#24 of 25 Things we know about what we don't know about Marketing Effectiveness

Friday August 1st 2008

It's no more than self delusion to set as your marketing objective the aim of "increasing brand loyalty". Brand loyalty is little more than a function of the period of data collection and rarely a reflection of true consumer behaviour influenced by the marketer.

Dr Stephan Buck, that most learned and informed leader of what was then AGB, the premier operation in continuous consumer panel data, was the first researcher to identify the delusion of brand loyalty. Even the most frequently bought brands are bought infrequently. Washing powder is only bought 5 times a year, on average. So an improvement in brand loyalty would be achieved by getting consumers to buy your brand three times rather than twice per annum - hardly a recipe for strong brand development.

He went on to identify the repertoire of brand purchasing, highlighting the increasing role of supermarket brands. Taken as a whole, the number of consumers who were 100% loyal was infinitesimal.

So if the data collection period was (say) just three months it would be perfectly possible for everyone to be 100% brand loyal to one or another brand. But that would be a totally meaningless construct. If the data collection period was across a year, then almost 0% of consumers are brand loyal; an equally meaningless construct.

We have followed the lead he gave and developed this work further using a variety of data sets across many markets. The conclusion remains sound. The marketer is best served with strategies designed to maximise brand trial, all focused on attracting the maximum number of consumers to buy once, not through gimmicks and unfulfilled promises but with relevant attractive messages firmly rooted in the brand's benefit proposition.

The consumer knows more about the use of brands than does any marketer. So she/he will decide if they want to buy again and it is they who determine brand loyalty, not the marketer.

The best returns come from marketing techniques designed to maximise trial. Marketing programmes designed to develop brand loyalty are doomed to failure

For a range of commentary on advertising, media & marketing issues, John Billett's personal "Blogit with Billett" is at www.johnbillett.com (& click on "Blog" on the Home Page) or go direct to http://blog.johnbillett.com.

#23 of 25 Things we know about what we don't know about Marketing Effectiveness

Thursday July 31st 2008

Leaders in marketing effectiveness have recognized that the best way to make progress is to demote to the second tier the well established practice of using small panels of consumer behaviour - media exposure, brand purchase et all, and work intensively with the new premier league of consumer behaviour audits.

Interesting that the biggest, current marketing effectiveness news is about the probable acquisition of TNS by either GFK or WPP. It should be about getting control of Dunn Humby, the majority Tesco owned company who with their creation and development of Tesco Club Card (and now live with Kroger in the US) are the company which knows more about consumer behaviour in store than TNS & GFK & WPP combined

Interesting too that the biggest media effectiveness challenge, in both UK & USA, is about BARB & Nielsen's measurement of in home and out of home TV audiences, when in reality Rupert Murdoch and his Sky digital TV & on line services know more about the reality of channel switching and viewing behaviour than any subscriber to  Nielsen, BARB and the rest of the media panels

The new reality is transaction based consumer studies and audits of millions of viewing behaviours and the relationship of the two. Its hard behaviour we are monitoring not soft samples of high variability.

We started years ago with face to face interviews. We moved then to telephone interviewing. We then moved to internet panels. The latest rapid research comes from live mobile communication. Now in 2008 we experience behaviour auditing for fast action, fast results, fast reaction.

In an earlier "July 21st #15 of 25 Things..." we noted how embedded rather than tacked on research was bringing new opportunities to measure marketing effectiveness. To that we now add the use of behaviour auditing, bringing further new insights that break conventional moulds of marketing effectiveness operations.

If you are not yet on board, there's still time. But don't delay. The ship is sailing 

For a range of commentary on advertising, media & marketing issues, John Billett's personal "Blogit with Billett" is at www.johnbillett.com (& click on "Blog" on the Home Page) or go direct to http://blog.johnbillett.com.

#22 of 25 Things we know about what we don't know about Marketing Effectiveness

Wednesday July 30th 2008

Not long ago the direct marketers, the direct marketing agencies and the direct marketing trade associations could claim they were the true faith of marketing effectiveness. Their claim to divine holiness was that they were the purest form of marketing effectiveness. Not any more folks.

They claimed they alone could relate input to output and hence "owned"  he holy grail of marketing effectiveness. Now, the combination of technology and the internet has made us all direct marketers.

