Harsh Times Demand (Even) More Concrete Evidence of Effectiveness September 2, 2008
Posted by Mark Blei in : Uncategorized , add a commentBATAVIA, Ohio (AdAge.com) — Want to know if advertising works? Or how it works? Or what consumers think? Chances are, you’re about to find out as much as or maybe even more than you ever wanted.
A slew of media companies, agencies, research firms and even marketers themselves have ramped up efforts to churn out elaborate studies or research results as selling tools. Reasons vary from the obvious need of media to prove themselves, particularly in tough times, to the fact that data-based pitches have gained currency with the public at large.
By the numbers
+25%
Direct-response TV may be accountable, but it doesn’t always work as planned.
+160%
Average increase in unaided awareness for brands in seven package-goods and fast-food categories in a Yahoo study based on ComScore data
+31%
One-week lift in sales of Campbell’s cream of mushroom soup in April 2006 from a Parade ad in an analysis released late last year from Information Resources Inc.
Of course, it also helps to have the numbers handy because media, agencies and marketers alike are facing a much tougher audience: finance executives.
Only a decade ago, the biggest marketers were run by executives who started their careers in marketing. Today, CEOs of such marketers as Unilever and Kimberly-Clark Corp. come from finance backgrounds. And their joint rival, Procter & Gamble Co., recently has named executives who spent most or all of their careers in finance either as global marketing officers or senior managers over more than a third of the business.
For anyone who wants to crunch numbers, plenty are available.
Parade of data
Parade, after last year commissioning Information Resources Inc. to use marketing-mix models to show sales lift and payback from advertising in the Sunday supplement, is now preparing its third wave of IRI analyses of various brands’ ads and the second wave of using health-care-research firm IMS to do similar analyses of prescription-drug ads, said Mike DeBartolo, exec VP-advertising.
Parade keeps paying for expensive analytics it never used years ago because they help sell ads. Mr. DeBartolo said Parade’s page volume from consumer package-goods, food and over-the-counter drug advertisers is up 36% through July compared to last year after a similar gain in 2007.
Likewise, digital media are finding they have to produce new data to tap a huge pool of media spending that up to now has been largely beyond their grasp, particularly from CPG advertisers.
Direct-response advertisers who’ve been the bread and butter of online media, particularly search, didn’t need studies. They had their sales results.
Not so with CPG advertisers, who generate relatively few sales online and whose abysmally low click-through rates don’t do much to prove effectiveness. So Yahoo, Google and MSN all have ponied up for third-party research this year to prove they’re relevant to the brand marketers.
Searching for results
Google earlier this year released research from Nielsen/Net Ratings and ComScore of an online display and search campaign for Unilever’s Dove deodorant estimating a $530,000 sales lift and 13-percentage-point increase in favorability ratings.
Yahoo recently set out to prove that search had a brand-building impact beyond the clicks, joining MediaVest in a study of 6,000 consumers showing that search ads generated an average 160% increase in unaided brand awareness.
Of course, media have always used data to prove impact. The difference now is that media are having to come up with new types of studies to prove they do more than just reach people, said Joel Rubinson, chief research officer of the Advertising Research Federation.
“Yahoo knows that just focusing on clicks and having an advertising model based on that may be shooting themselves in the foot,” he said, “because there are these other kinds of [branding] benefits.”
He pointed to Microsoft’s “Engagement Mapping” study launched earlier this spring, that works with marketers and agencies including Citi Cards, Sprint, GSD&M Idea City, MindShare and Initiative to demonstrate the cumulative effect of online display or search ads in driving sales rather than just assuming the “last ad clicked” is responsible.
Publishers’ data
For media where marketing-mix models and clicks don’t apply or aren’t practical, proving effectiveness can be harder.
Still, Brenda White, VP-director of print investment at Starcom, is seeing a growing number of publishers come to her with studies from third-party research firms, something the agency has been demanding based on client wishes.
“With the economy the way it is,” she said, “publishers are going to have to do this to hold onto budgets. They’re under increasing pressure from other media, too.”
Since most individual titles aren’t big enough to practically use marketing-mix models, Ms. White sees more publishers using studies from Dynamic Logic or Marketing Evolution that base effectiveness analysis on other metrics, such as changes in brand perceptions.
Similarly, MTV Networks has been looking to build deals around Marketing Evolution’s “return on marketing objectives” system, offering guarantees based on how well campaigns deliver against marketer-chosen objectives such as increasing brand favorability.
