic return a buyer requires on an investment given the risks related to that investment. ROI marketing is a management concept that is fast evolving to help marketing executives better understand how they can spend their money to attain the highest possible return on their marketing investments.

Sethumadhavan said businesses in Thailand and many neighbouring countries still lacked knowledge of such ROI techniques. They usually implement ROI only when challenged by a crisis or competitors.

"To implement ROI, companies should have richness of data and good materials to work with," he said.

ROI is heavily dependent on data. In some Western countries such as the United States and the United Kingdom - as well as Australia, Japan, China and India - ROI is more popular than in Asean countries, including Thailand. In those Western countries, about 30 per cent of executives use ROI as a tool.

"Our research also shows that almost 80 per cent of leading organisations want to use ROI in the future," he added.

Implementation of the ROI marketing technique could start with the set-up of key performance indicators (KPIs) on what are the most important factors in the business, such as sales and profit or a better relationship with distributors or trade dealers. KPIs should be specific to the market.

Marketing people then collect information and analyse that information in a measurable way. With the implementation of ROI measurement, those marketers would select the option of marketing investment and activity that optimised a return to the company.

The ROI process should be tracked to make sure it works. It should be a continuous process.

"From my experience, ROI marketing will help firms increase sales by at least five to 15 per cent on average in three to six months. And they can reduce expenditures in a particular business area by five to 10 per cent by allocating their marketing investment to something else more effective," Sethumadhavan said.

Almost 30 per cent of ATG's clients have already implemented ROI marketing and most of them are multinational companies. Local clients, on the other hand, look at cost reduction as a priority rather than an increase in effectiveness.

Joanne Sheehan, head of media and sponsorship at Ford of Europe, said increased competition following the success of Asian car brands, market saturation, the rise of "intangibles" including brand and purchasing experiences, and the growth of Eastern Europe had been witnessed as changing the rules for the automobile industry.

Those challenges would need to be met with more effective investment in marketing to build stronger brands, she said.

ROI marketing relies on answers to key questions concerning budgets, customers, profits, sales, media channels and investment.

Kwanchai Rungfapaisarn

The Nation