It's now clear to all except those in marketing denial. Coupon clipping, direct mail responses, letter writing, phone calls & click through, no longer "own" the marketing response metrics.

The evidence points clearly to the fact that digital technology and internet research now make every advertising expression "measurable", from traditional TV and newspapers via mobile communications, through to embedded messages in game play and third world applications and lots more.

As with all developments and evolutions there are the doubters who believe these new approaches are but flash in the pan notions and others who appreciate the possibilities but reject the current methods. Both are out of touch with the new reality

The initial and fast growing mountain of evidence now available through any business and agency that embraces digital technology proves conclusively that there are real winners emerging among those who embrace marketing measurement as a permanent feature of the marketing landscape.

The strongest evidence of this sea change is the small but increasing number of procurement and financial management now embracing marketing ROI.

I am neither the best equipped, nor is this column best placed to identify the many examples. But for those who wish to know more and see the evidence, drop me a note and I will happily make the connections with the new direct marketing effectiveness experts. 

For a range of commentary on advertising, media & marketing issues, John Billett's personal "Blogit with Billett" is at www.johnbillett.com (& click on "Blog" on the Home Page) or go direct to http://blog.johnbillett.com.

#21 of 25 Things we know about what we don't know about Marketing Effectiveness

Tuesday July 29th 2008

Sustaining your marketing visibility over time with limited intensity is more cost effective than shorter, more intensive bursts of activity.

One of the longest standing marketing conundrums remains unanswered in the market place; that is if you judge uncertainty by the volume of column centimeters written in articles and blogs and by the wide range of different campaign plans tackling similar situations. "Which works best? Bursts or continuous marketing activity?"

Sorry to disappoint the punters. Sad to have to try and squash debate. I hope I won't offend any who have built marketing careers backing both horses. But the truth is out

Legions of empirical evidence from across Continents, Campaigns and Categories proves that building a marketing presence over time works best.

We noted last week (#18 of Things.. July 24th) the necessity to deliver high target audience reach. So once you've done that stop and don't waste money doing more. Spread the money out over time and sustain visibility

Bursts just incorporate massive diminishing returns. Of course all media owners love bursts, they get the money faster.  Many agencies love bursts; they get their commissions in bulk. Marketing directors love heavy weight campaigns especially early in the financial years before the CFO can re-gather the unspent funds. But don't fall for these blandishments.

For anyone truly disposed to optimising marketing effectiveness resist these siren voices and just take  a calm approach to sustaining visibility. There are two groups who just love sustained marketing visibility; your customers and your shareholders. And their judgment really counts in cash.

For a range of commentary on advertising, media & marketing issues, John Billett's personal "Blogit with Billett" is at www.johnbillett.com (& click on "Blog" on the Home Page) or go direct to http://blog.johnbillett.com.

#20 of 25 Things we know about what we don't know about Marketing Effetiveness

Monday July 28th 2008

Consumer promotions, trade deals, retailer support, direct mail & media advertising are internal competitors for marketing funds. Instead of complementing each other they often act in counter productive ways. And many marketers like it that way and encourage dissonance not harmony

Many companies organise, separate and distance their several marketing activities. The result is a series of fractured communication messages, creating uncertainty among prospects and delivering marketing ineffectiveness.

Try these for size. All are current in the UK,are alive and active. You may recognise these & other from your own experiences

1. A major financial institution structures in its own marketing ineffectiveness. Its on the ground High Street branch marketing is isolated from its direct marketing business targeting existing customers, which in turn is at arm's length from any brand advertising.
2. A major retailer organises its branches not only as a separate profit centre but as a stand alone Limited Liability Company, quite distinct from its central media function, which is outside the P&L of any operating business.
3. A leading marketing director discourages any parallel investigation of the marketing effectiveness of his advertising & sales promotions for fears that the sales promotions might be seen to work best and he loses his advertising budget
4. Another marketing director has responsibility for advertising but no responsibility for trade deals which are the responsibility of a separate sales director who does not report to the marketing director.

With some management remunerated on a commercial set of criteria such as volume, sales & short term metrics & with others remunerated on marketing metrics such as brand standing, image & value, it comes as no surprise that these organisations struggle to demonstrate cost effectiveness from their marketing communications.

