Watson Calling: Can Cognitive Computing Improve Ad Effectiveness?

May 28, 2013

The following post first appeared in the IBM “Building a Smarter Planet” Blog on May 21, 2013.

===============================================================

It’s often said that marketers are drowning in data, but here at Nielsen, we have an idea for turning that harrowing experience into an insightful deep sea exploration.

For decades, Nielsen has been in the business of empowering brands and agencies with the information they need to understand and build connections with consumers.  We do this by measuring the advertising and media content people watch, the goods and services people buy – and very importantly, by spotting connections between the two. Why are these connections important? If you know what ads people are exposed to, and you know what those same people buy, you can get a lot smarter about how well your advertising is working and how to make it work better.

IBM Watson Calling - Can Cognitive Computing Improve Ad Effectiveness?

IBM Watson Calling – Can Cognitive Computing Improve Ad Effectiveness?

However, despite vast amount of data at their fingertips—and often because of the complexity of the data at hand—our clients’ ability to form these vital connections is oftentimes hindered. In fact, our advertiser clients tell us that despite the ever increasing amounts of data they have access to, they still have problems answering basic questions such as: How much should I spend on advertising? How should I allocate my spending across media platforms and within them? And, how do I measure my advertising performance “in-flight,” and make course corrections to improve results?

To help answer these questions, Nielsen created a simple “end-to-end” framework for measuring advertising and media effectiveness: the 3R’s. The 3R’s try to answer three simple questions: First, is my advertising reaching my intended audience (Reach)? Second, is it breaking through, being remembered and changing consumer opinion about my brand (Resonance)? And third, is it driving a behavioral reaction – e.g. sales (Reaction)?

We’ve been working hard to create the data sets and tools to help brand marketers answer these questions. We’ve gotten much better at answering the fundamental questions about advertising effectiveness, but we still have work to do.

Like never before, we and our clients face a continuous and, sometimes overwhelming stream of data generated by consumers and our digitally enabled measurement tools.  Just envision terabytes of structured and unstructured data pouring into our offices – trends, metrics, sentiments and perspectives – that express who consumers are, which programs and ads they’ve seen, how those ads perform by TV program, genre, web site, placement, number of times they’ve seen the ad, exposure to social media, where they’ve shopped, what they’ve bought, etc.

Within this data, there exists a range of opportunities to better understand consumers. But the challenge is clear, and for many, overwhelming – due to the data’s volume, scope and growing complexity, it’s almost too much to decipher.

A new form of technology is needed to dive deep into this sea of data, and come up for air with actionable advertising and media insights that can help brands understand their campaigns’ reach, resonance and reaction, and in turn, improve their advertising campaigns.

That’s why we were so intrigued when we began discussions with IBM about an entirely new and unique category of technology known as cognitive computing.

Cognitive computing systems can understand the nuances of human language, process questions akin to the way people think, and quickly cull through vast amounts of data for relevant, evidence-based answers to their human users’ needs. And very importantly, they learn from each interaction, to improve their performance and value to users over time.

Seems like a custom fit for the data-driven challenges today’s advertisers face.

Building on this excitement, we’re embarking on a new collaboration between the Nielsen Innovation Lab, which we founded in 2012 to advance research in advertising effectiveness, and IBM to harness the power of Watson, the sole player in this exciting new era of cognitive computing.

IBM Watson

IBM Watson

As part of our own brand’s continuous effort to advance understanding around advertising effectiveness, we’ll be exploring ways to use Watson for helping our agencies and their client brands engage more effectively with consumers across all devices – from TV to tablet to smartphone – while improving the impact of their advertising and media plans.

We believe this collaboration will open up a realm of possibilities for our clients, so they too can uncover value from new and exciting data. It’s time to stop drowning, and start exploring.

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Is Free Media Good for Your Brand?

September 20, 2010

In a recent global consumer survey, 8 of 10 consumers told Nielsen that they would stop using a website if it begins charging for content (disclosure: I work at Nielsen). Most consumers believe they can get the content they want for free—so why pay? Is free content good for Marketers—or not?  

Is Free Media Good for Your Brand?

 

Will All Digital Content be Free?  

