When Will Mobile Marketing Get Moving?

April 26, 2010

Should you be investing more behind Mobile Marketing? With penetration of web viewing by U.S. Mobile users at 44% of home based web penetration, it’s not a trivial question.  

In my frequent discussions with CMO’s, here’s the truth:  few are spending much of anything on Mobile. Why? Is this just another example of big company CMO’s being conservative and behind the power curve?   

What is the Potential of Mobile Marketing?

 

The Theoretical Potential of Mobile 

In theory, mobile should be the next big thing in Marketing. It’s highly personal, in-hand most of the time, and increasingly interactive with the advent of Smartphones, 3G and Apps. Mobile’s clearly not just about phone calls and text messaging anymore. In addition, it has vast advertising potential via contextual and geo-location capabilities.   

3 Building Blocks for Advertising To Take Hold 

Three things must be true for advertising to work in any medium. First, there have to be enough “viewers” using the medium for advertisers to be interested. Second, platforms must exist to deliver the advertising in an engaging manner. And lastly, advertisers need the capability to measure both the viewership and impact of the ads. All are necessary for new mediums to become a meaningful part of the broader advertising ecosystem.   

Building  Blocks — What’s Different Now?

Smartphones – Mobile penetration is so high, it’s scale is beyond debate. The more important question is: does it have Smartphone scale? Smartphone usage is growing rapidly in the U.S., with 21% of all wireless subscribers using an iPhone, Blackberry or other Smartphone (Source: Nielsen data). Almost half of respondents say their next phone will be a Smartphone, so its projected that by end of 2011, Smartphones will outnumber feature phones. This is important because Smartphone adoption will accelerate web and app usage, which in turn will increase mobile advertising.  

Smartphone To Trump Featurephone Usage (image from Nielsen Wire)

   

Improved Advertising Platforms – Mobile advertising has many forms—SMS, banner ads on internet sites, on-line video ads, and search. I think the biggest untapped potential, however, is with mobile accessed on-line video and apps embedded ads.  

On-Line Video:  Nielsen IAG data clearly shows the superiority of on-line video ad versus banner ads and even linear TV advertising. Increasing Smartphone penetration, increased 3G/4G access, and more on-line video will bolster advertising opportunities for mobile accessed on-line video.  

Apps embedded advertising is another opportunity — a whole new creative way to engage consumers.  Apple recently announced their new iPhone based ad platform, iAd.  iAd provides Apps developers an easy way to make money by building ads into their apps and sharing the ad revenue. iAd also keeps users viewing the ads inside the app, which should make the ad user experience better.  

   

Steve Jobs Talks iAD – Apple’s Mobile Advertising Platform

Geo Targeting – Increasing GPS and geo-location mobile features will create greater targeting opportunities. One of the more interesting entries in this space is a start-up called Shopkick, Inc. which has signed Best Buy and Macy’s Inc. for a new app that targets shoppers with special offers based on their proximity to relevant stores. Loopt  is working on an ad service that will charge advertisers based on the cost per person served an ad near a store location, instead of charging a cost per impression.  

GPS and Geo-Location Targeting Create Advertising Opportunities

    

Contextual ImpactAs I’ve written elsewhere, content plays a powerful role in influencing advertising effectiveness. Content impacts ad effectiveness both through consumers engagement with the content (more engagement = higher recall) and by congruence of the advertising and the content, such as Travelocity advertising during “The Amazing Race.” Mobile advertising offers plenty of opportunities in both areas for improving ad effectiveness. For example, weather related web sites have high mobile usage, and are perfect for weather based products — e.g. Totes umbrellas, etc.  

Measurement – Without measurement of both audience and ad impact, advertisers will lack a “currency” to value the mobile medium. To date, measurement has been focused on impressions and clicks – not a promising start.  

The issue is that there’s not yet a common ratings currency across the 3 screens of TV, web and mobile. This makes integrated marketing communications planning difficult at best. Without this, it’s hard to know whether Mobile exposures are increasing viewer reach, duplicating the same viewers, or both.  

