Archive for February, 2006

Finding the Cause and Effect in Advertising

Today there was an article in the Media & Marketing section of the Wall Street Journal about the AAAA conference in Orlando by Brian Steinberg. Media Buyers Fly Down to Business It talked about changes in the focus of media buyers and advertisers toward “new digital technologies that are fragmenting audiences and forcing advertisers to find new ways to market their products”. It spoke to the trend of media buyers putting more resources into various techniques to measure the effectiveness of advertising. It quotes Jim Poh, VP and Director of creative content distribution for Crispin Porter + Bogusky: “It’s more and more important because more and more advertisers are questioning what their advertising is doing for them”. And it quotes Charlie Rutman, chief executive of Havas’s MPG North America as saying “The overarching goal is to try to find the cause-and-effect relationship between a marketing act and some kind of consumer action”. Like I said in earlier posts, this is more and more about measurable R.O.I. Advertisers are demanding to know what their ad dollars are doing for their sales. But, as Mr. Poh points out, the deluge of data that can be brought forward doesn’t necessarily prove that their advertising works.

It seems there are challenges in not only the measurement, but the use of the data that comes out of the measurement. The ability to measure more accurately what was served and the conditions under which it was served will continue to increase, but the connection with the consumer action is still more difficult. One would think that with all of the point-of-sale information that is collected by everyone, it would be easier to make this connection. A step in the right direction has been made through Internet ads and online buying. Television and mobile still have a ways to go to create this connection.

Hitting The Mark

An interesting interview was part of an article in Mediapost’s behavioral Insider newsletter named The Merging of TV and BT – by Phil Leggiere, Friday, February 24, 2006. You may need to sign up to view the article, but I believe it is free. In the article, Simmons Research Co-CEO Bill Engler is interviewed. He gives his views of targeting with an eye toward specific targeting on TV. Unfortunately, they’re still talking about clusters and then media buys that concentrate on numbers.

Here’s the problem I see with TV advertising. Even though the advertiser and their agency know the profile of their targeted audience, they end up buying ad time on programs that generally have audiences that are in that demographic. Problem is, it doesn’t work too well because people that watch certain programs are by-in-large different. They may or may not have the same interests or buying habits. So the problem here has been with delivery system, not necessarily with advertisers not knowing their target. Enter… A Digital Age, where communication becomes two-way on electronic devices. The lead and where much of the learning has been is the Internet, but reaching a targeted audience still is not great in that media. Now we see a move to digital television, digital mobile devices with higher bandwidth and the opportunity for marketers to send a specific message to a specific device is technically possible. Two-way pipes have been created that enable interaction at a personal level.

So we have a system where over $60 billion is spent annually on TV advertising. This system includes a tremendous amount of waste right now. Lots of players are involved in creating, targeting, measuring, setting rates, buying and delivering. Being able to target specifically to an individual may require dramatically less numbers because theoretically the response rate will be much higher on a well targeted ad. Couple with that an industry where we have an explosion of choices and increased control for the consumer. All of the sudden, a 7 p.m. Monday night spot is no longer valid because the consumer can watch that program at any time with video-on-demand or digital recorders(DVRs). So the target has to become the individual not the time-day part or program. I predict this is where it’s moving and the technology is catching up to provide ads that are most relevant to me.

Chime in! Let me know what you’re thinking, what you’re hearing and how you feel about this personalization of advertising.

-Andy

Demands of Advertisers

Around $280 billion is spent in the U.S. on advertising! Big numbers with big expectations. The traditional way is to broadcast or shotgun the ads out and hope they find their target. The adage is We know that 50% of our ads work sometime. We just don’t know which 50%! (This is obviously paraphrased and I have no idea to whom it is attributed.) So the advertisers spend the money and hope the shotgun spray hits. They play because they feel they must to be competitive.

Things are a-changing in corporate America and abroad, demanding more accountability for dollars spent. They ultimately are driving this ship that we call advertising because they have the money that feeds the beast. A funny little metric called R.O.I. or return-on-investment has come more into focus. In the past, this metric was laden with assumptions as to the relationship between the launch of an ad campaign and a lift in sales in a loosely associated time-frame. I use the analogy of a maker of umbrellas. They may run a new ad campaign, spend tons of money on the certifies and buys and see a lift at retail, but not necessarily because of the campaign, but maybe it is unseasonably rainy at that point in time. Or maybe they don’t see a lift in sales due to dry weather. In this case, the relationship has little to do with the effectiveness of the ad campaign and everything to do with the weather.

Changes in technology surrounding ad delivery can potentially tighten this relationship between the ad campaign and its true impact on sales. Interactive media allow for the most direct correlation where ads drive buyers to make a purchase through that media. Media like mobile phones and television with an interactive environment will be critical for this delivery in the future.

Providing more concrete returns to advertisers will increasingly become critical for agencies, publishers and media companies who what to see future growth.

How are you reacting to these pressures?

-Andy

We can do it better!

OK! I’ve been inspired by Guy Kawasaki through his blogging at http://blog.guykawasaki.com/. Great insights! Good read! Go take a look at it, especially if you are an entreprenurer and/or business owner.

So, here’s my first shot:

The last time you watched television, what did you do when an irrelevant or irritating ad started? In the past, we either changed channels or got up to go to the fridge. Today more and more, people are fast forwarding using DVR devices like TiVo. The problem is, the opportunity for the marketer was wasted in many of these cases. I like to watch football, but I find the ads seem to be for lite beer, which I’d much prefer a good stout or amber, and for trucks – which I’m the most unlikely candidate. The money was wasted by the advertiser and I just got fatter because of my return trip to the kitchen. How many political ads have you received by candidates and issues for which you can’t vote? I live on a state line and more than half of the political ads are irrelevant to me. Wasted money, wasted time.

“So, just zap the ads”, you say. Problem is, the ads pay for the content. If we were to pay the full bill, our cable bill would be way too high for most. We wouldn’t enjoy the luxury of 200 channels because of the cost.

Over $280 billion is spent in the U.S. on advertising. There is tremendous unrest in the advertising community. The unrest is caused by lack of accountability and results based on the dollars spent. Advertisers are demanding a better way and consumers are getting impatient with irrelevent ads. The old model is breaking because of the choices and control people now have over their media.

Over the next several posts, I’ll deal with some key premises. These are:

  1. Advertisers are demanding a near-realtime sense of R.O.I. (return on investment)
  2. Consumers have gained significant control over their media with more choices and control over what they see and when they see it.
  3. Advertising has a high content value to the consumer when properly targeted.
  4. Advertising has an entertainment value to consumers when relevant and created in an enticing manner.
  5. Technology advancements with digital television and mobile phones allow for a two way interactive environment where targeted ads can be effectively delivered.

Mark this blog and come back for new posts. Your thoughts and comments are welcomed and appreciated.

-Andy

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