3 “Big Shifts” in the Advertising Paradigm

August 16, 2010

From my July 11th guest post on Meng Blend:  

In the old advertising paradigm, Marketers worshipped at the altar of pre-market “copy-testing,” myself included. The belief system was simple: get great TV advertising—measured by above norm copy testing results—and in-market success would follow.  

3 "Big Shifts" in the Advertising Paradigm

 

It was a pretty simple world—with a clear route to business results nirvana. Marketers knew exactly what they needed to focus on. And, it actually worked pretty well. In fact, some CPG companies “validated” copy testing by showing that some of the key copy testing metrics, for example persuasion, were correlated with in-market results.  

It was a great system—while it lasted.  

The Future Advertising World Looks Different  

The advertising world is changing before our viewing eyes. Beyond the obvious move– to consumer engaged, digitally enabled, social media — advertising will be revolutionized by several “big shifts.” These big shifts will upend and largely destroy the monolithic model of a single ad effectiveness measure—and will enable a much more nuanced and sophisticated understanding of ad performance in the future.  

3 Big Advertising Shifts 

Big Shift #1 – Form Factors Matter 

Advertising device “form factors” are proliferating. It’s now possible to run the same basic advertising on linear TV, non-linear DVR, on-line video, and mobile. And it doesn’t end there. With the Apple iPad, we have the makings of a whole new form factor. And newer forms are proliferating all around us—think of app driven advertising via iAd, in-store video networks, etc.  

Big Shift #1: Media Form Factors Matter -- And Are Proliferating

 

Why should we care about the proliferation of media device form factors? Beyond having interesting, cool new ways to consume content and connect with others, these new form factors matter to Marketers because they change how we should view ad effectiveness.  

Media device form factors influence ad effectiveness. The evidence to date strongly suggests that the same ad performs differently based on the “form factor” the consumer views it on. Surprise—you don’t really have a single ad—you have multiple ones—each one performing differently via the device it’s viewed on.  

Big Shift #2 – Content Matters 

Every Marketer intuitively knows that programming content—whether it’s a TV program, a web-site, or some other content—should either enhance or detract from an ad’s effectiveness that sits within it. Contextual ad measurement is now rapidly moving beyond on-line search and digital into other areas—including TV. And the early learnings are compelling—content does, indeed, make a big difference in how ads perform.  

For example, consumers’ attentiveness to TV programs is highly correlated with their ability to recall ads—the more attentive the program, the more they recall the ads. TV genres also matter. Web site performance varies too—the same ad works differently across sites. Content and context matters—in a big way.  

Big Shift #2: Linking Consumer Engagement, Context & Content

 

What’s different now is that these content based effects are measurable in ways they weren’t before. Hard facts and data about ad performance is replacing gut instinct or intuition by media planners.  

And as our understanding of the impact of content and context grows, these effects will eventually be priced into the content itself—so advertisers have to understand the differential performance by content or risk being placed at a major disadvantage in the market.  

Big Shift #3 – Synergy Matters 

I grant you that the word “synergy” has come to have negative connotations—puffery, or as one old boss used to say “all clouds, no rain.” What’s synergy anyway but a hope and a dream from a desperate salesperson? All the synergy bashing aside, advanced measurement is proving that 1+1 can really equal 3 when it comes to cross media impact—synergy is real and it’s big.  

We now know that consumers exposed to TV + On-line ads, on average, react more favorably than to either individually. At a more refined level, we also know that ad effectiveness among consumers exposed to  TV + On-Line video ads is greater than either on its own. And finally, we even know that ads seen by consumers in a combination of all three — TV + banner + on-line video ads — perform best of all.  

Big Shift #3: Platform Synergy Boosts Online Advertising

 

And this is just the beginning. There are thousands of other permutations—all unique to the brand, ad and contact point. The message is this: the time is fast approaching where marketers will be able to measure and understand their ads’ impact across all manner of combinations and permutations of media contact points. This is big. Integrated marketing communications is finally for real.  

So What Does All This Mean? 

If your head is spinning, it should be. Advertising effectiveness measurement is going to get a lot more complex and complicated. Advertisers will now need to understand advertising performance across a range of dimensions that they didn’t previously understand nor have knowledge of:  

  • By media device form factor
  • By program content
  • By combination of media contact points

There will be no single “advertising effectiveness” score anymore. There will be hundreds, perhaps thousands of them, all based on the media form factor consumers view advertising on, the content ads sit within, and the combination of contact points that a consumer sees or interacts with.  

Managing a Future of Advertising Complexity 

There are two paths for dealing with this potential chaos.  

First, there will be ever more sophisticated algorithms and model based approaches for managing all of this data. Marketers will need to become a lot more sophisticated at understanding how all of this works and not be overwhelmed or misled by the potential “black box” phenomenon.  

Second, advertisers need to develop a set of “universal truths” that simplify advertising decision-making. Newton created the scientific formulations underpinning the theory of gravity. But, most people simply know that a dropped apple will fall to earth, Similarly, advertisers don’t need to know every fact or formula across the above dimensions for ad success. They just need to know the “essential truths” of how advertising works to be effective. Divining these essential truths will be key to success in the future.  

We are moving from a mono-theistic “single ad performance” world, to a more complex poly theistic “many ad performance” approach. This world represents both an opportunity and a threat to Marketers.  

