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What do we need – now and in the future – to measure advertising success?PowerPoint Presentation

What do we need – now and in the future – to measure advertising success?

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### What do we need – now and in the future – to measure advertising success?

### How does advertising work? advertising success?

### How is advertising effectiveness measured? not twice as much, not three times as much, but 19 ½ times as much merchandise as another ad for the same product.

### What’s going to happen? not twice as much, not three times as much, but 19 ½ times as much merchandise as another ad for the same product.

Print

Chisinau, November 7th 2008

Introduction advertising success?

- 1973-1988 – Boase Massimi Pollit
- 1988-1990 – Tilby & Leeves
- 1990-1993 – Grey
- 1993-1996 – DDB
- 1996-2002 – OMD
- 2002-2007 – Schwarzkopf & Henkel
- 2007 – OMD MoscowThe following presentation represents a personal point-of-view – but influenced by working both for an advertiser and in agencies. Some ideas, and indeed charts, have been borrowed from colleagues, most notably Tim Broadbent from O&M.

Format advertising success?

- How does advertising work?
- How is advertising effectiveness measured?
- What’s going to happen?
- What measurement will we need in the future?

What do we know about Advertising Effectiveness? advertising success?

- “Half the money I spend on advertising is wasted;
- the trouble is I don't know which half. “
- John Wanamaker,
- US department store merchant (1838 - 1922)

“The only purpose of advertising is to sell. advertising success?

It has no other justification worth mentioning.”

Ray Rubicam

1893-1978

“Anybody in advertising who doesn’t say his purpose is to sell that

piece of merchandise is a phoney.”

Bill Bernbach

1911-1982

“I have seen one mail-order advertisement actually sell, not twice as much, not three times as much, but 19 ½ times as much merchandise as another ad for the same product.

Both advertisements occupied the same space.

Both were run in the same publication.

Both had photographic illustrations.

Both had carefully written copy.

The difference was that one used the right appeal and the other used the wrong appeal”

(John Caples, Tested Advertising Methods, 1931)

Short-term or Long-term? not twice as much, not three times as much, but 19 ½ times as much merchandise as another ad for the same product.

- “Andrew Ehrenberg has derived from these models of buyer behaviour (NBD/LSD and Dirichlet) a view on advertising for established brands. It mostly serves to publicise the advertised brand, but seldom seems to persuade. Promotions have only a short-term effect , and do not affect a brand's subsequent sales or brand loyalty. The extra buyers during the promotion have been seen almost all to have bought it before the promotion rather than being the hoped for new buyers”
- And, advertising normally DOESN’T have much effect on short-term sales
- It seems to protect existing loyalty and repeat purchase through LONG-TERM effects
- . . . . . and how do we measure the ABSENCE of change?

How does advertising work? not twice as much, not three times as much, but 19 ½ times as much merchandise as another ad for the same product.

- Advertising has the objective of increasing sales
- Or not (Road Safety, Health, Fire Prevention, Programme trailers, Nutrition Advice, etc.)
- Sales when?
- Different ads work with different levels of success
- Work in different ways
- Work in the same way but better or worse

How does advertising work? not twice as much, not three times as much, but 19 ½ times as much merchandise as another ad for the same product.

- Er, we don’t know
- It seems pretty certain that different campaigns work in different ways
- It seems pretty certain that different ads within campaigns work with varying success – and sometimes work in different ways
- It seems pretty certain that long-term effects greatly outweigh short-term effects (N.B. This is normally not true for brand launches and even less true for category launches)

The problem with evaluating ads’ effectiveness not twice as much, not three times as much, but 19 ½ times as much merchandise as another ad for the same product.

- “Its a good campaign, if sales go up”
- “Its a bad campaign, if sales go down”
- “Unfortunately, neither of these statements is always true. They are very often false”(Rosser Reeves, Reality in Advertising, 1961)

The problem with evaluating ads’ effectiveness not twice as much, not three times as much, but 19 ½ times as much merchandise as another ad for the same product.

“Recently a group of marketing men, almost idly, at a

luncheon table, listed thirty-seven factors, any or all of

which could cause the total sales of a brand to move up

or down.

Advertising was only one of these.

The product may be wrong. Price may be at fault.

Distribution may be poor. The sales force may not be

adequate. Budget may be too low. A better product may

be sweeping the market. A competitor may be outwitting

you with strong deals.

And when a wheel has many spokes, who can say which

spoke is supporting the wheel?”

Rosser Reeves

Advertising Effectiveness Measurement – not twice as much, not three times as much, but 19 ½ times as much merchandise as another ad for the same product.The Last 30 Shameful Years

- Broadly, the methods for judging advertising success or failure are the same now as they were 30 years ago – only worse (despite around $10 trillion at 2000 prices being spent on advertising in mainstream media, globally, over this period)
- Sales (but usually short-term)
- Pre- and Post- Awareness, Usage and Attitude
- Tracking (more prevalent now)
- Econometric Modeling (but almost always based on short-term sales response – sometimes with some lag effects) (more prevalent now)
- Etc

Problems with Modeling not twice as much, not three times as much, but 19 ½ times as much merchandise as another ad for the same product.