Mind candy
Yet it’s not just media getting into studies. So are agencies — such as Ogilvy Action, which recently completed a 14,000-shopper study globally to buttress its standing as a global player in shopper marketing and build interest in the discipline.
R-E-S-P-E-C-T: Why Market Research Just Doesn't Get It September 26, 2007
Posted by Mark Blei in : Uncategorized , add a commentR-E-S-P-E-C-T: Why Market Research Just Doesn’t Get It
Marketers Continue to Ignore an Industry They Need Now More Than Ever
Published: September 24, 2007
It’s a weird dissonance some believe is at the heart of marketing’s malaise. Marketers need good research more than ever but either can’t get it, can’t understand it or can’t accept it. Market research, in other words, has never been so important. Yet market researchers are as unimportant as ever — at least within their organizations.
 |
Like moguls with trophy wives, marketers keep collecting them and keep ignoring them.
The research industry is struggling for respect even as it races to fill vacancies. Fragmentation, complexity and demand for accountability have been a boon for researchers — to the point that their pay and bonuses are rising 10% or more annually, according to recruiting firm Stephen-Bradford Search.
On the other hand, few researchers ever move beyond their staff functions into top marketing or management roles at marketers, agencies or even leading research companies. When the private-equity owners of Nielsen Co., the biggest research firm of all, needed someone to turn the company around, they turned to David Calhoun, one of the hottest products from General Electric Co.’s general-management mill, who spent most of his career in finance.
“Marketers generally distrust research and data,” said Greg Stuart, former CEO of the Interactive Advertising Bureau and co-author of the book “What Sticks,” who’s in the process of launching an undisclosed new business.
Punch in the gut
That attitude helps keep the industry driven largely by gut instinct and what Mr. Stuart calls “tribal custom.” But tradition and gut are increasingly impractical given the complexities of modern marketing, he said.
He cites a relatively simple marketing plan with five elements — positioning, segmentation, TV, print and online media plans — and five choices within each element. It amounts to more than 3,000 permutations. “We’d have to be out of our minds to think we could know what to do in our gut,” he said.
Researchers’ relatively low status within companies and agencies, he said, leads to marketers ignoring their advice or never seeking it in the first place. At the same time, many marketers’ inability to understand the methodology and calculations behind data they get, Mr. Stuart said, “allows research to be abused, sometimes by researchers but also by people trying to sell things.”
Just as marketers often don’t understand research, the researchers often don’t understand why they’re doing it.
Utility
“There is a general belief [among researchers] that over 50% of the research done at companies is wasted,” said Bob Barocci, CEO of the Advertising Research Federation. “They’re asked to do things that, even if the research project is perfect, won’t be useful.”
He attributes much of that to research done purely for defensive purposes to support decisions already made. “It’s covering-your-butt kind of thinking,” he said.
But he also blames research departments for much of the disconnect with marketers. “Often all we do is present numbers,” Mr. Barocci said. “We don’t present insights.”
To be sure, researchers have sought to fix that image by no longer calling research by its old, academic-sounding name.
“I can’t stand the term ‘market research,’” said Alison Zelen, director of consumer and market insights for Unilever’s deodorant business. “I don’t consider myself a market researcher at all. I really consider myself a marketer, which is why I like the [insights] title.”
She termed market research “this huge industry of billions of dollars that anyone basically can do.”
Self-sustaining problem
That outlook has found its way into industry economics, encouraging procurement departments to drive down costs and, in the process, research quality, which in turn undermines marketer confidence in research. It’s a classic vicious circle.
Years before marketers set their procurement officers loose on ad agencies in the 1990s, they did so on research, and with much less hand-wringing.
“The perception is that the only thing important here is price, because any one of these companies will deliver the same results,” Mr. Barocci said. “That’s the cause of procurement getting involved early and quickly [in research buying]. I don’t think anybody ever really believed agencies, on the other hand, were a commodity.”
Research companies are to blame too, he said, for not pushing back, or at least not disclosing what the quality trade-offs will be from low bids.
Quality control
Online research has been a key factor driving down research costs and increasing speed, but some believe it’s also driving down quality. Procter & Gamble Co., the biggest buyer of research in the world, last year disclosed that some online surveys from the same vendors weeks apart delivered significantly different results, as well as online surveys whose results differed significantly from those obtained by mail surveys.
