Post on 26-Dec-2015
What do we need – now and in the future – to measure advertising success?
Chisinau, November 7th 2008
Introduction
1973-1988 – Boase Massimi Pollit
1988-1990 – Tilby & Leeves
1990-1993 – Grey
1993-1996 – DDB
1996-2002 – OMD
2002-2007 – Schwarzkopf & Henkel
2007 – OMD Moscow
The 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
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?
“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.It has no other justification worth mentioning.”Ray Rubicam1893-1978
“Anybody in advertising who doesn’t say his purpose is to sell thatpiece of merchandise is a phoney.”Bill Bernbach1911-1982
“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)
“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?
Short-term or Long-term?
How does advertising work?
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?
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
“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)
“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
The problem with evaluating ads’ effectiveness
Advertising Effectiveness Measurement –
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
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
Brand X
30 months, bi-monthly, data, rounded
Advertising, distribution and price
Period Advertising Distribution Price Factor Sales1 0 40 90 1002 250 50 95 3003 0 60 90 3504 0 70 90 3605 250 80 100 4006 0 80 100 3607 0 80 90 3708 300 80 90 4009 0 80 90 39010 0 80 100 37011 0 80 100 36012 300 80 100 42013 0 80 100 41014 0 80 90 40015 300 80 90 46016 0 80 90 440
Abusing a Model
Sales = 154.0+0.143*Advertising+5.74*Distribution-2.36*Pricing
R2 = 0.81
Typical Sales Decomposition (Period 15)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Advertising
Distribution
Price
Residual
5%
53%
24%
18%
Abusing a Model
Brand X
30 months, bi-monthly, data
Advertising, distribution and price AND Factor Y
Period Advertising Distribution Price Factor Factor Y Sales1 0 40 90 100 1002 250 50 95 101 3003 0 60 90 102 3504 0 70 90 103 3605 250 80 100 104 4006 0 80 100 105 3607 0 80 90 106 3708 300 80 90 107 4009 0 80 90 108 39010 0 80 100 109 37011 0 80 100 110 36012 300 80 100 111 42013 0 80 100 112 41014 0 80 90 113 40015 300 80 90 114 46016 0 80 90 115 440
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)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Factor Y
Advertising
Distribution
Price
Residual
4%
37%
17%
11%
30%
What is Factor Y?
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?
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
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
30” TV
, 1995
, 1996
Average TV Viewing Time per Day
Source: Television 2006 / Mon- Sun / IP Network / local institutes / TG adults / Ø- time spent viewing / *no panel system
287
280256
255
249235
230
227
226224
219
217216
201
189182
169
166164
162
156
148145
224237
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 EuropeCentral & East Europe
Minutes
Average TV Viewing Time per Day in Western Europe
TV viewing has grown (+13% in the last 10 years).
Source: Television 1996-2006 / IP Network / local institutes / EU-15 /TG / whole TV / figures weighted according to country size
198
210
219223 224
1995 2000 2003 2004 2005
Minutes
Average Media Consumption in Hours per Week
TV is still by far the most used medium.
PressInternetTV
TV Consumption in Context in Western Europe
0
1
2
3
4
5
6
7
8
Hours Working Hours watching TV
4.01 billion
TV Consumption in Context in Western Europe
0
1
2
3
4
5
6
7
8
Hours Working Hours watching TV
4.01 billion
7.65 billion
Worldwide advertising Television : end of the hegemony ?
30%
35%
40%
45%
50%
55%
60%
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Market share of Television
France
Germany
Italy
Russia
UK
Japan
USA
Spain
Not in Russia
We all know what happened…
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.
Media Consumption
Advertising Revenue
Media Ownership
Media Agency
OwnershipTechnology
ConsumersMedia
Research
Retailing
Atomisation
Consolidation Convergence
Consolidation & concentration everywhere!
+$56.8 billion
98,000 people$9.3 billion29,000 people
More power vs. retailers & media ownersMore resources & synergies for R & DMore pressure on advertisers
Grocery retail concentration in western EuropeMarket share by value of the top three retailers in each country
0%
10%
20%
30%
40%
50%
60%
70%
Den
mar
k
Sw
eden
Aus
tria
Fin
land
Fra
nce
UK
Net
herla
nds
Bel
gium
Spa
in
Por
tuga
l
Ger
man
y
Irel
and
Gre
ece
Italy
Nor
way
Hun
gary
Cze
ch R
ep
Pol
and
2001 2003
Retail consolidation – new media force
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.
Media ownership development
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
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).
Holistic view of a campaign
Television
AlliancesBritish soap opera awards
Outdoor
Radio
Interactive
PR
Packaging
Average time allocation by Media
TV33%
Newspapers10%Magazines
8%
Radio29%
Internet20%
Source: Pan-European EIAA Media Consumption Study IIBase: Users of each medium
“Television will disappear in less than ten years and the internet will be the leading mass medium.”
George Gilder & Nicholas Negroponte, 1995
Penetration by Media Type
4854
7779
96
0
20
40
60
80
100
120
PercentOf
Respondents
TV remains the media of choice for most consumers with 96% of those studied watching something during a typical week
Penetration by Media Type
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
Book tickets
Read newspapers
Chat to your friends
Shop
Listen to music
Read magazines
Share music
Buy music
45
37
35
31
27
23
17
16
%
Base: Internet users
Approximately 2 in 5 internet users now book tickets online around a third chat to friends via the internet
Airport ads
TV sponsorships
Info withmonthly bill
Consumermagazines
Displays in shops
Friends
Family andcolleagues
Pester power
Trials
Sales people
Helpline/callcentreTV
Newspapers
Radio
Coupons
Outdoor
Fragmentation within the media landscape & increasing
technological and consumer sophistication
Never EASIER to REACH
Never HARDER to CONNECT
Too much advertising “pollutes”
Turned off by advertising% agreeing
Source: TGI
15
20
25
30
35
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
%
TV ads are annoying
Enjoy ads as much as TVprogrammes
With increased clutter, it becomes more difficult to break through
YEAR
Aided awareness showing
ad
Doesn’t identify
any brand
Identifycorrectbrand
Identify wrongbrand
2000 52 47 14 39
2001 50 49 13 38
2002 49 48 13 39
2003 47 51 13 36
2004 46 51 13 37
Source: Millward Brown (base 700 spots tested) - Spain
Ad “Cost per Awareness Point” Index
100
110
120
130
140
150
160
170
180
0 2 4 6 8 10 12 14 16 18 20
Campaign-Contacts
Inde
x R
ecog
nitio
n TV
1998
1999
2000
2001
2002
2003
Advertising effectiveness is on decline Recognition TV – Example MRF
Source: OMD Market Response Finder / Average all campaigns - Germany.
The Convergence PrizeThe Convergence Prize
PC Heritage TV Heritage
Console HeritagePortable/Device
Heritage
True convergent device
Some, Tentative, ConclusionsMedia 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?