The death knell for paid media content is everywhere– web-based content and services are moving toward “free.” Chris Anderson wrote about it eloquently in his book “Free,” arguing that consumers have become conditioned to free stuff, and that the future of the web is free, free and more free. 

Of course, consumers expect “free” content based on linear TV, which was free of everything except commercials long before the web arrived. 

Yet, cable TV has made in-roads into the traditional “free” TV space, consumers pay for content on iTunes, and the last time I checked, people were still going to see movies. So, while free is in our future, and there’s certainly a lot of it on-line (including this blog), whether all digital content will be free is  uncertain. 

Free vs. Paid Content: Uncertainty for TV & Digital

 

 What Consumers Really Want   

Let’s go back to the Nielsen study above. What consumers were really saying is that they don’t want to pay for a site because they can get the same content for free elsewhere. Consumers have and will continue to pay for content under one of two conditions:  

  • If they have to. That is, they can only get the content from a web site or distribution channel that charges for it—and not for free somewhere else.
  • If the quality is worth it and there’s no good substitute. If I can only watch the NY Giants for a fee, and I’m a big fan, there’s no other option.

And let’s not forget the other 20%. That is, 20% of the surveyed people were willing to pay to access a web site. So, even in today’s digital world where much quality content isn’t walled off in a paid “garden,” 1 in 5 people are still willing to pay for it.  

  

Too Much Content — An Economic Issue 

The challenge is this: the web has democratized content creation, and this in turn has created massively more content, which has driven down ad prices. And, with lower ad prices, advertising alone won’t support some web sites. These sites don’t have a viable business model without charging for content. 

Content quality and distribution will differentiate free versus paid models. Higher quality content, or content with limited distribution, will generate revenue thru consumer fees. Lower quality content and/or content that is distributed broad-scale will be free. 

3 Trends Marketers Should Watch For 

1.  The digital media eco-system will continue to fragment. This means that web sites will increasingly fragment into free, paid and hybrid models. This is already happening. Some sites, like Yahoo News, are completely free. Others, such as Angie’s List, make you pay. And still others, like Consumer Reports, will charge for some, but not all, content.  

Paid Content: Angie's List

 

This fragmentation will make media planning more complex and challenging. Ad inventories—particularly on the paid side—will change and this will impact media costs. Building broad reach quickly via digital will continue to be a challenge, but targeting opportunities will increase. 

2.  Advertising performance will differ by model. As the quality gap widens, advertisers will need to understand how quality of content, and consumers willingness to pay for it, impacts ad effectiveness. Does higher quality paid for content increase consumer engagement and ad performance? Does the increased ad clutter associated with free models reduce ad performance? These are important questions that Marketers will need to answer. 

3.  Advertising forms will continue to evolve. At one extreme, paid for content may have no traditional advertising at all, but may increasingly rely on product placements and hybrid ads that appear to be part of the show. The line between advertising and content will continue to blur. On the other extreme will be free content that continues to have a relatively high traditional advertising load. Viewers will be less attentive due to commercial pod interruptions, ads will compete with other ads, and ad breakthrough will be more challenged.  

Traditional TV Advertising: Continuing to Evolve

 

Paid or Free – Too Soon To Call  

Whether digital content moves inexorably toward free or paid, or some combination of the two (most likely in my opinion), Marketers will need to be increasingly adept at advertising models that work best in each environment. 

Every B-School grad learns the 80/20 rule. The question is how it applies to the paid/free media model world. Will the 20% of consumers who are willing to pay for content deliver 80% of the impact to advertisers? Or vice versa? The only thing that’s certain is this:  you can check back here soon to learn more – for free. 

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Put Social Context Where It Matters Most – Next to Your Advertising

May 10, 2010

I was in Bangalore, India last week, and it seemed that cell phones were everywhere.  Increased cell phone penetration — now estimated at over 500 million — and the ability to access the web cheaply and from anywhere, is driving rapid change.  In fact, a headline in The Economic Times read:  

“TWEET EQUITY:   Consumers are exchanging notes online, even posting complaints on the CEO’s Twitter page, leaving companies with no choice but to rethink strategies in a world where consumer behaviour is being driven by online exposure.” 