- Multivariate statistical techniques are being used more and more frequently to evaluate advertising effectiveness (and media mix, regional upweights, etc)
- Criterion variable tends to be short-term sales – thus ignoring the main, long-term, contribution made by advertising
- The statistical tools tend to be more robust than the data – like using a road drill for dentistry
- The tools find relationships within the data – but this merely DESCRIBES the data – it does not necessarily prove CAUSALITY

Abusing a Model not twice as much, not three times as much, but 19 ½ times as much merchandise as another ad for the same product.

- Brand X
- 30 months, bi-monthly, data, rounded
- Advertising, distribution and price

5% not twice as much, not three times as much, but 19 ½ times as much merchandise as another ad for the same product.

53%

24%

18%

Abusing a Model- Sales = 154.0+0.143*Advertising+5.74*Distribution-2.36*Pricing
- R2 = 0.81
- Typical Sales Decomposition (Period 15)

Abusing a Model not twice as much, not three times as much, but 19 ½ times as much merchandise as another ad for the same product.

- Brand X
- 30 months, bi-monthly, data
- Advertising, distribution and price AND Factor Y

30% not twice as much, not three times as much, but 19 ½ times as much merchandise as another ad for the same product.

4%

37%

17%

11%

Abusing a Model- Sales = -120.8+0.142*Advertising+4.94*Distribution-2.00*Pricing+2.79*Factor Y
- R2 = 0.83
- Typical Sales Decomposition (Period 15)

What is Factor Y? not twice as much, not three times as much, but 19 ½ times as much merchandise as another ad for the same product.

- My son Tom’s age (expressed in months/2) at the time of the data series (he was 16 at the time)

So what does this mean for media measurement? not twice as much, not three times as much, but 19 ½ times as much merchandise as another ad for the same product.

- We don’t know how advertising works
- We do know that different campaigns and even different ads within a campaign work in different ways
- We don’t know how to measure its effectiveness
- Thus, media measurement (for advertisers) should restrict itself to the measurement of EXPOSURE (as now) rather than other factors (engagement?)
- Even exposure is going to be harder to measure – or it will present different challenges – in the changing media landscape

, 1995 not twice as much, not three times as much, but 19 ½ times as much merchandise as another ad for the same product.

, 1996

30” TV

Some Forecasts“Television will disappear in less than ten years and the internet will be the leading mass medium.”

George Gilder & Nicholas Negroponte

“TV sets across the world will be jettisoned within a decade.”

Sir Christopher Bland, BBC Chairman

Minutes not twice as much, not three times as much, but 19 ½ times as much merchandise as another ad for the same product.

Croatia

Hungary

Greece

Poland

Italy

UK

Belgium South

Spain

Germany

Ø West Europe

France

Portugal

Czech Republic

Netherlands

Irish Republic

Belgium North

Finland

Austria

Norway

Denmark

Sweden

Switzerland

Iceland*

West Europe

Central & East Europe

Average TV Viewing Time per DaySource: Television 2006 / Mon- Sun / IP Network / local institutes / TG adults / Ø- time spent viewing / *no panel system

Average TV Viewing Time per Day in not twice as much, not three times as much, but 19 ½ times as much merchandise as another ad for the same product.Western Europe

TV viewing has grown (+13% in the last 10 years).

Minutes

Source: Television 1996-2006 / IP Network / local institutes / EU-15 /TG / whole TV / figures weighted according to country size

Average Media Consumption in Hours per Week not twice as much, not three times as much, but 19 ½ times as much merchandise as another ad for the same product.

TV is still by far the most used medium.

TV

Internet

Press

TV Consumption in Context in Western Europe not twice as much, not three times as much, but 19 ½ times as much merchandise as another ad for the same product.

4.01 billion

TV Consumption in Context in Western Europe not twice as much, not three times as much, but 19 ½ times as much merchandise as another ad for the same product.

7.65 billion

4.01 billion

Worldwide advertising not twice as much, not three times as much, but 19 ½ times as much merchandise as another ad for the same product.Television :end of the hegemony ?

Not in Russia

TV – Current Status not twice as much, not three times as much, but 19 ½ times as much merchandise as another ad for the same product.

“The reports of my death have been greatly exaggerated.”

Mark Twain

We all know what happened… not twice as much, not three times as much, but 19 ½ times as much merchandise as another ad for the same product.

- TV viewing constant or growing
- Print still read avidly
- Cinema attendances increase
- Despite growth of DVD’s and PVR’s plenty of 30” ads

It’s the people spinning the globe.

Not the technology.

Atomisation not twice as much, not three times as much, but 19 ½ times as much merchandise as another ad for the same product.

Consolidation

Convergence

Media

Consumption

Advertising

Revenue

Media

Ownership

Media

Agency

Ownership

Technology

Media

Research

Consumers

Retailing

Consolidation & concentration everywhere! not twice as much, not three times as much, but 19 ½ times as much merchandise as another ad for the same product.

