Addressing the Trust Deficit in Advertising

September 17, 2012

Consumers increasing lack of trust doesn’t begin and end with government and other large public and private institutions. It applies to advertising as well. This should hardly be a surprise to anyone. Who trusts ads anyway?

What’s surprising is that advertising continues to work as well as it does when the majority of consumers say they “don’t trust (advertising) much or at all.” This is, no doubt, due to the creative power of great advertising—its ability to entertain as well as sell. Advertising works despite itself.

Trust in Advertising – Paid, Owned and Earned

In a recent Nielsen global study (disclosure: I work at Nielsen), all forms of paid advertising—TV, Print, Digital, Radio, etc., fared poorly on the trust factor. Conversely, and not surprisingly, “recommendations from people I know” scored highest on trust, with 92% of consumers trusting this source completely or somewhat. Owned media, such as brand websites, scored higher than paid advertising, but lower than social recommendations.

Trust In Advertising

Now What ? The Convergence of Paid, Owned and Earned

Now that we’ve demonstrated what many of us already knew, what should we do about it? Does trust in advertising even matter? If so, can we even do anything about it?  After all, the only advertising that most CMO’s control is their own (and some Ad Agency people would even debate that).

Since trust is a continuum , moving from earned (highest) to owned and then paid (lowest), it stands to reason that brands should want more earned and owned media. But giving up paid media? For most brands, this isn’t really feasible given both the broad reach and historical success associated with paid media.

Instead, we need to start thinking of how Paid, Owned and Earned media can work together to improve trust and deliver better results. Marketers continue to discuss them as if they are separate and discreet media. They’re increasingly not.

Technology is blurring the lines of paid, owned and earned media.  Paid media can now also be social. Social is often about paid. Owned media can have paid embedded in it. And sometimes, all three can exist in one consumer touchpoint. What’s a CMO to make of this trend?

3 Examples of Paid, Owned, Earned Convergence

1.       Paid Ads Work Harder with Social

What actually happens when you combine social and paid advertising? Research on Facebook ads with and without a social layer (Jimmy, Billy and 8 other friends are fans of Brand X), shows that social ads generate much stronger breakthrough and purchase intent than ads without a social layer. Why? Knowing that the advertised brand is liked by our friends builds trust.

Paid Advertising Works Harder with a Social Layer

2.       Paid Digital Advertising Drives “Owned Media” Usage

Digital advertising can drive consumers to a Brand’s owned media. In the example below, we look at the effectiveness of four different brands digital advertising in driving consumers to their respective web sites. Brands A & B were far more successful in doing so than Brands C & D.

Brand A

   Brand B

   Brand C

Brand D

% of those exposedto the online display campaign that went on to visit a brand’s site post-exposure 

4.7

       5.2

      1.0

1.2

% of those not exposedto the online display advertising who visited a brand’s site 

    0.5

       0.4

0.2

0.3

3.       Owned Can Work Harder Than “Paid Media”

What about owned media? Does it work once consumers arrive? One way of understanding this is to measure the off-line sales impact of those consumers exposed versus not exposed to your brand’s website. In the example below, we can see that exposure to Brand X’s owned digital media drove almost 3x the sales lift of paid digital ads alone.

Owned Media Can Work Harder than Paid

The Opportunity – Putting it All Together

Addressing the truth deficit in advertising is more than just making ads that are, well, true. It’s also about how to use paid, owned and earned media to your brand’s advantage.

Using the example above, why not build social into your paid advertising (where possible), use your paid ads to drive consumers to your website, and optimize your site to drive maximum on or off-line purchase? Why not experiment with the myriad of ways to engage your consumers across the paid, owned and earned continuum?

Because I’m betting that overcoming the trust deficit in advertising isn’t about making ads that aren’t misleading or exaggerated. It’s about adding in social and owned media experiences in ways that gives paid media more legitimacy and enables it to work harder for your brand.

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How to Make “In-Game” Adjustments to Improve Advertising ROI

March 26, 2012

Imagine a coach who only shows up after the game to find out the final score. No half-time adjustments, no in-game adjustments based on what’s working and what’s not.  Is this good coaching? Of course not.

Advertiser as Coach -- Why Advertising ROI Isn't the Final Score

The final score is just that–a final score. It doesn’t say anything about what caused the game to be won or lost, and more importantly, what adjustments could be made throughout the game to win.

Measuring advertising ROI only is like a coach coming to the game after it’s over to learn the final score, and then declaring victory–or defeat.