Advertisers who take the time to experiment, learn, and divine the new “advertising truths” in media device form factors, program content and cross-platform performance will be amply rewarded. And those who don’t – well, they’ll probably still be arguing with the CEO that business results behind the new ad campaign can’t be bad—after all, they had great pre-market copy test scores.  

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The 5 Truths of TV Advertising Effectiveness

January 18, 2010

Question:  Is TV advertising less effective today than 15 years ago?

If you think you know the answer, read on. Digital and social media are having a transformational effect on Marketing content, organizations and processes. This being said, what’s often ignored is what we know about TV advertising effectiveness in the here and now. 

The 5 TV Advertising Truths

I recently wrote about “The 5 Myths of TV Viewership,” and this post forms a book-end with that earlier one. Like TV viewership, there are many myths about how and whether TV advertising actually works in the current environment. Here are the 5 most prevalent ones–some of which you might find surprising:
MYTH:   TV Advertising Takes a Long Time to Work
TRUTH #1:   Advertising Works Fast, When it Works

Part of the mythology of TV advertising is the “3+” frequency myth. That is, it takes a minimum of 3 repetitions of an ad for it to move a consumer down the purchase funnel. For CPG, this is simply not true. 

The advertising response curve is "convex"—the greatest marginal response is from the first exposures.

Numerous single source tests have demonstrated that when TV ads work, they work quickly to build sales (Rubinson, Journal of Advertising Research).  In fact, the TV ad effectiveness curve is generally convex—e.g. early airings have the most impact, and additional airings decrease in effectiveness (Taylor, Kennedy & Sharp: Journal of Advertising Research). When ads work, they tend to work quickly. 

MYTH:  When TV Ads Work, They Have Large Impact
TRUTH #2:  Ads Generate Small Impact Over Time

The question “What sales impact is my ad having?” has been studied rigorously since the advent of single source data (e.g. BehaviorScan or other panels which track the single variable impact of advertising on purchase behavior). On average, for the CPG categories studied, every $1 invested returns about $.10 (Taylor, Kennedy & Sharp Journal of Advertising Research). The sales return on an invested TV ad dollar has varied between .06 and .14 over the past 20 years (Hu, Lodish, Krieger & Hayati Journal of Advertising Research). And the sales lift is larger in year 2 than year 1. 

MYTH:  DVR’s are Killing Ads
TRUTH #3:  Ad Impact is Similar With or Without DVR’s

Yes, it’s hard to believe, but the evidence suggests that DVR homes have about the same recall of TV ads as non-DVR homes (du Plessis, Journal of Advertising Research). 

 

There’s likely a range of reasons for this phenomenon, including people with DVR’s watching higher engagement shows, DVR’s increasing total TV viewing time, etc. Interestingly, research shows that consumers have the same recall and understanding of your ad when fast forwarded as when viewed in a normal manner, if they have already seen it normally once (du Plessis, Journal of Advertising Research).   

MYTH:  Digital Ads are More Likable Than TV Ads
TRUTH #4:  TV Advertising is More Likable

People assume that because the web is a “lean-forward” medium, ads in this environment are naturally more engaging  and well liked. Research shows that this is not the case. On average, TV ads are liked better than digital ads (Moult & Smith, Journal of Advertising Research). Here I should also say that likability doesn’t necessarily translate to effectiveness. 

MYTH:  TV Ads are Declining in Effectiveness
TRUTH #5:  TV Ads are as Effective Today as 15 Years Ago

This is perhaps the biggest myth of all—that TV ads are losing effectiveness over time. Falling TV ratings and the rise of social media and mobile are hurting TV ad effectiveness, right? Wrong. The research on this topic, across time and geographies, strongly suggests this is not true. As noted earlier, advertising demand elasticities have fluctuated over the past 15 years, but are not declining (Rubinson, Journal of Advertising Research). So, TV advertising is as effective (or ineffective) as ever. 

Future of TV Advertising

So, if TV advertising is still effective, what’s the future of TV advertising? I’d suggest it will be in three areas: 

1. Cross Media – The rise of digital and social media has created numerous new means and forms to advertise and engage consumers. Research clearly shows that the impact of a TV ad is even higher when a consumer has been exposed to your brands ad on the web, and vice versa. Thus, CMO’s should focus on building cross media campaigns that continue to leverage TV as appropriate, but in new combinations with new social media and digital initiatives (for more on social media marketing, see “How the Future Social Web will Transform Marketing”). 

Social media has entered the traditional marketing ecosystem.

2. New TV Ad Forms – As TV evolves from network to networked TV, new advertising form factors are cropping up. iTV is already in place and many brands are experimenting with this new approach. Additionally, Shelly Palmer and others have proposed new ad forms such as speed bumps, telescoping ads, etc. which are being enabled by “networked” TV. Marketers need to keep an eye on these new ad forms and be ready to experiment, learn and adjust. 

3. Earned Media – There is vast opportunity for brands to understand how to use paid media to drive earned media. However, this is a nascent and poorly understood area that deserves much greater experimentation. Nonetheless, understanding how paid media drives earned, earned drives paid, and how they influence one another is fertile ground for future advertising model innovation. 

So, back to our original question: “Is TV advertising less effective than 15 years ago?” The answer is a clear “no,” just as you should answer the question “Shouldn’t we completely forget about TV advertising and just concentrate solely on new media?” 

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