It's understandable for critics to be concerned about our limited ability to capture interpret and understand all about marketing effectiveness. But spare a thought for the humble analysts trying to make sense of a set of disordered and incoherent input and outputs brought about more by the client who is paying the bill than by the operation charging the fees.

To assess from where the most cost effective marketing comes, identify the organisations that integrate and manage commercial communications under holistic management. They are the clients really worth working for.

For a range of commentary on advertising, media & marketing issues, John Billett's personal "Blogit with Billett" is at www.johnbillett.com (& click on "Blog" on the Home Page) or go direct to http://blog.johnbillett.com.

#19 of 25 Things we know about what we don't know about Marketing Effectiveness

Friday July 25th 2008

Television is the most effective marketing communications medium. That's what the TV networks claim. That's what the ad. agencies claim.  Proven TV case histories abound. It's what the econometric models "prove". So it must be true. Or is it?

It may not be true! We've never even given other media a chance or even a look in.

It's something that's bugged me for years. For sure, television is a very powerful and persuasive medium. But why is it that the volume of evidence is so swamping & favouring the domination of television as the brand leader effective medium?

It took me years to work it out and I have only recently proved the empirical reason. It's not that television IS the most effective medium. What happens is that whenever we plan TV campaigns we do three things that introduce a massive & unique bias in favour of TV.

1. First, we deploy far more absolute amounts of cash behind TV than we do for any other medium.
2. Second, we then compound the matter by planning that money in far more intensive slugs of cash per advertising week.
3. Third, in multi-media campaigns we ALWAYS start with TV. We never see other media precede TV

Econometric models & other multiple-regression techniques, always start with the first and largest effect. So if we plan TV that way it's inevitable that TV will be proven to work best. If you index the average TV campaign weight at 100, the average newspaper/magazine campaign is planned at 35 - a third of the weight. If the intensity of the average TV campaign is set at 100 units per week, the average radio campaign is planned at 25 - a quarter of the weight per week. I have as yet insufficient internet campaign evidence to be certain, but the initial analysis suggests that if the average TV campaign eats up $100 per week, the average internet campaign spend is only $15 per week.

With this massive built in bonus in favour of TV it's no surprise that TV "works best". No other medium stands a chance of proving its effectiveness.

The usual response to considering alternatives to TV is "but TV works, so why drop it for some experiment in marketing effectiveness?" That's an understandable reaction. But if we donate to the TV networks such a head start in extra money, it comes at no surprise that TV effects dominate.

The evidence suggests that if marketers start planning non-TV with the same weight, intensity, scale & cash as has become standard TV practice, you will be amazed how cost effective alternative marketing communication channels can be.

For a range of commentary on advertising, media & marketing issues, John Billett's personal "Blogit with Billett" is at www.johnbillett.com (& click on "Blog" on the Home Page) or go direct to http://blog.johnbillett.com.

#18 of 25 Things we know about what we don't know about Marketing Effectiveness

Thursday July 24th 2008

Campaigns that are seen by more prospects, always deliver more rewards. It sounds so obvious, yet  many campaigns overlook or just ignore the simple truths.

Despite all the advances in marketing sciences and the use of new digital research technology designed to track & understand better our target audience consumers, we have to face up. The prospective consumer knows more about themselves than we can ever appreciate.

We never quite know who is in the market for our brand. We never quite know when the prospects are in the market. Our prospects are better self selectors than advertisers.

The optimum solution is therefore to optimise the reach of the campaign, ensuring that as many as possible know of the marketing message. (Attempts to isolate the limited number of hot prospects and then drench them with marketing communication, are doomed to failure)

This high reach conclusion brings with it some challenges for effective marketing. And its harder to deliver too

• Diminishing returns can set in to deliver high reach
• High reach demands a mix of integrated marketing activities
• Multi-media rather than sole media advertising
• Premium prices for media that deliver scarcity and unique audiences
• And others

The marketer who chases the cheapest communication options & their procurement colleagues who benchmark marketing communication as a commodity, may impress some with their apparent cost efficient approach. But unless they also embrace & embed high reach as a marketing effectiveness metric,  the consumer response will prove it's a cost ineffective solution

(Readers who would wish to know more about high reach strategies are encouraged to seek out the "Recency Planning" work of my one time colleague in billetts America, Erwin Ephron & also the work of Prof. John Philip Jones of Syracuse University NY & his work on "STAS" (Short Term Advertising Strength). The lectures, articles & books from both have informed and inspired me.)

