What’s the ROI on SXSW investment?

Yahoo, Yodel, Yodel House
Yahoo, Yodel, Yodel House
The Yahoo Yodel House at SXSW 2015

The amount of money spent by companies trying to capture the attention of the tens of thousands of people visiting SXSW this year will run in to many millions of dollars.  The return they are likely to get on it is questionable.  Part of the problem is that most will have set no clear goals; part is that even those that did will not have any way to measure whether or not they have been achieved, let alone quantify the value delivered as a result of their investment.

Let’s take Yahoo! as an example.  I use it because it is one of the bigger names and it had a huge presence at the event, taking over one of Austin’s premier event and live music venues [according to its website], Brazos Hall.  Other similar examples include GE, IBM and VISA.

I visited the Yahoo ‘Yodel’ House a couple of times during my trip to SXSW and they had spared no expense.  There were the standard free drinks, lavish decoration in brand colours [which was changed on a regular basis], an AV set up that most local television stations would be envious of, venue managers, security, bar staff… you get the idea.  On both occasions it was buzzing.

My question is what was the point?  What did Yahoo! get out of it?  The lounge was busy.  People had a good time. They were able to recharge their devices.  They had a few [more] free drinks. My question to them is, SO WHAT?  What’s the tangible benefit?  The return on investment?

My peers would claim that visitors were engaging with the brand. They’ll say the Yodel House created buzz; pictures were shared on Instagram; people were Meerkat-ing [sic]; tweeting; hashtagging… This is often called ’brand awareness’ or brand marketing [it might be awareness, but it’s not marketing] and that’s great, but it is also unquantifiable! It has no tangible value.

I use this not to single out Yahoo! but to illustrate a growing trend.  Companies through huge amounts of money at making on awareness but without considering whether it makes financial sense to do so.  Often there is little thought about what the long-term return will be, let alone the short-term one.

It’s a dangerous trend. Sure, companies like Yahoo! and their ilk can afford it. They have deep pockets.  Some smaller companies have VC money they can “invest”, but the majority don’t.  And, if there is no tangible value then surely the money could be better invested in other things?  Things that are likely to deliver a return. Things that are likely to support the growth of the business – not just brand awareness for its own sake.

How many people that visited the Yahoo! lounge at SXSW will have gone home and changed their default search engine from Google to Yahoo!?  I think you know the answer to that.

Startup and SmallBiz Marketing tip: understand what action you want people to take and focus your time, energy and money on achieving it.  Successful marketing begins with strong relationships built via public relations.

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