It’s a fact: most advertisers are not getting the most out of their media budgets.
16 January 2004, By David Berkowitz
For a long time, many could speculate this, and in certain cases it was painfully obvious, but until recently, there hasn’t been a great way to prove it. As the Internet emerged, and advertisers held it up to standards never before imposed on any medium, a bold few realized that all media could be measured better. The boldest of the few actually did something about it.
Here’s where Rex Briggs, principal of Marketing Evolution, comes into the picture. He teamed up with the Interactive Advertising Bureau (IAB), the Advertising Research Foundation, Dynamic Logic and Forrester Research to launch the Cross Media Optimization Study (XMOS) which can document, well beyond a reasonable doubt, how advertisers should arrange their media mix to gain the highest return on their investment. It’s not all that surprising that the Internet is consistently found to be underutilized, given the young medium’s tendency to command a less-than-fair share of budgets. What’s more eye opening is how much of a role the Internet should play, how well it boosts several different campaign objectives, and how clearly the research spells out to major brands how their budgets should be reallocated.
eMarketer called up Mr. Briggs to dig deeper into XMOS.
Rex Briggs: Things changed for the better the last couple of years in terms of marketers being more focused on and open to measuring and getting quantitative feedback on their performance. If I go back and think 10 years ago where things were at pre-Internet, in the state of marketing, there was very strong resistance to doing true performance measurement of marketing. There was openness, of course, to using research for strategic purposes, but not as a way of grading the performance of television or magazine or radio or Internet advertising.
eMarketer: So now you’re going into boardrooms, where some people have very firm beliefs on what they should be doing, and you get to tell them sometimes that they’re wrong, right?
RB: Yeah, it ends up being a process of working together to find out what the truth of their effectiveness is. In the whole advertising and marketing process, everyone wants to see a campaign succeed, except maybe your competition. What we try to do is by putting a measurement system in place, number one, you figure out what’s working and what’s not working faster and can therefore make adjustments to make your campaigns as effective as possible, and sometimes you do have to say this campaign didn’t work very well. Now, we can do even better than that. We can say, “This aspect of your campaign didn’t work very well, but this aspect of your campaign did work very well.” We may see that the TV worked really well but the Internet didn’t, or vice versa. That could be pretty helpful because they begin to get their head around what’s different with the different communications.
eMarketer: It sounds like now, with the ways you can break things down by medium and track a lot of variables within each medium, it would be unusual for a campaign to be a complete failure — it’s just a matter of tapping into what parts work the best and replicating them.
RB: Yes, but there are some times where the product itself isn’t all that great. We have seen a couple of cases in the last year where in the first week of the campaign, they create a lot of enthusiasm and excitement, and then as people actually try the product — this happens with movies, for example — if people don’t like the movie, all those positive branding levels begin to drop and decay very quickly. We also begin to understand the delineation between what advertising can do and can’t do — and it can’t do everything. The product has to deliver what the advertisements promise. Sometimes what happens is the sales aren’t what the marketer wanted, and then the question is, “What’s to blame? Is it the ads, or is it the product?” We begin to get some great insight into that as well.
What’s most interesting to me is often looking at the synergies across media, when you see different media working really well and playing off each other really well. There are still a lot of marketers that aren’t fully taking advantage of that synergy, as if it’s really two different campaigns. The messaging isn’t coordinated consistently.
eMarketer: What do you think it will take for marketers to sign on and take advantage of that?
RB: The biggest hurdle for most of them is getting to the point where they are actually doing the measurement. I know it’s self-serving for me to say, I’ll admit that right now, but that is at the core of many marketers’ challenges, that many of them just don’t know whether it works or whether it doesn’t. If you look at the dynamic that begins to form in organizations where there isn’t measurement, it’s a very unhealthy dynamic. What you have is an agency and marketers that basically have to talk to senior management periodically, and their only evidence that they’ve added value to the tens of millions of dollars that are spent is whether or not they’ve won a creative award.
My wife and I play a little game sometimes where she’ll say, “I remember that ad! I love that ad!” I will almost always end up asking her the same question: “Who was that ad for?” Three-quarters of the time, she can’t remember. Try the same game. Think of as many great ads as you can. What I’ll say is that the ad is not great if you don’t remember the brand that it’s for. Just because you’ve won a creative award doesn’t mean that ad is doing what it needs to for the business.
eMarketer: And even for ads like Budweiser’s where you can inherently assume that the most entertaining beer ad is going to be theirs, ask people if they’ve purchased Bud any more because of that and it’s a whole other issue. Even in the case where you can guess right, it’s not always revealing.
RB: Exactly. Then you get into the level where you have ad recall and proper recognition, but you’re not getting the conversion to the key branding metrics, which is why Marketing Evolution’s philosophy is that you don’t measure ad recall as a branding metric. You really measure whether or not purchase intent or sales or at least brand image has increased — whether or not people think the beer tastes better or is more refreshing or is more associated with ‘the beer to choose when you’re out with friends.’ You measure the branding metrics that actually link up to business performance. Ad recall is a useful metric as a diagnostic, but it doesn’t tell you whether you’ve been successful or not.
eMarketer: When you’re telling this to marketing people and agency people, is this really startling to them? How are they taking it?
RB: Many of the marketers that we work with are probably more sophisticated, ones that have a greater openness to measurement. By the time we get to the data, we’ve already gone through the scenario planning so they know what action they’re going to take and so forth. What’s probably most startling to them is the cost-performance of different media. We do this whole analysis called ROMO, return on marketing objectives, and that’s where we actually put a dollar value — what does it cost, on average, to make someone aware of your brand or to make them want to buy your brand — and we compare one media versus another on that dollar by dollar comparison. That’s the one where you do see some surprising results. The challenge is the results aren’t consistent industry-wide. One marketer might have Internet be really, really cost efficient, and another one might have magazines turn out to be really cost efficient. It has some to do with the creative that they choose and some to do with the nature of their product and their brand. Higher consideration, high involvement ones like magazines do a lot better.