For a range of commentary on advertising, media & marketing issues, John Billett's personal "Blogit with Billett" is at www.johnbillett.com (& click on "Blog" on the Home Page) or go direct to http://blog.johnbillett.com.

#17 of 25 Things we know about what we don't know about Marketing Effectiveness

Wednesday July 23rd 2006

The evidence proves conclusively that whilst consumer response to long standing effective marketing campaigns may continue & remain high, company brand management consistently ditch these campaigns too soon, only because the company, not the consumer, has fallen out of love and just wants a change.

A common theme running through our marketing effectiveness work, is that first, company management changes, followed a close second by mergers & acquisitions are together a far more potent force for effecting marketing change than is ever created by a reduction in consumer response that demonstrates the current campaign has "run out of steam", has lost consumer impact and hence demands a new marketing approach.

From our own data base we have tracked many tragic instances where an effective marketing campaign has been terminated by an over zealous marketing team, eager to prove that what went before was out of date, only to be replaced with an anonymous forgettable marketing approach that failed to elicit even the same, let alone enhanced response.

• THAT'S THE WONDER OF WOOLIES
• YOU KNOW WHEN YOU'VE BEEN TANGOED
• R WHITES; I'M A SECRET LEMONADE DRINKER
• TOBLERONE; TRIANGULAR CHOCOLATE FROM TRIANGULAR TREES & TRIANGULAR HONEY FROM TRIANGULAR BEES
• TAKE A BREAK, TAKE A KIT-KAT
• THE CAR IN FRONT IS A TOYOTA
• STELLA ARTOIS; REASSURINGLY EXPENSIVE (The earlier "#8 of 25 Things.." features Stella's self inflicted brand challenges)

The litany is a lot longer than just this short list. Readers will have their own list of prematurely abandoned, highly successful marketing campaigns.

My plea to brand management and their marketing suppliers is look closely at what is the consumer response. Consider a re-presentation of the familiar to refresh and update effective marketing campaigns, long before you abandon something of which you may have "had enough" but to which your consumer is still responding positively.

This column presents tangible evidence and does not indulge in either hypothesis or conjecture. But we read with interest the decision by Orange to drop their long-standing "The future's bright, the future's Orange" marketing proposition and replace it with "I am who I am because of everyone". Who we inquire believes the future is no longer bright with Orange? Is it the consumer or the brand management. It won't be too long before we can find out.

For a range of commentary on advertising, media & marketing issues, John Billett's personal "Blogit with Billett" is at www.johnbillett.com (& click on "Blog" on the Home Page) or go direct to http://blog.johnbillett.com.

#16 of 25 Things we know about what we don't know about Marketing Effectiveness

Tuesday July 22nd 2008

"The internet is great, for we can measure directly the relationship between input & output." Yes, it's an attractive current belief but marketing buyer's beware. Reality may be an illusion.

The use of the internet, not only as a marketing communication tool but also as a marketing effectiveness service holds many attractions. (I touched on these benefits in yesterday's #15 of 25 Things about new research applications).There is no doubt that the internet brings a revolution in so many things we have experienced or hitherto been unable to entertain.

But don't throw caution to the wind. Here are just a few marketing effectiveness internet-take-great-care experiences we have found worthy of industry wide attention.

First internet research can suffer from worryingly low response rates, bias from professional respondents &  inactive panels that have to be re-built therefore destroying the continuous respondent benefit

Second, the marketing effectiveness metrics regularly suffer from that technical deficiency called "crap". (If I have to suffer any more "click through" statistics I will go mad - we would never suffer such gross simplifications in other media so why do we allow common sense to go down the drain when the magic word "internet" is mentioned?)

Third, if you dig deep you find that the absolute numbers are low and hence misleading. Predictions & projections are regularly based on false premises. And worst of all confusion reigns between absolutes and relatives.