Partly in response, the ARF launched an effort to develop new online-research quality standards by next year. At the same time, Mr. Barocci said the ARF hopes to “start a dialogue on procurement” practices in 2008.
But he said the single biggest issue facing the industry is: “How do we get better data?” He added that continued concerns about the quality of research data in many areas may play the biggest role in undermining the industry’s image.
Research produced as part of the ARF’s online-quality initiative isn’t necessarily a confidence builder. A study recently presented by Knowledge Networks found in some cases substantial divergence from known benchmarks established by the U.S. Census or elsewhere both in online and phone surveys. The sample populations in seven online surveys and one phone survey ranged 10 percentage points or more from the norm in areas such as race, education, income range, movie viewership and travel habits.
A separate study by Burke found an average of 14% of survey takers across 20 online panels were fraudulent or “mentally cheating.” Depending on the panel, between 11% and 20% of respondents contradicted themselves by — at different points in the surveys — saying the same brand both was and was not worth paying more for.
Innovation needed
Kimberly-Clark Chief Marketing Officer Tony Palmer said survey research itself may be part of the industry’s image problem.
“It’s becoming harder and harder to get people’s attention to do research,” Mr. Palmer said. “It’s becoming clearer and clearer that what people say and what they do is different. So there’s a real need to drive research to newer techniques, toward research that deploys anthropology and observation.”
Of course, if more senior managers at marketers or agencies came from research backgrounds, they might be better at sniffing out research-quality issues, understanding quality trade-offs for cheaper research and recognizing how research could be improved. But for many reasons, that isn’t happening and may never.
“When you get to a senior level, it’s about leadership, inspiring people, direction, decisiveness, handling ambiguity,” Mr. Palmer said. “My guess is that the skill set required to make you a really good researcher may be a little different. You tend to
be a little more introverted. … But the industry also needs to ask itself the question: ‘Am I developing people the way I need to be?’”
Susan Gianinno, chairman-CEO of Publicis USA, is a rare senior agency executive from a research background — a former University of Chicago research psychologist who spent several years in or running agency research departments before moving into account management. But she, too, thinks most researchers are ill-suited to run businesses.
Detached researchers
“To move a business forward, you have to come to a judgment and move on pretty quickly, and a really rigorous researcher knows too much about what he doesn’t know,” she said. “Some of the best researchers are better served by being the objective spokesperson for truth and not having to worry about some of the pragmatic aspects of our business.”
But because researchers have become increasingly detached from the creative process, she said, many “don’t know how to take their insights and convert them into actionable, inspiring briefs.”
Unbundling of media from creative agencies over recent decades has widened the divide of research from creativity, she said, because the media agencies took most of the best researchers with them. And research lost favor within its remaining stronghold at creative shops — account planning.
“The whole era of British-imported planning,” she said, “did a huge disservice to strategy and planning because it became too qualitative in the sense that if somebody could just think up an idea or put on a good presentation, they were deemed a good planner.”
While it’s rare for researchers to move into senior marketing and management positions at marketers, too, it’s not unheard of. One example is Irene Rosenfeld, chairman-CEO of Kraft Foods, who after getting a Ph.D. in marketing and statistics from Cornell University started in the General Foods research department in 1981.
Success story?
Research executives believe the relative clout people from research backgrounds had at Kraft and General Foods in decades past probably contributed to Kraft becoming the leading adopter of now widely used marketing-mix modeling to evaluate advertising effectiveness.
Gregg Ambach, VP-analytic services at ImmediateFX and a veteran both of Kraft and Campbell Soup Co., said Kraft was well ahead of Campbell in developing marketing analytics. “Certainly there was no one with a career path similar to Irene’s in the Campbell organization,” he said. “Some of that is probably recognizing the value of the staff function.”
Of course, the Kraft experience hasn’t always been a glowing endorsement of the power of analytics. With sales growth stuck, around 3%, Kraft has been lagging behind some of its big peers, such as Kellogg and Nestlé. And in one of the more extreme forms of procurement hardball in 2003 (before Ms. Rosenfeld took over), Kraft asked some market-research firms to rebate money they’d already been paid.
Even the biggest proponents of research don’t necessarily believe putting more researchers in charge is the answer. But putting more researchers into C-level roles, perhaps as chief strategy officers, may help.
Bringing data to the table
“I like to have a quant jock or a researcher by my side in running a business,” Mr. Stuart said. “I like to have direct access to that expertise.”