In addition, measuring ad effectiveness on “clicks” or “click-thru rate (CTR)” is highly suspect. While these can be good intermediate measures of impact (e.g. a consumer clicked to subscribe to a newsletter, etc.), research from Nielsen On-line shows that CTR is not correlated with sales lift. For now, Marketers should assume that the same is likely true for mobile.   

My Mobile Take – Create, Experiment, Learn

Mobile has huge potential, as evidenced by both Apple and Google’s forays into the space. However, most of the enablers aren’t yet fully formed, and measurement of audience and ad impact is still short of what’s needed.  

That said, Mobile is so big and evolving so quickly that CMO’s can’t afford not to experiment and learn in this nascent, but increasingly important medium.  My take: create a little, experiment more, and learn a lot. Just don’t bet your budget on it—yet.   

Follow Randall Beard on Twitter   

Get free updates of Randall Beard’s Blog by e-mail   

Get free updates of Randall Beard’s Blog by RSS reader


Why “Easier” is Better for Your Brand

April 19, 2010

Is “easier” better for your brand? Consider this excerpt from the article “Easy = True” by Drake Bennett

Imagine that your stockbroker…who’s always giving you stock tips–called and told you that he had come up with a new investment strategy. Price-to earnings ratios, debt levels, management, competition, what the company makes, and how well it makes it, all those considerations go out the window. 

The new strategy is this: Invest in companies with names that are very easy to pronounce. This would probably not strike you as a great idea. But, if recent research is to be believed, it might just be brilliant.”

If making it easier to pronounce the name of a company can influence stock market performance for the better, can making your marketing “easier” for consumers build your brand and Marketing ROI? 

Cognitive Fluency

A relatively new topic of research in the world of psychology these days is “cognitive fluency.” It’s the study of how the ease or difficulty in thinking about and understanding a topic influences our attitudes and preferences toward it. As a research topic, psychologists are learning that cognitive fluency affects our thinking in subtle, yet important ways. Many of which are very relevant for communicating with consumers. 

Apple Advertising — “Easier” in Action

Let’s take a real world example: the Apple iPhone. With the iPhone, Apple had a tough task: communicate the incredible multiplicity of apps so that consumers would immediately understand the ease and simplicity of accessing them to solve basic everyday problems.

iPhone TV Advertising - Simple & Effective

Now think of the Apple iPhone TV advertising. What I think of is simple, easy and wow. Showing the ease of using the iPhone, tapping cool new apps, and solving practical problems brings their value to life in a way that makes complicated and complex-well, easy. 

The Broader Advertising Landscape

In my experience, simple and easy to understand ads tend to be more effective. The impact of making something easy to understand has been show in research to influence consumer preference and choice. For example, Novemsky et al. demonstrated that even something as simple as fonts can make a difference; fonts which were easier to read doubled purchase intent versus more difficult to read fonts. 

Cognitive fluency suggests that making your Marketing easier to understand results in making it easier for consumers to do what you want them to do — consider and buy your brand. There are multiple angles you can take for making your brand easier. Or, just by making it your Marketing centerpiece as Staples has with their “Easy Button.” 

Staples Easy Button - Marketing & Cognitive Fluency

5 Areas to Make Your Marketing “Easy”

1.  Brand Equities – Every brand should have both strategic and executional equities.  Strategic equities include brand benefits and reasons to believe, while executional equities are the distinctive executional assets the brand wants to own (e.g. McDonald’s and the yellow arches; Bounty and the Quicker Picker Upper, etc). 

Once defined, brands should work to build strategic and executional equities into distinctive assets that distinguish the brand from competition through repetition and variation.  Repetition is important because it makes your brand more familiar and, as cognitive fluency learning shows, more familiar equals easier. 

McDonald's Yellow Arches: A Distinctive Brand Equity

2. Visual and Auditory Cues — Another smart way to build brand familiarity and make it easier for consumers to identify your brand is through visual and auditory cues. A great example of a visual cue is the Pantene “hair flip” that communicates “shiny hair,” which has been part of virtually every Pantene ad for the past decade. 