Try out this recent "click through" experience from one of our clients and see if it rings bells for you. (Even if you disregard the "crap" metric, you can still get it wrong)

Marketing version A versus version B

• 50% A & 50% B
• All determining variables controlled
• Version A delivers CTR (Click Through Rate) 25% higher than Version B
• Agency pushes to adopt Version A and cancel Version B

But we suggested we wait for more data

After one week

• 400K impressions (200K for each version)
• Version A = 100 clicks a CTR of 0.05%
• Version B = 80 clicks a CTR of 0.04%
• A beats B by 25%
• Error rate = 15% and confidence +/- 86%

After three weeks

• 1500K impressions (750K for each version)
• Version A = 300 clicks
• Version B = 350 clicks
• Now B beats A by 17%  (smaller than the 25% margin than A led after one week)
• Error rate down to only 8% and confidence +/- 95%

So whilst after three weeks B performs RELATIVELY less well than after one week,  it performs BETTER ABSOLUTELY and with far lower error rate and within much higher confidence limits.

In all forms of marketing, and in this regard the internet is no different to any other commercial communication, you can't proceed on relative measurement for you can only bank absolutes

For a range of commentary on advertising, media & marketing issues, John Billett's personal "Blogit with Billett" is at www.johnbillett.com (& click on "Blog" on the Home Page) or go direct to http://blog.johnbillett.com.

#15 of 25 Things we know about what we don't know about Marketing Effectiveness

Monday July 21st 2008

Such a shame that for so many, the concept of marketing effectiveness is "tacked-on" as a begrudged after thought once the campaign is complete.

The best marketing effectiveness processes that we have identified, build in market research as an integral element, not only of campaign development but also as a feed back loop in the campaign execution.

If you want some further insight beyond this Blogit with Billett commentary, you can turn to no better source than the excellent series of IPA Advertising Effectiveness Awards volumes, now spanning many years. This is a first class collection of the best the effectiveness industry can assemble. Instead of checking out examples of what works best, take a view on how research has been used across the wide spectrum of published entries

What you find is the sequential use of research, first to aid establishing the communication message, and then later to post rationalise the reasons for effectiveness. Hardly at all will you find examples where research is built in so that as the campaign develops and responses build up, so the communication planners & marketing services buyers amend & change the campaign in response to changing consumer behaviour.

Richard Abbott, Marketing Magazine's Deputy Editor recently picked up on the necessity for research to be "more than raw data supplied" and for researchers to "come up with insight that can be injected directly into a business for immediate positive results.

Active research from developments such as web-polling, text response & behaviour auditing, among others, is changing the manner and speed with which marketing effectiveness can be measured & enhanced. There is a small but fast growing portfolio of evidence that faster response to consumer behaviour, increases marketing effectiveness, brand margins & profits

It's sad that the marketing business, that prides itself on being a leader in effecting consumer change, is so luddite and conservative when it comes to effecting change to itself

For a range of commentary on advertising, media & marketing issues, John Billett's personal "Blogit with Billett" is at www.johnbillett.com (& click on "Blog" on the Home Page) or go direct to http://blog.johnbillett.com.

#14 of 25 Things we know about what we don't know about Marketing Effectiveness

Friday July 18th 2008

Advertising that features the brand's consumers experiencing/using/enjoying the brand, invariably sells a lot more stuff than explanatory/benefits listing/product based/impersonal etc. propositions.

It took a long time for me to reach this conclusion. In fact it's taken many years of econometric studies across a wide range of product categories, working for a wide range of marketers spanning many categories and brands, and collecting loads of published material, before I stumbled into this outcome.

Most marketing effectiveness work embraces evaluations of traditional and well established inputs and outputs.

• On the input side my examinations usually embrace classic variables such as advertising weight, pricing & promotions, ad.A versus ad.B, variations in distribution, regions, temperature, competitive activity, in store location & visibility, media choice and so forth.
• On the output side, my examinations usually embrace gross & net margins, penetration, frequency of use, shopper type, volume, and so forth

Frustration with the sometimes less than hoped for success with these approaches, led me to re-examine the collected data in horizontal tranches (i.e  checking across the sum of many diverse clients activity) and not just the vertical tranche (i.e. within that client's activity over time) and then to benchmark performance on other measures.

An unambiguous conclusion emerged. Those marketing programmes that actively feature consumers experiencing the brand, consistently perform better against whatever output criteria were required

Families eating food, individuals talking about the use of the brand, dining in a fast food outlet, dialogue between seller & buyer, people buying the product, etc., are essential ingredients that make advertising shift more goods. Ads that feature the brand or product not being used, involving technical descriptions & manufacturer claims of excellence in the absence of users using, etc., just don't shift as many goods. The abstract devoid of humanity ads perform the least well.