More power vs. retailers & media owners

More resources & synergies for R & D

More pressure on advertisers

+

$9.3 billion

$56.8 billion

29,000 people

98,000 people

Grocery retail concentration in western Europe

Market share by value of the top three retailers in each country

70%

60%

2001

2003

50%

40%

30%

20%

10%

0%

UK

Italy

Spain

Ireland

Poland

Austria

France

Finland

Greece

Norway

Sweden

Belgium

Portugal

Hungary

Denmark

Germany

Czech Rep

Netherlands

Retail consolidation – new media force not twice as much, not three times as much, but 19 ½ times as much merchandise as another ad for the same product.

- With impressive retail consolidation comes a newly viable and buyable media phenomena – in-store media
- Retailers are now so big that their in-store media can have larger daily reach than TV shows and stations, or press and radio packages
- These media will become increasingly important as retailers continue to consolidate, mass media fragments, and usage occasions change to more impulse and channel specific.

The importance of In-store Media not twice as much, not three times as much, but 19 ½ times as much merchandise as another ad for the same product.

Media ownership development not twice as much, not three times as much, but 19 ½ times as much merchandise as another ad for the same product.

1983:

- 50 corporations “dominated” mass media
- $340 million biggest merger
2000:

- Number dominating companies down to six
- AOL & Time Warner merger $350 billion – a thousand times larger!

One company – endless possibilities not twice as much, not three times as much, but 19 ½ times as much merchandise as another ad for the same product.

Capitalizing of resources and synergies for Harry Potter launch!

Editorial coverage in the company’s Time and People magazines, by reviews on CNN and by advertising on the AOL internet service (in fact the company, which plans and buys most of its media in-house, is itself one of America’s largest advertisers).

Radio not twice as much, not three times as much, but 19 ½ times as much merchandise as another ad for the same product.

Packaging

Television

Alliances

British soap opera awards

Outdoor

Interactive

PR

Holistic view of a campaignMedia Consumption not twice as much, not three times as much, but 19 ½ times as much merchandise as another ad for the same product.

Average time allocation by Media not twice as much, not three times as much, but 19 ½ times as much merchandise as another ad for the same product.

“Television will disappear in less than ten years and the internet will be the leading mass medium.”

George Gilder & Nicholas Negroponte, 1995

Source: Pan-European EIAA Media Consumption Study II

Base: Users of each medium

Penetration by Media Type not twice as much, not three times as much, but 19 ½ times as much merchandise as another ad for the same product.

TV remains the media of choice for most consumers with 96% of those studied watching something during a typical week

Penetration by Media Type

Percent

Of

Respondents

In a typical 5 day week, do you watch TV, read a newspaper or surf the internet? (note Magazines and Radio was during a typical 7 day week)

Source: Pan-European EIAA Media Consumption Study II

Offline Activities Moving Online not twice as much, not three times as much, but 19 ½ times as much merchandise as another ad for the same product.

Approximately 2 in 5 internet users now book tickets online around a third chat to friends via the internet

%

Book tickets

Read newspapers

Chat to your friends

Shop

Listen to music

Read magazines

Share music

Buy music

Base: Internet users

TV sponsorships not twice as much, not three times as much, but 19 ½ times as much merchandise as another ad for the same product.

Coupons

Consumer

magazines

Displays in shops

Info with

monthly bill

Pester power

Sales people

Family and

colleagues

Radio

Newspapers

Trials

Airport ads

Friends

Helpline/

callcentre

TV

Outdoor

Fragmentation within the media landscape & increasing technological and consumer sophistication

Never EASIER to REACH

Never HARDER to CONNECT

Too much advertising “pollutes” Complexity

Turned off by advertising

% agreeing

35

30

%

25

TV ads are annoying

Enjoy ads as much as TV

20

programmes

15

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

Source: TGI

With increased clutter, it becomes more difficult to break through

Ad “Cost per Awareness Point” Index

Source: Millward Brown (base 700 spots tested) - Spain

Advertising effectiveness is on decline throughRecognition TV – Example MRF

Source: OMD Market Response Finder / Average all campaigns - Germany.

Technology through

Converging technologies, e-merging contents.

The Convergence Prize through

Some, Tentative, Conclusions through

- Media research should restrict itself to determining levels of exposure for advertising
- With increasing amounts of media transmitted via the internet and via different platforms, should we maintain current research methodologies? Are peoplemeters dead?
- The reports of the death of TV have been greatly exaggerated.
- The store is becoming a significant medium
- Development of multi-channel communication plans – from multi-channel media owners – and the importance of holistic research for planning and evaluation
- Project Apollo may finally provide a plausible explanation of advertising effects?
- The consumer has never been easier to reach but never harder to connect or involve – and advertising has never been less involving
- TV advertising has reduced power – owing to clutter – or poor creative?

Спасибо through

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