Auditory cues are also important, as I wrote in a previous blog post “Why Your Brand Needs an Acoustic Identity.” Can you imagine the Olympics without the Olympic theme music, or a United Airlines ad without “Rhapsody in Blue?” Of course, when done well, visual and auditory cues can also become executional equities. 

3.  Congruent Context – Ease of understanding is also related to context. The more congruent a brand’s ad with the program content it sits within, the easier it is to relate to the ad. A Slim-Fast ad in the The Biggest Loser is easier to understand and remember than a Slim-Fast ad in another TV program about a different topic, even when the demographic make-up of the audience is the same. Why? The Biggest Loser viewers are thinking about weight loss, and so, it’s easier for them to digest the Slim-Fast ad message. 

4.  Packaging – Even packaging can make consumers’ lives easier. Ease of finding a package in store is a key metric many CPG companies use to evaluate packaging impact. The easier it is for consumers to find your package, the more likely it is that they’ll actually consider and buy it. 

Packaging - Critical to the In-Store Experience

5.  Pricing – Many companies have moved to “value pricing” with low everyday prices and modest merchandising discounts. Making it easy for consumers to understand your true value includes pricing strategies that don’t distort the real value. 

Easier is Better

Of course, the list above is only a starting point–almost any part of your Marketing Mix and customer experience can be made easier. Most CMO’s and Marketers would agree that easier is better. Yet there’s an awful lot of Marketing that isn’t simple, transparent, or easy. 

Why? My guess is that Marketers, like anyone else, need to think that what they’re doing is challenging and difficult. And the truth of the matter is that it is–great Marketing is hard. And one of the reasons it’s hard is that so few Marketers focus on making it “easy.” 

Follow Randall Beard on Twitter 

Get free updates of Randall Beard’s Blog by e-mail 

Get free updates of Randall Beard’s Blog by RSS reader


The Genetic Markers of High Advertising ROI Brands

April 12, 2010

When I was in 8th grade, I was a pretty good basketball player who aspired to the NBA, but never noticed that my father was only 5’10” tall. The more scientists learn about our genes, the more they learn that while they’re not destiny, they do increase the likelihood that we will turn out a certain way. 

In a similar vein, TV Advertising has genetic tendencies–that is, certain characteristics tend to be associated with high ROI advertising brands. In June, I’m leading a series of Marketing ROI sessions at Nielsen’s annual Consumer 360 event in Las Vegas (Disclosure: I work for Nielsen). In preparation, I’ve been reviewing what we know about Advertising ROI from Market Mix Modeling. And learnings clearly point to a set of “genetic markers” of TV Advertising ROI. 

Market Mix Modeling — What Is It ?

Market Mix Modeling, if you’re not familiar with it, uses Marketing inputs and retail scanner data to build regression models which show how each Marketing element impacts revenue and, ultimately, Marketing return on investment. These models have become increasingly sophisticated and can now answer questions about ROMI by media channel, trade promotion, consumer promotion, FSI, etc. Most major CPG companies and many companies in other industries now routinely use MMM to evaluate the effectiveness of their Marketing mix.  

The Principles of Market Mix Modeling

So, back to the question: Assuming quality creative (always the most important factor), what are the genetic markers of brands with high TV advertising ROI? In a previous post, “The 5 Truths of TV Advertising Effectiveness,” I discussed whether TV advertising works as well today as 15 years ago. But beyond this, Marketing Mix Modeling can provide some answers not just about whether TV advertising is effective, but what kinds of brands and situations it’s most effective for.  

TV Advertising ROI is Highest:

1.  When Brands are Large — Larger brands ($200M+ in revenue) deliver higher ROI’s from TV advertising than smaller brands (<$50M in revenue). Why ?  