What’s really useful is that in almost all the cases, what we find is there’s room to better optimize the mix. Out of the last dozen that we’ve done, one was already very well optimized and we couldn’t really make any recommendations to do much better, but the other 11, there was room where you could save anywhere from several hundreds of thousands up to, in one case, about $7 million, just in the case of one quarter, simply by recognizing what each medium was bringing to the table with the current creative execution and rebalancing that better.
eMarketer: I’m curious, now that you mention it, especially with those 11 where you recommended improvements on how they could optimize their marketing mix — have you looked back at whether they actually acted on that?
RB: Yeah. In some cases, they are much better. One of the things we’ve learned over the last three years of doing this analysis is that we now view ourselves much more in a consulting role as opposed to just delivering a data report. In that process, we now do what we call scenario planning where we sit down with a marketer before we’ve ever gotten any results back in, and we go through the different scenarios. Frankly, that was something that Johnson & Johnson and David Edelman over there helped us think through. That process brings us a discipline to the results. Now, when a client gets the results, they already made the decision on what action they should take. Sometimes it gets bogged down in politics and sometimes it slows down, but for the most part, all the clients that have gone through that process have implemented the results. I will say some of the earlier people we worked with didn’t go through that process. Some of them implemented the results. Many of them did not fully implement the results. It brought them closer to executing the action, but not all the way there.
As I look at that, a lot of that comes back to some of the fundamental changes that still have to happen to marketing to make it more of a discipline as opposed to just this black magic art practiced by people that simply make a claim of past success and experience as opposed to tangible results.
eMarketer: How many of those studies are in the works right now?
RB: We do both public and private studies, and we have 10 studies simultaneously running. The ones that are most exciting are those that are trying to push harder toward measuring sales. I can’t talk in a whole lot of depth there, but if you basically imagine what XMOS has done before, and you include not only the branding side of the equation but also the actual, tangible sales data into the analysis, that gives you a pretty good picture of where we’re going with that. By the summer, we expect we’ll have some tangible results from that research.
One of the public studies I can talk a little bit about is Ford F-150. Car and Driver referred to it as the largest campaign and the most important car launch in Ford’s 100-year history. The fact that they turned to our research to help them understand what was working and how it was working I think is a really great statement about the work that we’re doing. We’re learning a lot about the interaction between TV and magazines and online through that campaign.
eMarketer: Are there any industries or types of companies you’d really like to see get involved with these studies that aren’t already doing so?
RB: That’s actually a really interesting question. We’ve worked across so many different categories — I feel pretty good about that. Some of the ones that surprise me that aren’t doing more in this area are really in the quick service restaurant field. There’s a target audience that’s young, where the Internet is such an important part of their media experience, and you look at them and besides McDonald’s doing the study on flat bread, I don’t believe any of the other ones have done really serious research to understand this category.
Automotive is one where Ford is taking a great leadership position to do some real pioneering research. The Internet is such an important part of the car buying process. There’s so much on the line that you’d think there’d be a lot more intense research in the automotive category.
Those are the two where I think there have been some notable leaders doing research, but the whole categories should be doing a lot more.
eMarketer: So far, when leaders have come out with a public study, do you tend to see a few competitors calling you and at least considering it?
RB: Certainly. To me, the best indicator of how sophisticated they are is before that research comes out. After the research comes out, it becomes a little more about competitive jockeying. You don’t want somebody too much of a competitive advantage because they have a better measurement system. It’s not surprising that our phone rings after a study comes out; the others want to be briefed on it.
There is so much on the line in those two categories. I guess you could throw in entertainment as another where the Internet, as an element of the advertising mix, is fundamentally changing the whole way that someone goes about buying. I look at those areas and just ask the question, “Why aren’t companies in this area completely driving most of their marketing based on real, tangible metrics?”
There are some categories where it’s really hard to do metrics and you really can’t get very good measurement. A good example is confections. You can probably carve out a handful of exceptions, but the vast majority of marketing categories can be very accurately measured.
I should be really clear on our side. We talked about the Internet because that would be of more interest to your readers, but we spend much more time measuring traditional media like television and magazines. Even in those cases, I have to tell you that many of those marketers don’t have a very strong discipline for measurement. Many of them have tracking studies in place, but tracking studies are now a little over 30 years old in terms of the overall methodology design, so they were designed in an era when media was not as fragmented as it is today. Most of the tracking studies aren’t integrated into actually measuring return on marketing investment. All of those companies, with the amount that they’re spending on television and so forth, should have much more of a discipline about measurement. XMOS is certainly one of those.
I think that we are at the transition point for a lot of marketers. Many of them are shifting over to this much more systematic way of measuring and reporting on the success or failure of their campaign. The Internet certainly benefits by that being measured because of the Internet works, and it generally does, it will benefit by marketers being much more disciplined about measuring what works and what doesn’t work, and where they’re getting the best ROI. Yet so will television and so will magazines because usually television works and usually magazines work, and now it’s a question of how much should you be paying for each of those media. What percentage of your media should be dedicated to each of those?
I don’t know what the final answer is or how long it will take the transition to happen, but I do see that a lot of marketers are now open to the question of measuring effectiveness in a quantitative way rather than counting the number of awards. I think that’s a very healthy transition for business in general.