Measuring ROI

This article first appeared in the 2005 Streaming Media Industry Sourcebook.

Technology vendors like to make sure we know their customers’ Webcasting success stories. By regularly publishing case studies on how IP multimedia enhances the communications process at these organizations, these vendors are shining the spotlight on the undeniable benefits of Webcasting.

But even with so many customers and so many vendors involved in the development of case studies, it should come as little surprise to anyone that all discussions of return on investment—or ROI—invariably return to one issue: money.

The race is on among leading Webcast technology vendors to identify those vaunted "cost savings" that are generated by the deployment of online multimedia in the enterprise. Every organization that can save money by trimming travel expenses or streamlining the dissemination of information to employees becomes a feather in the cap of the company supplying the technology.

After all, if an enterprise can save hundreds of thousands of dollars a year deploying Webcast technology, it stands to reason that the technology vendor can help other organizations save money, too. The same rationale holds true for any other Webcast solution supplier in the market.

Some industry participants see case studies highlighting cost savings as an elixir with the potential to supercharge growth in the corporate Webcasting sector. Data collected in executive surveys, however, begins to suggest that this type of approach leads to nothing more than an ROI sand trap.

Webcast vendors—and corporations mulling the use of the technology—tend to focus too much on the financial implications of multimedia deployment. In the process, they can sell themselves, and the technology itself, drastically short. The intangible benefits that can arise from the implementation of Webcasting can far outstrip the measurable dollars-and-cents impact of online audio and video.

In the real world, the impact of anecdotal evidence still gets short shrift. Vendors’ reports from the front lines of selling indicate that spreadsheet analysis still is the deciding factor in most, if not all, deployment decisions. Whether an executive moves to authorize the deployment of multimedia-enriched Web applications usually depends on how quickly the technology can justify its expense through the cost savings it generates.

And thus we find ourselves in Webcasting’s ROI sand trap: The harder that Webcast vendors hack away at the issue of cost savings, the more corporate decision makers are encouraged to focus on cost-cutting instead of initiatives that can make online multimedia an indispensable element for day-to-day business.

For the long-term health of the Webcasting industry, this has to change. First and foremost, Webcasting needs to be seen as a communications solution that helps organizations convey their messages to far-flung groups more effectively than ever before.

This industry ties its own hands when it positions Webcasting merely as a less expensive alternative to corporate travel. Rather, the real value comes from promoting the technology as a premium option that outshines those widely deployed, pedestrian platforms for corporate communications— everything from the four-color sales brochure to the long-distance telephone call.

Weave Webcasting into the tapestry of possible corporate communications solutions and suddenly the selling proposition behind the technology changes 180 degrees. No longer is the technology something that companies can’t afford to deploy. It becomes a tool that effective, efficient organizations can’t afford to live without. Shifting the mindset of prospective corporate Webcasting customers can be a matter of simple tweaks in one’s approach to the market. It’s a change that can arise simply from asking the right questions.

Different Questions, Different Answers
Analysis of survey results from 1,206 corporate executives conducted by Interactive Media Strategies in Q4 2003 can illustrate how an executive’s answer can hinge so greatly on the way a question is asked.

Consider the seemingly divergent results emerging from a series of questions posed in the IMS executive survey: the first question for examination produced the kind of results consistent with the Webcasting industry’s current outlook on savings-driven ROI. The query asked respondents to cite the factors that "should play the largest role in gauging the effectiveness of a presentation or meeting that incorporates the use of Web communications technology."

Given what we traditionally assume about the Webcasting market, it’s not surprising to learn that 42% of all corporate executives surveyed cited "Cut Travel Costs" as the single most important factor in assessing the effectiveness of Web-based communications. That number is more than double the 19% of survey respondents who cited "Increased Revenue" as the most important factor to be used in gauging the effectiveness of Webcasting.