Advertising ROI

This article, Preferred Hotel Group’s 5:1 ROI Guarantee Yields 100% Success Ratio for 2006 Co-op Marketing Programs, illustrates the illusion I continue to see put forth about the effectiveness of traditional advertising programs. Essentially, Preferred is guaranteeing a 5:1 return on your advertising investment. But, are they? The example in the article refers to revenue dollars as the "return". Conversely, most ROI measurements are based on profit or net income, not top line revenue. And, that's how I suggest we look at advertising, or any marketing investment for that matter. So, the 5:1 probably returns a break-even scenario if you consider a 20% profitablity margin. That's not necessarily bad....but not as healthy as it may seem on the surface.

I've seen the effectiveness of many ad campaigns measured solely via revenue, incremental roomnights generated, etc.  Unfortunately, that's a bit short-sighted. While more business is the obvious goal, don't lose sight of the real put more money in the bank?