The other solution, he said, is to make research a bigger part of general marketers’ training.
He said he sees hope for more “fact-based decision-making” taking hold in marketing through such parallels as Major League Baseball, where the numbers-driven “Moneyball” talent development of Oakland Athletics General Manager Billy Beane has gained a growing foothold in recent years.
“That kind of change is generational,” Mr. Stuart said. “It’s going to be a long, slow slog.”
If baseball’s any indication, he’s right: The A’s are playing under .500 this year.
What's the Value of an Engaged Viewer? July 9, 2007
Posted by Mark Blei in : Uncategorized , add a commentWhat’s the Value of an Engaged Viewer?
OMD Claims to Know How Rapt Audiences Stack up Against Your Average Eyeballs
<!–
–>
Published: July 09, 2007
BATAVIA, Ohio (AdAge.com) — One engaged viewer is worth eight regular viewers, according to a new study.
New research from Omnicom Group’s OMD may move the seemingly fuzzy concept of engagement beyond the realm of academic debate by proving it really does move sales. The study could bolster advertising by better reflecting its contributions to sales growth, and the fledgling science of engagement measurement, which now has some tangible evidence of its worth.
Completed by OMD and presented to an Advertising Research Federation forum late last month, the research indicates that not only does consumer engagement with media and advertising drive sales, but it also can drive sales more than media spending levels. That suggests even a relatively small media outlay could work wonders should the ads draw keen attention from consumers within media they also find engaging, said Mike Hess, director of global research and consumer insights for OMD.
 |
| Source: OMD |
Further research necessary
The research, conducted by Sandra Eubanks, U.S. director of research for OMD, and Huw Griffiths, U.S. director of metrics and brand science, covered only three financial-services brands. They and Mr. Hess cautioned that broader research is needed to prove the link between engagement and sales or to determine how much media weight, media engagement and advertising engagement each affect sales generally.
But for the brands studied, which weren’t disclosed, figuring engagement into the picture increased measurable advertising return on investment 15% to 20% over models that only factor in Nielsen Media Research’s gross ratings points.
OMD used its proprietary engagement measure, an index that factors in such things as how often people say they watch a show, to measure media engagement. The agency used copy-test results measuring primarily how much people like ads to measure advertising engagement.
They mashed those numbers with the one discipline that’s been a hotter research commodity than engagement tracking — marketing-mix modeling — to analyze how much engagement with programming and with ads themselves drive sales.
Validation
The results appear to validate the usefulness of OMD’s media-engagement measure, not exactly a disinterested finding, Mr. Hess conceded. But the study also found that ad engagement — using copy-test measures in which OMD has no stake — had an even bigger impact than the media engagement.
The research appears to validate what copy-testers have been saying all along — that its copy-test measures really can predict ROI from an ad, Mr. Hess said.
For the three brands tested, consumer engagement with media had three times the impact on sales media weight (GRPs) alone did, and that consumer engagement with the ads had an eight-times larger impact on sales than GRPs. One result was to make the marketing-mix model more accurate, Ms. Eubanks and Mr. Griffiths wrote in their report.
Engagement creates sales
The results “clearly confirm the basic premise that media engagement drives sales,” the OMD team wrote. “Marketers have often felt that mix models understate the true impact of ROI and advertising. The addition of engagement metrics would help to minimize this effect. … Increased ROI [shown by adding engagement to the mix] could drive higher levels of investment in advertising vs. other marketing activities.”
But Gregg Ambach, VP-analytics services of ImmediateFX, a marketing analytics firm, cautioned that engagement can’t be separated from media weight, “because you can’t have one without the other.”
P&G Will Boost Marketing Spending for Fiscal '08 May 2, 2007
Posted by Mark Blei in : Uncategorized , add a commentP&G Will Boost Marketing Spending for Fiscal ‘08
Emphasis Will Be on ‘Nonmeasured Media’ but TV Still a Priority Investment
Published: May 01, 2007
BATAVIA, Ohio (AdAge.com) — Procter & Gamble Co. will spend heavily on marketing for its year starting July 1 — possibly at the expense of margin goals — as it makes boosting top-line growth a priority, executives said today.
The comments came as P&G issued quarterly results that, while meeting or exceeding its stated goals, failed to impress the market. P&G shares were down 2.2% to $62.95 today. Morgan Stanley analyst Bill Pecoriello said in a research note that P&G’s trade-up of consumers to higher-priced items and its margins both were lower than he had expected.