The ad effectiveness ratio averages 3:1, in favour of ads with consumers experiencing the brand.

This presentation of reality, demonstrating not illustrating makes it easy for the transient audience to identify and get the message - despite the inherent casting difficulties that this route imposes.

(I was asked recently if this focus on consumers using & experiencing the brand would apply equally to cartoon and second world ad. characters. My honest reply was "I don't know" for I don't have the required volume of data. But it would be interesting to inquire.)

For a range of commentary on advertising, media & marketing issues, John Billett's personal "Blogit with Billett" is at www.johnbillett.com (& click on "Blog" on the Home Page) or go direct to http://blog.johnbillett.com.

#13 of 25 Things we know about what we don't know about Marketing Effectiveness

Thursday July 17th 2008

Marketing, Advertising & Media Tests work. Don't let anyone persuade you otherwise

In an earlier note in this series of "25 Things.." we observed (#4 on July 4th refers) that "testing" had become a dirty word in marketing circles. There is no possible justification for this phobia, other than from the marketing destructor who resents the prospect of finding out and who rejects determining what works and what doesn't.

The facts are straightforward. The recipe for making an inconclusive marketing test - that's the worst possible result  from any investigation - is easy to handle. What often passes as an "experiment" is in truth regularly no more than a post hoc review of what happened. Our experience is that this is a lousy recipe and doomed to fail. If the variables remain uncontrolled and the marketer takes the data "as it falls", this approach rarely delivers conclusive results.

There is an attitudinal bug bear to overcome. There are marketers who prefer inconclusive results rather than definitive proof that certain aspects of the marketing activity failed to deliver the goals.

Building in testing and investigation as an integral campaign execution methodology, usually delivers conclusive results - but yes folks, some of those with be "unacceptable"

But surely we all need to adopt the continual improvement agenda. As it was put to me years ago and is still relevant today - "If we don't "fail" or "get it wrong" from time to time, then we're not trying hard enough".

If you build  "investigation"  as an integral part of the campaign, and create variables of input you can be almost guaranteed to get conclusive results. Internet communication now makes continual testing & investigation the new marketing effectiveness norm.

Marketing, Advertising & Media Tests work. If your agency, consultants etc. tell you otherwise and encourage you to adopt a different approach, I suggest you get some new marketing effectiveness suppliers

For a range of commentary on advertising, media & marketing issues, John Billett's personal "Blogit with Billett" is at www.johnbillett.com (& click on "Blog" on the Home Page) or go direct to http://blog.johnbillett.com.

#12 of 25 Things we know about what we don't know about Marketing Effectiveness

Wednesday July 16th 2008

Large ads/long ads/big ads generate the greatest response/volume/penetration etc., but small ads/short ads/discreet sized ads generate the most cost effective returns for the marketer. You need both.

The direct marketing industry has known the "truth" since time immemorial. Smaller ads deliver the most cost effective results & large ones deliver the largest  volume. But it's taken the rest of the marketing business a long time to come to terms with this continuing "thing we know about marketing effectiveness" and many remain in self-denial.

My first, and still the most dominating, experience was as a media buyer for Woolworth in the 70's. We found that the optimum response in store came from buying just three 2 minute commercials followed up by many shorter commercials with the same creative message. Consumers saw the shorter ads. as though they were the longer ads. We got the impact ad recall, cut through , foot fall and the volume of sale we needed from the shorter ads, and saved ourselves a ton of cash.

We have proved this maxim time and time again in the many years since. You can establish the brand presence first with the larger/longer ads and then go for cheaper frequency and save between 50% & 75% of what an exclusively larger ad. campaign would cost

There is plenty of research out there from broadcasters, newspaper owners & magazine proprietors as well as from consultants and advisers. It all points to the same conclusion. If you have a great marketing proposition it should be possible to express it in a variety of formats, shapes, sizes and times. Armed with this flexibility then start large and get small as soon a possible . You will enjoy the triple  whammy of higher sales volumes & great cost effectiveness & all sustained over time

For a range of commentary on advertising, media & marketing issues, John Billett's personal "Blogit with Billett" is at www.johnbillett.com (& click on "Blog" on the Home Page) or go direct to http://blog.johnbillett.com.