  • First, they have more users for advertising to influence. Advertising doesn’t just cause more consumers to buy your brand (or not). Beyond building penetration, effective advertising also builds purchase frequency and transaction size. Larger brands generally have more users, and therefore, more opportunities for advertising to build consumption through changes in purchase frequency and amount.
  • Second, it’s easier for larger brands to pay out the advertising investment. Simple math shows that a +10% revenue lift on a larger $200M brand ($20M) yields more revenue than the same lift on a $50M brand ($5M). So, on a fixed advertising spend, big brands can more easily achieve a good financial return.

TV Advertising ROI: Large Brands Have Large ROI

2.  When Purchase Frequency is High — Higher purchase frequency brands and categories tend to have strong Advertising ROI’s compared to low purchase frequency categories and brands.  

Higher purchase frequency brand consumers are likely more loyal to your brand (they’re buying it more frequently), and therefore, more predisposed to your brand and more likely to respond to your advertising. Also, a higher category purchase frequency means there are more buying opportunities for your advertising to influence consumers to buy your brand.  

3. When the Category is Expandable — Some categories are easily expandable (e.g. movies) while others are not (e.g. prescription medicine). Advertising ROI’s tend to be higher in expandable categories.  

And, big brands tend to benefit the most from category consumption increases, so the big brand effect mentioned above is doubly important (see Mike Ferry’s Guest Post “5 Ways Market Leading Brands Can Drive Growth“). 

4.  When Seasonal Category Consumption Is Higher than Media Costs — Many categories have seasonal consumption spikes. When the increase in category seasonal consumption is higher than the comparable seasonal increase in media costs, this presents an opportunity. Advertising ROI tends to be higher for brands that advertise during these seasonal consumption/media increase periods of imbalance.  

5. When the Brand has the Halo of a Masterbrand — Brands within a “Masterbrand” tend to have higher TV advertising ROI’s than brands without one. The halo effect of other brands within the Masterbrand have a clearly positive ROI impact on individual brands.  

But, Trade Promotions Are Even Better — Or Are They ?

Perhaps the most discouraging learning for Marketers who are big believers in advertising is this:  on average, MMM shows that advertising ROI is less than trade promotion ROI. And for some Marketers, that leads to the obvious: more and more trade spending and less and less advertising. Is this a good thing?  

Definitely not. MMM work clearly shows that there is a strong relationship between the % volume sold on promotion and regular price elasticity. Consumers aren’t stupid. If your brand is frequently on promotion, consumers learn that it’s only a matter of time until the next great deal–and they wait until it comes along.This points to another important way that Advertising works–it reduces price elasticity. It does so by reminding consumers of your brand’s benefit, getting current users to continue buying, encouraging them to buy more frequently and even buying more per buying occasion. 

Genetic Markers of High Advertising ROI Brands — Destiny or Hard Work ?

So, if your brand has the right genetic markers–is big, part of a large Masterbrand,  or lives in a category with seasonal consumption/media increase imbalances, high purchase frequency and expandable consumption–you’re in luck. For everyone else, don’t despair, it’s still possible to have high Advertising ROI.  After all, even the sons of 5’10” fathers make it to the NBA, just not very often and not without a lot of hard work.  

Follow Randall Beard on Twitter  

Get free updates of Randall Beard’s Blog by e-mail  

Get free updates of Randall Beard’s Blog by RSS reader


Linear TV vs. On-Line Video Advertising — Which is More Effective?

April 5, 2010

Did You Know That:

  • On-line video ad spending grew +41% in 2009 — even during a down advertising year?
  • 72% of all internet users in the U.S. viewed on-line video last year?
  • More U.S. consumers watch video on the web than watch recorded TV on DVR’s?

All of this adds up to something very interesting: On-Line Video advertising is growing like a weed. Which raises another question: how does On-Line Video advertising work versus Linear TV advertising? 

On-Line Video Ads -- How Do They Compare to Linear TV Ads ?

My colleague David Kaplan of Nielsen IAG (disclosure: I work for Nielsen) partnered with Beth Uyenco, Global Research Director from Microsoft, to compare the effectiveness of Linear TV advertising and On-Line Video advertising in a recent presentation to the Advertising Research Foundation (ARF). 