Coaching After the Game is Over

In my last post, Driving Higher Advertising ROI Without Big Data, I described the apparent disconnect between the growing avalanche of “big data” and CMO’s continuing frustration with their inability to measure marketing effectiveness.

Given this, the 3R framework of Reach, Resonance and Reaction is a simple, yet powerful framework for evaluating advertising effectiveness. As important as it is to measure sales impact, measuring advertising ROI is not the be all and end all.

The 3R framework illustrates why this is the case. Reaction is the outcome, the end product. It is the product of Reach and Resonance–they are both drivers of Reaction. Even when Reaction is strong, Reach and/or Resonance aren’t always optimized. And this is the opportunity for the advertiser to coach–during the game.

A Simple Case Study — The Power of In-Flight “Coaching”

A client invested a significant amount in a broadscale digital campaign:

  • Target (disguised):  males, aged 21-29
  • 100 million impressions
  • Mix of banner ads, rich media, on-line video
  • Multiple creative units
  • Multiple web sites

Now, let’s work backwards:

Reaction — How well did the campaign drive sales ?

The campaign delivered +22% sales lift among those exposed to the ads.

How do we know this? The digital ads were tagged, and sales lift was measured via off-line purchase panels among those people exposed to the ads versus those not exposed.

This looked like a huge victory: what’s not to like about a +22% sales lift ? Let the celebration begin…

Reach — How well did the campaign reach males, aged 21-29?

Of the 100 million impressions delivered, only 60 million hit the target. So, 40 million impressions hit women, or men older than 29, teens, or some other group other than males aged 21-29. Obviously, the campaign was not well targeted. In my experience, this is the norm, and not an exceptional case.

But the campaign also wasn’t well planned: the reach was <10% and the frequency was 50+. Most consumers exposed to the campaign were almost certainly exposed way too much. And way too few target consumers were not exposed at all.

This kind of data is available now on a daily basis. Now, if it was just before halftime and you were coach, what would you do with numbers like these ?

Resonance — How well did the advertising break-thru and change consumer attitudes ?

Overall, the campaign performed slightly above norm. Ad recall was well above norm and branding was generally solid–good news and consistent with the sales results.

However, performance varied tremendously across creative formats, creative units and web sites. On-line video performed best, followed by rich media and banner ads. Of the 10 creative units, 3 performed well below norm. And of the 8 web sites, 2 performed well below norm.

Now, if was the end of the 3rd quarter, and your we looking at results like the above, what would you do ? Most likely, you’d move spending out of low performing ads, ad formats and sites, and reallocate them to higher performing ones.

Optimizing Advertising Performance “In Game”

It’s clear in hindsight that the campaign wasn’t optimized. The campaign clearly drove a sizable sales lift among those people exposed to it. If the client had measured results in flight and made adjustments along the way, the sales lift would have been higher, and among a much larger group of target consumers.

As the example above illustrates, it’s not enough to  just measure the sales lift of the advertising. This is like measuring the game’s outcome, without coaching throughout the game.

There are other important factors which are critical for you as the advertising “coach” to do to optimize advertising performance in-game:

  • Understand whether you are reaching the right consumer with the right reach and frequency.
  • Make sure that your campaign breaks thru and changes consumer opinions–across all creative units and all sites.
  • Measure all of the above in flight, in real-time, so you can asses what’s happening and quickly make decisions to change your plan to optimize the campaign and generate the best possible result.

So, what are you waiting for? Don’t be like many advertisers and be content to simply measure the final ROI score. Or, just take Yogi Berra’s famous advice to constantly coach, adjust and optimize during the game, because:

“It ain’t over till it’s over.”

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Guest Post: Five Myths Marketers Believe About Presentations

November 15, 2010

This post is part of a continuing series of guest posts. Diane DiResta is CEO of DiResta Communications, Inc., a New York City consultancy serving business leaders who want to communicate with greater impact.

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Having coached a number of marketers on their presentations, it’s come to my attention that when delivering presentations even the most creative marketing professionals may be sabotaging their success. The reason many marketing ideas are rejected by management is not because of the quality of the idea. It’s more often because of the way the idea is presented.

Five Myths Marketers Believe About Presentations

 

Here are five presentation myths that marketers need to dispel:

1. It’s about the numbers. I’ve seen marketing clients who believe that if the numbers back up their idea, it will sell. Nothing could be further from the truth. Marketers fall in love with the numbers and make this the focal point of the presentation. Then they’re shocked when senior management isn’t excited about their new product launch.

Reality: It’s passion that sells. I had one client who was shot down after presenting a new product. The reason was not because it wasn’t a good product. It was because it wasn’t a compelling presentation. The feedback her manager gave me was that she presented the facts but there was no enthusiasm. Tell the story behind the numbers. Senior management needs to be sold in the same way the consumer needs to be sold.