#11 of 25 Things we know about what we don't know about Marketing Effectivenss

Tuesday July 15th 2008

Media buying is a budget allocation business almost exclusively about optimising media cost efficiency and has little, if anything, to do with optimising marketing cost effectiveness.

There's a business of high volume & cost of employment, deploying significant amounts of money, using considerable business and operational expertise, located in the offices of media owners, media agencies and among advertisers which has little influence on the amount of money spent on advertising and precious little to do with marketing effectiveness.

The practice of media buying takes the sum of money the advertiser elects to spend and optimises the size and type of the audiences delivered for that money.  That's it.

In addition to reviewing all the previous studies and assessing the published literature, such as the Peacock Report and IBA work, we have completed three major studies to examine the relationship between advertising spend and media prices and media value: - 

• A major study for the UK advertisers' trade body, ISBA
• A major study for the largest commercial UK broadcaster ITV
• A consultancy service, alongside Prof Paddy Barwise of the London Business School, for Ofcom

The evidence shows that when media value efficiency (cost per audience delivered) improves, advertisers can deliver their rating targets by spending less. When media prices rise, advertisers spend more to reach the same audience. Great value = spend less. Poor value = spend more. It's the opposite of what you might expect.

The problem is compounded by the lack of absolute marketing effectiveness metrics and their substitution by cost per audience relative media efficiency metrics.

Media buying efficiency models can't work effectively across media types because the measures of audience contact - viewing, reading etc are totally incompatible. So we are left with buying practices unique to each medium, compounded by the activities of the media auditors, where the evaluation is restricted to benchmarking relative cost efficiency versus competitive sets and paying no attention to the absolute cost effectiveness of buying the audiences.

We currently read a lot of the falling revenue of all media in the face of the current economic difficulties. Media audiences remain established and large. The cost of reaching those audiences hasn't been cheaper for many years. But the marketer, looking to suppliers to help and guide through the crying out need for cost effectiveness, is stuck with out of date metrics that simply allocate the money and then justify the spend by comparing to others the cost per audience performance delivered, without reference to optimising marketing effectiveness

The first media buying business that can deliver what advertisers' need will have a real competitive advantage

For a range of commentary on advertising, media & marketing issues, John Billett's personal "Blogit with Billett" is at www.johnbillett.com (& click on "Blog" on the Home Page) or go direct to http://blog.johnbillett.com.

#10 of 25 Things we know about what we don't know about Marketing Effectiveness

Monday July 14th 2008

Advertising is the best most cost effective tool available to marketers in expanding markets, far more so than in static or declining markets

An unambiguous conclusion reached from my work not only in established markets but also in expanding markets, is that advertising is more effective in attracting non customers to buy for the first time, than it is in getting existing customers to buy again. But never overlook the value of advertising in justifying those higher prices and better margins in established markets; (#8 of our "25 Things.." refers)

When marketers launch a completely new brand or new proposition, they have 100% non- customers. And advertising is one of the most efficient and cost effective ways of creating trial. So it's not just a coincidence that propositions that embrace "new" "different" "faster" "better" etc permeate the advertising vocabulary and have passed the effectiveness proof.

Expand that notion geographically and hence it's no surprise to read the accelerating volume of successful advertising case histories streaming from the previous Eastern bloc & expanding Eastern economies.

Create a satisfying marketing effectiveness meal as follows.

• (1) Take a ample spoonful of rapid expansion of consumer wealth and
• (2) Add some growing aspirations of previously held back consumers.
• (3) Add a healthy amount of potential consumers"thrill" of the new & unexpected and
• (4) Finish off with cheaper advertising and communication audience contact costs,

and you have a fulfilling recipe for advertising cost effectiveness.

You can then luxuriate in the warm glow of success that comes from knowing  that user satisfaction is the best driver of repeat purchase.Advertising just doesn't work so well where these (1-4) points aren't available

For those marketers stuck with brands that have no added consumer value in non-expanding markets all the evidence suggests its best to save money on advertising and turn to other alternative consumer incentive marketing.

For the luckier marketers with brands not yet realising their potential, working in expanding markets, throw a ton of cash into advertising - making sure your agency is top of the heap.

For a range of commentary on advertising, media & marketing issues, John Billett's personal "Blogit with Billett" is at www.johnbillett.com (& click on "Blog" on the Home Page) or go direct to http://blog.johnbillett.com.