Maintaining sales growth
Speaking on a conference call for analysts, Chief Financial Officer Clayton Daley said, “For fiscal-year 2008, the priority for the company is to sustain strong sales growth. As such, we plan to invest in our leading brand equities. We plan to launch a strong initiative program.”
Later, Mr. Daley made it clear P&G will be willing to sacrifice margin improvements if required for the sake of top-line growth. He said if P&G can meet its double-digit earnings-per-share growth goal “with more sales growth and less margin expansion, that’s OK. … I don’t want to imply that we are going to do anything to try to hold back sales growth.”
While P&G may be looking to spend more aggressively in fiscal 2008, it appears to be pulling back on measured media right now in what Chairman-CEO A.G. Lafley termed a shift toward the internet and “nonmeasured media.”
Shifting mix
“If you step back and look at our [marketing] mix across most of the major brands, it’s clearly shifting, and it’s shifting from measured media to in-store, to the internet and to trial activity,” Mr. Lafley said. The latter he didn’t define precisely, though he gave Gillette sampling programs, which include distribution of free razors by mail, as one example. On Gillette Fusion razors, he said, “you are going to see … more sampling, because we still have relatively low trial rates.”
Though it’s impossible to measure how much P&G is spending in-store, as much of it is accounted for as deductions against net sales, data from TNS Media Intelligence do appear to indicate a pullback in measured media spending in its fiscal first quarter. P&G spent $459.9 million in January and February according to TNS, excluding newspaper inserts, a run rate that, if sustained over a full year, would trim P&G’s measured spending 17.5% in 2007.
But the proportion P&G spent on TV in January and February — 70.4% — is in line with proportions the company has had for years and last year’s 69.9%. P&G’s spending on internet display ads inched up to 2.1% of its outlay in the first two months of 2007 vs. 1.6% last year.
Efficiency in TV
“We are still investing a lot in television, because, especially in developing markets, it’s a hell of an efficient investment,” Mr. Lafley said.
Overall, he said P&G ad spending as a percent of sales was “about 10%” in the fiscal third quarter, about where it was last year.
The talk comes after two consecutive years in which P&G has trimmed reported advertising spending as a share of sales, which peaked at 10.7% in 2004 and slid to 9.9% of sales last fiscal year.
It’s not clear where that number will end up in fiscal 2007, as P&G officials have declined to provide specifics and won’t report the number until after the fiscal year closes. But Global Marketing Officer Jim Stengel and Mr. Lafley have said in investor presentations late last year that they were more concerned with advertising effectiveness and brand equity than with ad-spending-to-sales ratios. P&G’s trims in ad-spending ratios also have come as rising raw-material costs have pressured margins in recent years.
P&G reported sales up 8% to $18.7 billion, up 6% organically, or excluding acquisitions, divestitures and currency effects. Earnings per share rose 17% to 74 cents. Both numbers were helped by a weakening dollar, which added two percentage points to sales, and by a relatively weak year-ago performance, when P&G’s top line and profits were pressured by consolidation of distributors for newly acquired Gillette and apparently temporary weakness in Russia and China.
Beauty biz not so pretty
While the fabric and home-care business led growth, with sales up 12% (10% organically) the beauty business trailed the company as a whole and rival L’Oreal with organic sales growth of 5%.
P&G also reported relatively weak results in three more areas. Gillette’s blades and razor business had only 4% organic-sales growth, despite comparison to a year-ago period hurt by sales lost as distributors were consolidated in China and despite much stronger growth reported last week by rival Energizer Holdings’ Schick. Organic sales for the Braun and Duracell businesses, acquired along with Gillette in October 2005, were flat. And sales for the pet food, snack and coffee business declined 1%, hurt by the Iams and Eukanuba pet-food recall, whose impact P&G declined to specify.
Toothpaste spending pays off
One area where P&G ad spending has been unrestrained — U.S. toothpaste — appears to be seeing some strong results, and Mr. Lafley claimed P&G has taken broad market leadership in the U.S. toothpaste market.
He noted that in 1998, the first full year after Colgate Total was launched in the U.S., Colgate had a 27% toothpaste while P&G had a 25%-plus share. Last quarter, he said P&G had a 38% in all outlets, including Wal-Mart, club and dollar stores not measured by syndicated services, compared to 32% for Colgate, he said.
“There is plenty of room,” he said, “for our principal competitor to grow and for us to grow in the oral-care business.”