Buzz Builds the Social Media Ecosystem

The social media phenomenon is global, there’s no doubt about it. “Earned” media (e.g. user generated reviews, blogs, organic search, Facebook fans, Twitter followers, etc.) continues to increase in importance, no matter where brands reside.  And as I’ve written about before, traditional “Paid” media (e.g. traditional TV, Print, paid search, etc.) is still viable.

So the bigger challenge for Marketers today is how to integrate the two into one larger Marketing communications interlocked plan. To do so, Marketers need a much better understanding of how they influence each other.

Questions About Earned Media

I talk to leading CMO’s, Media Heads, and Heads of Research and Insights at major CPG companies on a frequent basis. Virtually all of them believe that earned media is growing in importance, and probably impacts other paid elements of their Marketing mix, but few have the research to really know for sure.  

Questions I routinely hear include:  

• What’s the real value of a Facebook fan?  

• Do positive blog posts make my advertising more effective?  

• Does advertising drive more positive buzz?  

These are great questions, but unfortunately, they’re mostly just that–questions without answers. This is changing, however, as new research sheds light on how social media affects traditional paid advertising.  

Facebook Fans: Build Value through Social Media

Measuring the Impact on Paid Advertising

One recent example is the initiative by Nielsen and Facebook to study the impact of social context on ads placed on Facebook (Disclosure: I work at Nielsen).  

Nielsen and Facebook surveyed over 800,000 users, about 125 Facebook ad campaigns and 70 brand advertisers. Users were grouped into a control group (no ad exposure), a standard ad group (exposed to the ad only), and an Ad + Social Context group (exposed to the ad and the fact that their friends were fans of the brand–see below).  

The Value of Facebook Ad Impressions (image from Nielsen Wire)

Key Learnings – Where’s the Biggest Impact ?

The basic Ads on Facebook drove higher recall, awareness and purchase intent than the control group not exposed to ads. And, as you would expect, the ads with social context around the ads drove better results than the ad only group.

 

   

No Ad Control  

   

Ad on Facebook  

 Ad on Facebook with Social Context

 Index Context Ad vs. No Context Ad  

Ad Recall

100  

110  

116  

1.6x 

Awareness

100  

104  

108  

2.0x 

Purch. Intent

100  

102  

108  

4.0x 

What’s more interesting to me is this:  the results from having ads + social context improve as you move down the Marketing funnel from ad recall to purchase intent. That is, the ads with social context achieved 4x the purchase intent of the ads with no social context, while they recalled only 1.6x better. 

It seems that positive earned media, in this case knowing that “your friends are fans of the advertised brand,” makes more people notice your advertising, but has the greatest impact on the most important metric prior to purchase: Purchase Intent. It’s the power of an indirect recommendation from people you know. 

Putting the Learning Into Action

So, now we know that social context makes advertising more effective. The next obvious question is how brands can get more of it. And then CMO’s will have a new challenge: getting positive earned media where it matters most–next to their brands advertising.  

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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.  

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What Drives Branded Integration Success?

February 1, 2010

From my January 19th guest post on Joe Pulizzi’s blog  Junta42:

Instead of using your own content marketing to surround and reinforce your brand, what if you put someone else’s TV program content around it instead ? Branded Integrations, done right, use TV program content to drive your brand. The problem, though, is that most Branded Integrations come about by happenstance and not by use of proven tools and techniques. Here’s how to successfully use Branded Integrations as part of your Content Marketing portfolio.

Branded Integration – A Short History

Branded Integration has a long history, arguably as old as publishing itself.  The Lifesavers brand was integrated into the 1932 Groucho Marx movie “Horsefeathers,” and Spielberg’s “E.T.” featured the first paid candy integration: Reese’s Pieces. National Geographic had a starring role in the 1946 movie “It’s A Wonderful Life.”

Reese's Pieces in "E.T." -- the first candy branded integration.

Procter & Gamble and Unilever sponsored soap operas continued the trend. More recently, companies have taken branded integrations even further with video games and even programs designed around TV commercial characters (Geico Cavemen).

Given this long history, it should come as no surprise that Branded Integration is big business: PQ Media estimated 2006 product placement spending at $3.1B.

Is This A Good Idea ?

Being big and being good aren’t always the same thing. Does Branded Integration really work? Certainly, the large spending would lead you to think so. However, the usual process for developing branded entertainment – haphazard and creative driven — often leaves something to be desired. A branded entertainment company executive once explained the process something like this:

“The studio sends us a script. We break it down. We look for our clients demographics and then we tell our client this movie is available with this actor, with this director, with this producer, do you want it?”