Marketers, Take Note: Passion Sells

 

2. Defend your position. One client got into hot water because of a need to defend his idea. When you’re wedded to your way of thinking you can alienate your boss and your supporters.

Reality:  Defending a position may actually backfire on you. Some marketers believe if it isn’t invented here, it doesn’t count. Being flexible and open to other ideas will up the ante on your presentation. Listening and questioning are the keys to success in selling your idea. If you don’t know the answer admit it and offer to get back to the questioner.  “Fake it til you make it” does not apply here. You’ll gain more credibility if you’re honest.

3. Tell them everything you know. Some marketers do a data dump, believing the listeners should be information rich.

Reality:   Good speaking like good marketing gets to the point. When pitching a product or concept if you give too many details, the listeners tune out.  Tell them what they need to know – not everything you know. When it comes to delivery, less is more.

Effective Public Speaking for Marketers

 

4. Keep Talking. Some marketers believe that by dominating the conversation they’ll push through their ideas. The squeaky wheel may get the grease but it won’t necessarily get you the business.

Reality: Know when to shut up. A running faucet will eventually flood a room. Don’t drown in your own verbiage. Come up for air. Master the pause.

5. The Company Knows Best. Departments  have their own culture. Expectations may range from using  a standard version of a PowerPoint template to having a tradition of all presenters being seated.

Reality: Tradition doesn’t have to reign. Breaking the rules can be used to your advantage. A text-only deck is not as impactful as slides that contain a few visuals. Just because presenters traditionally speak while seated in a boardroom, doesn’t mean you shouldn’t stand. Effective presenters know how to stand out and blend in. You can respect company culture and also infuse your personal brand.

To give a good presentation remember the three  Cs – clear, concise, and compelling.

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Diane DiResta is CEO of DiResta Communications, Inc., a New York City consultancy serving business leaders who want to communicate with greater impact — whether face-to-face, in front of a crowd or from an electronic platform.  DiResta is the author of Knockout Presentations: How to Deliver Your Message with Power, Punch, and Pizzazz, an Amazon.com category best-seller and widely-used text in college business communication courses. http://www.diresta.com

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Should Your Advertising Target Heavy Buyers ?

November 11, 2010

Heavy users are every Marketers dream segment. Large sales, highly profitable (usually), and inclined to stay with your brand forever. Large sales: yes;  highly profitable: usually;  inclined to stay with your brand forever:  not necessarily.

Should Your Brand Advertise to Heavy Buyers ?

 

Do Heavy Buyers Really Stay Heavy ?

Jenni Romaniuk and Samuel Wight, both of the Ehrenberg-Bass Institute of Marketing Science, recently conducted an analysis of heavy buyer buying behavior using 2006 Kantar Worldpanel data.

Buying behavior was defined using multiple schema—using both relative consumption (e.g. top 20% of consuming HH’s) and also purchase frequency (number of purchase occasions per year).

They examined 15 categories and 139  CPG brands across the 2006-2007 time period. Their analysis shows that, on average, about 50% of heavy buyers become non heavy buyers of the same brand in the next year.

Let me put that differently: heavy buyers aren’t heavy buyers forever. They can become light or non-buyers if you’re not paying attention to them.

Heavy Category Buyers and Category Effects

Of course, some heavy buyers become non heavy buyers because they leave the category (e.g. parents of a diaper age baby). But even after looking at category heavy buying, Romaniuk and Wight’s analysis still shows that 65% of category heavy buyers remain heavy buyers in the subsequent year.

This is surprising to say the least. What should Marketers do about it? Romaniuk and Wight suggest focusing on light or non-buyers given the annual churn of heavy buyers and also the fact that growing brands growth is often due to the acquisition of non or light buyers.

I agree with this, but also think that CMO’s need to ask the question: “what do I need to do to keep my heavy buyers buying heavily?” And, how do I turn light buyers into heavy buyers?

3 Considerations for Advertising to Heavy Buyers

1.  Heavy buyers are not heavy buyers indefinitely.  As the Ehrenberg-Bass data shows, Marketers cannot just assume that heavy buyers will hang around and stay loyal. You have to constantly re-earn their loyalty.Marketers need to have a continuing dialogue with heavy buyers and find new ways to delight them.

2. Heavy buyers tend to be more profitable.  Although there is some debate on this point, especially in promotion intensive categories, most analyses I’ve ever seen show that heavy buyers not only buy more, they also tend to be disproportionately profitable.

