Activities need to be measurable in order to efficiently and effectively control a business. In the field of product placement, this is often done solely with simple reach figures (in combination with the respective cost).
However, reach alone is no indicator for success and therefore not suitable for measuring success!
When determining the key performance indicators (KPI) for corporate succcess, one needs to makes sure, that they measure the right thing and are clearly correlated to the goal (corporate success). Reach does not fulfill any of there requirements.
Some short explanation
The reach of a marketing activity with regards to corporate success is comparable to simple sales numbers. More is usually better. However, they can mislead! Simply imagine a product that has a highly negative profit margin, but is sold as crazy. The company loses money with every item sold – regardless the fact that the KPI “sales number” is awesome.
It is the same with reach, especially when it comes to product placement. More is usually better. However, if the integration is done wrong, this can lead to negative effects and then, suddenly, reach acts as a multiplier for failure.
But reach is still a valid KPI, right?!
Reach can be used as KPI, because a KPI is defined by a given goal and can also only measure the performance of a specific department (or even person or measure). You can use reach as a KPI to measure the success of the marketing department – regarding the goal to achieve a high reach. In this case, however, reach is more a goal than a real KPI, and one has to ask if this makes a lot of sense. In any way, reach of marketing can never be used as KPI when you look at the corporate success – at least not alone.
What to do?
Responsible controllers never only look at sales figures without taking into account more numbers like cost of production (or simply the profit margin). Measuring the success of marketing needs to be done similar. Reach figures always needs to be combined with other insights. Only then, they have any right to exist as KPI. At small companies, which only have one product and do not that much advertising, reach can be simply compared to sales numbers. However, in most cases this is not possible without large bias. Here, it is recommended to use quality indicators instead. Remeber that quality means how the advertisement affects the consumers and not how good the product placement has been integrated from the director’s point of view! A bad quality then needs to lower the importance of reach. You can determine the advertising quality by starting comprehensive market research (no simple phone surveys). That is how you can make sure that a product placement campaign has no negative impact that gets multiplied by a tremendous reach. Additionally (or even as an alternative, since comprehensive research is quite expensive), a software solution like Placedise can help to measure the advertising effects and therefore quality of product placement.
No matter how you measure the effect of the placement on the target audience – it is important that you never solely look at reach as KPI if you want to maximize corporate success!
The knockout argument here will always be: It can get very expensive if you only trust on reach – just like suddenly dealing with negative margins.