Research Approach — What Was Measured

Kaplan and Uyenco used Nielsen IAG’s U.S. on-line panel to measure TV and web video advertising data from November 2007 to May 2009, across 238 brands, 412 products, and 951 advertising executions.  For each ad, they measured the same effectiveness metrics: general recall, brand recall, message recall and likeability. Key measurement metrics were identical across the two mediums. 

On-Line Video Advertising -- Why Is It More Effective ?

Key Learnings — Linear TV vs. On-Line Video

1.  On-Line Video Outperformed Linear TV — Remember that this was an “apples-to-apples” comparison which compared the exact same creative execution across the two mediums. On-Line Video scored higher than Linear TV ads, on average, for: 

  • General Recall:        65% vs. 46%
  • Brand Recall:           50% vs. 28%
  • Message Recall:      39% vs. 21%
  • Likeability:               26% vs. 14%

2.  The On-Line Video Advantage was Largest Among 13-24 year olds — Among younger consumers, On-Line Video outperformed Linear TV advertising by greater than 2 to 1. On-Line Video’s advantage cut across all age groups, but was smallest among  50+ year olds. 

3.  Re-purposed TV Ads Outperformed Web Original and Flash Animation Ads — This was one of the most interesting learnings of the study. Even when controlling for prior TV ad exposure, a re-purposed TV ad shown on web video performed better than ads created specifically for the web. What does this say about Marketers understanding of digital creative ? 

4.  Linear TV + Web Video Ads are More Effective Than Linear TV Alone — Consumers exposed to ads in both mediums had higher general recall, brand recall, message recall and likeability than consumers exposed to TV alone. Once again, the data clearly shows the advantage of a cross-platform, integrated marketing approach. 

Why Is On-Line Video More Effective ?

There are a number of reasons which could explain On-Line Video ad superiority: 

  • Higher Program Engagement — As I’ve discussed in a previous blog post, Why Your Brand Should Understand TV Program Engagement, research shows that the more engaged consumers are in a program, the more likely they are to remember the ads in the program. Nielsen IAG research shows that on-line video program engagement is +13% higher than the broadcast TV primetime norm. So, this higher engagement naturally drives higher ad recall.
  • Inability to Skip Advertising — If you’ve watched any On-Line Video, you know that you can’t easily skip the ads. I think the impact of DVR ad skipping on ads is over-rated, but the lack of DVR like ad skipping has to benefit On-Line Video ads.
  • Reduced Ad Clutter — On-Line Video has about 1/2 the ads per hour than regular network TV. Various research studies over the years have shown that there is a small, but significant, impact of clutter on advertising effectiveness.
  • Presence of Companion Ads — On-Line Video ads are more likely to have companion ads in the same program. The presence of companion ads increases ad effectiveness versus a single exposure alone. However, even when they controlled for a single ad exposure, On-Line Video still significantly outperformed Linear TV.

Now, before you think about running out and building your next campaign around On-Line Video, consider this: the average consumer spends only2% of the time viewing web video as they do TV. The practical implication of this is that most brands can’t deliver a high reach media plan with web video alone. 

But the facts remain: On-Line Video ads are more effective than Linear TV ads, especially among 13-24 year olds. As well, On-Line Video ads work synergistically with TV, and perhaps best of all, TV ads can be re-purposed on-line and actually score better than creative that’s been created specifically for the on-line medium. 

Can It Last ?

Some of the factors contributing to On-Line Video’s advantage, such as higher program engagement scores, are unlikely to change anytime soon. But others, like reduced ad clutter, will probably erode over time. Content providers are not making much money with their content on-line, and some are experimenting with more ads per hour. So, any advantage due to less clutter is likely to be short-lived. 

Nonetheless, with it’s higher performance versus Linear TV and spectacular growth rates, I think it’s only a matter of time On-Line Video ads become a signficant part of every smart CMO’s marketing mix. 

Follow Randall Beard on Twitter  

Get free updates of Randall Beard’s Blog by e-mail  

Get free updates of Randall Beard’s Blog by RSS reader