3.  Competitors often target your heavy buyers.  Heavy buyers are attractive not just to your brand, but to competitors as well. Heavy buyers tend to be the gold that every brand likes to mine—so if you don’t mine it, some other brand will.

Targeting Based on Buying Behavior

Dissenting Opinions — Issues with Heavy Buyer Targets

All of the above seems obvious, but there are dissenting opinions on this. Kevin Clancy wrote a blog post in his “Shocking Truth of the Month” series titled: “Heavy buyers are the worst target for most marketing programs.”

His argument is twofold. First, heavy buyers tend to be more deal and promotion conscious and are, therefore, inherently more price sensitive and less profitable. Second, competitive heavy buyers are already “psychologically locked” to a competitive brand and hard to convert.

There are no doubt cases where the first is true–e.g. brands have heavy buyers who buy the brand heavily because it’s often on sale. Make sure your brand doesn’t fall into this trap. His second point contradicts the first. If consumers are locked-in to another brand, then they are inherently loyal and unlikely to be price sensitive.  Lastly, my point is not to advertise to competitive brand heavy users; it’s to consider targeting your own heavy users before they become light users.

50% — A Loss Too Much?

Let’s come back to the central point here:  that 50% of your heavy buyers are likely not going be your brands heavy buyers next year. And on average, this will contribute to a -15% loss in sales for your brand all things being equal.

Assuming you’ve done your homework and know they’re not just loyal, but also profitable, then the question remains: should your advertising target heavy buyers (before they’re not heavy anymore)?

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What Makes A Great CMO ?

October 25, 2010

I’ve often said that the best CMO is a CEO who believes in Marketing. But beyond this, what makes a great CMO? This is germane not only to CMO’s whose average tenure is about 2 years, but also to CEO’s who need Marketing to drive results.

What Makes A Great CMO?

CMO Competency Research

Egon-Zehnder International (EZI) has taken a close look at this and has some interesting insights. Over the past 5 years, EZI conducted 25,00o CMO appraisals across 300 companies to better understand what differentiates great CMO’s from average ones.

Assessed skills included: results orientation, team leadership, collaboration, strategic orientation, organizational development, change leadership, customer orientation, and market knowledge.

Markers of a Great CMO

EZI’s assessment shows that 2 factors stand out in differentiating great from average CMO’s:

1.  Results Orientation

“Results orientation means driving uncompromisingly for better outcomes, often achieving them through skilled use of robust analysis and benchmarking”

 

2.  Change Leadership

“Good CMO’s are adept at advocating change and communicating a clear and compelling new direction…they set clear targets that focus people on achieving the change and develop metrics that both monitor and motivate it”

You could easily summarize the above as “set a direction and then deliver on it.” And, this is entirely consistent with a previous post, “What Do CEO’s Really Want From Marketing?,” where I discussed Lou Gerstner’s definition of CMO success: great CMO’s build the brand and build the business.

Makers of a Great CMO

What Can CMO’s Do?

1.  Success Metrics — One thing that most CMO’s can do better is to develop clear Marketing success metrics and then use them to assess the performance of their Marketing efforts. I’ve written extensively about the need for Marketing to be more accountable, particularly with Advertising and Media.

  • Does your advertising build your brand equity ? Which creative or media choices contribute most to this growth?
  • Does driving your brand equity scores build your revenue and profitability ? Which equity attributes are most critical to better business outcomes ?
  • Does your advertising build volume, share and revenue ? And, what’s the short and long-term ROI impact ?

2.  Reward Metrics — The same metrics can be used to reward your organization. Whether you recognize and reward people on an ad hoc basis, or with more formal annual Marketing Awards events, every CMO has an opportunity to continuously recognize great performance by individuals and groups by emphasizing progress on the same metrics.

Success Metrics & Reward Metrics

 

Set a Direction and Then Deliver On It

Like most good insights, it sounds simple but is, of course, hard to execute in practice. Lou Gerstner was right. Great CMO’s just build great brands and drive better business results. And, the Egon-Zehnder research just proves it.

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Guest Post: Rude Awakening— Only 15% of Word of Mouth Marketing Campaigns Show Positive Results

October 18, 2010

This post is part of a continuing series of guest posts and was originally posted on MENG BLEND. Christopher S. Rollyson is founder of CSRA, Inc., Architect of The Social Network Roadmap(sm) & Managing Editor at the Global Human Capital Journal.

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Word of mouth marketing is seen by many marketers as the economic engine of social business (or media) because people recommend products and services to each other: all marketers have to do is give them the right information to share and make it easy for them to recommend things, right? Wrong.

Rude Awakening— Only 15% of Word of Mouth Marketing Campaigns Show Positive Results

Or, in popular parlance, “It’s complicated.”

Here, I’ll identify some of the flawed concepts that underlie word of mouth marketing (WOMM), so you can avoid being part of its 85% casualty rate. I’ll show in general how you can tweak the idea and succeed with social business initiatives more often.

Word of Mouth Marketing Is Flawed

At Alterian’s user conference, Don Peppers shared this arresting statistic in his keynote:  only 15% of WOMM initiatives show positive ROI. Shocking—at least until you start thinking about it. Loosely speaking, WOM (sans “marketing”) happens when a trusted and relatively unbiased “friend” shares her experience with a product/service with someone close to her. “Someone like me” who isn’t tainted by sales commissions or quarterly revenue targets.

Marketing, on the other hand, is generally about creating need or driving sales. Do you see the problem?

In this context, WOM and marketing are mutually exclusive: the latter’s purpose is to serve the company by moving product; the former serves the person first. It’s a conflict of interest, and it will rarely work. Ever.

93% of Word of Mouth Is Offline

In a second data point, Keller Fay Group’s latest TalkTrack study revealed that the overwhelming majority of WOM (as defined by them) takes place offline and face to face (via e-consultancy and @stefanw), not online through social business. This is not surprising when you stop to think about what traditional WOM is, largely a conversation between family or close friends. Tight ties. However, neither of these references dives into WOM or WOMM deeply enough to understand why and how they can work or not.

WOM among Loose Ties

Digital communications significantly reduce the cost of many kinds of interaction, so WOM among loose ties will continue to grow. However, marketers should recognize that loose ties and tight ties have important differences because the motivations and level of trust are different.

Loose ties are not just inferior tight ties; people form loose ties for many reasons, but the online many-to-many environment enables people to manage their reputations and influence by leveraging the network effect. Tight tie relationships are limited in number, multidimensional and high investment.

How Marketers Can Succeed with Word of Mouth

Having led marketing for several firms, I can appreciate why marketers would love the concept of word of mouth marketing. Given that they are in conflict, it’s important to focus on WOM while avoiding WOMM. I’ll wager that the majority of the 85% of failures result from not understanding and honoring their differences. The good news is, WOM drives sales—when companies honor and nurture it. Here’s how:

  • First—and this is a leap of faith—accept that WOM serves the customer, not you. Trust that, if you don’t interfere, positive results will often result. There is no halfway here, intent and honesty are WOM’s key differentiators. Don Peppers shared Staples’ “Speak Easy” fiasco as a warning (“sponsored” tweets and bloggers are other traps). All companies say that they put the customer first, but many aren’t being honest with themselves or their customers.
  • Second, the company must put itself first to be congruent with itself as a business. It shouldn’t try to do WOM. But the company, acting in its self-interest, can support WOM. Marketers must safeguard these boundaries if they want to succeed because they form the foundation of trust among the three principal actors: company, friend and customer.
  • Third, accept that your products and services are not a great fit for most people. In a pervasive transparent network, the market will figure out what works and what doesn’t. Don’t try to “make markets” by convincing people to buy unless you have a valid value proposition for them. Focus on serving people for whom you have a superior value proposition. This is the key to thriving in a transparent environment.
  • Fourth, trust customers’ friends to engage with WOM—for their own motivations. Remember, they are there to serve their friend, not to move your product. WOM is their role, not yours. Campaigns like Staples’ fail because marketers don’t understand their role and unknowingly turn WOM into shilling. Sorry.

Remember Miracle on 34th Street? It was breakthrough to send customers to other stores when they had a better value proposition for the customer. It increased WOM because it surprised people and exceeded expectations. But it was Kris Kringle (a “friend”) who started it based on his personal integrity. Later Macy’s turned it into a tactic, but Kris never did.

Accepting WOM transparency is difficult because it requires significant culture change. Firms that don’t accept this new reality will fight and lose. The market will expose them in the end.

On the other hand, those that take this road will be more successful because they will be aligned with customers and their friends. Moreover, focusing on valid value propositions and customers will tend to lead the company to innovate more successfully.

Do you agree? Disagree? Please share your thoughts and insights in the comments…

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Christopher S. Rollyson has been a marketing and technology pioneer for over twenty years. As a consultant and marketing executive, he has had a leading role in launching such game-changers as: Java with Sun Microsystems, e-business strategy with PricewaterhouseCoopers Management Consulting Services, and SOA, Web services and architecture solutions with nVISIA and IBM. He can be found on Twitter as @CSRollyson.

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