Is this really the way companies should be deciding to spend $3.1B a year?

Beyond the :30 spot: Executing Branded Integrations

Beyond the :30 spot: Marketers need criteria for executing branded integrations

What Really Drives Branded Integration Results?

There are four keys to making Branded Integration work as Content Marketing for your brand:

1.  Choose the Right TV Shows – The best way to get high brand recall and brand opinion shift from your Branded Integration is to pick a show that fits with your brand and has high scores historically for Branded Integrations. Predictive models which isolate the factors most impacting brand recall, opinion shift, and fit with brand generally show that over 50% of the models’ variation are driven by TV show selection. Fortunately for Marketers, there are now syndicated panels which measure TV program Branded Integration effectiveness – so you can know a program’s track record ahead of time.

2. Design the Most Impactful Integration – Having selected the right genre and program for your integration, don’t just rely on the network and agency to tell you what the integration will look like. You need to negotiate for what really works. And what works, based on predictive modeling, is the following:

  • Involve Your Brand Longer – The duration of the integration makes a big difference; longer is better
  • Visualize Your Brand Icon – Don’t accept just an audio appearance; your brand needs to be visualized
  • Have Your Product Touched or Worn – It’s key to have characters physically interact with your product
  • Connect Your Brand to a Main Character – Physical interaction is good, but interaction with the main star is even better

These factors have been proven through research to be the most important creative factors in determining brand integration recall and positive brand opinion shift. Make sure that your execution includes them.

3.  Advertise Your Brand During the Program – This seems obvious but is often overlooked. Nielsen IAG research shows that ads aired during a program with the same brand integration generally score better for recall, branding and likeability than the same ads aired outside the Branded Integration program. Said simply, there really is “synergy” between your Branded Integration and your ad in the same program.

4.  Execute Branded Integrations in Multiple Shows in a Season – Continuity is key. If possible, negotiate for a series based branded integration, instead of an episode. Why? Having a Branded Integration in previous episodes of the same series raises brand recall and brand opinion by about 1% per previous episode — for example, take Subway’s series integration in NBC’s “Chuck.”

Subway's integration in NBC's "Chuck" not only increased sales, but saved the series.

Subway's integration in NBC's "Chuck" not only increased sales, but saved the series.

Where Should Marketers Focus ?

Adding Branded Integrations to your content marketing portfolio provides another way to drive engagement with your brand (for more on content marketing, see “Build Your Brand with Content Marketing”). But, don’t just walk blindly into it. Choose the right programs, design the integration for greatest impact, advertise during the program and deliver integrations consistently for maximum impact.

So the next time your Agency calls with their next “BIG” branded integration idea, do your brand a favor. Ask the tough questions: Why is this the right show? How will the execution optimize impact? What’s the proposal for integrating my ads? Is this part of a longer deal? Most importantly, negotiate from a position of strength: use historical data and learnings about what really drives Branded Integration success to add another powerful element to your Content Marketing mix.

 

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The 5 Myths of TV Viewership: What You Don’t Know Might Surprise You

January 4, 2010

TV remains the dominant medium for content consumption across the 3 screens, even with the growing presence of video content on web and mobile platforms. Yet 5 great myths — urban media legends if you will — about trends in television consumption have managed to become commonly held beliefs, even among senior Marketing professionals. 

5 TV Viewing Myths

And like the proverbial alligator in the New York City sewers, they just don’t want to go away. As the new year begins, it’s time to disentangle the myths and their realities: 

MYTH #1:    Young People are Watching Less and Less TV
REALITY:    Youngsters Have Always Watched Less TV

A positive correlation has always existed between age and TV viewership — older people watch more, younger people less. This is simply a function of time available, as older people have more of it. A recent Nielsen Wire post (Disclosure: I work for The Nielsen Company) showed that adults aged 65+ watch 38% more TV hours per month than those ages 25–34. And, viewers aged 12-24 watch even less.

TV Viewing: Always Lowest Among Younger Viewers

It’s true that children and teens watch less TV each month than adults do —  but contrary to popular belief, they are not replacing TV with the internet for video consumption, but have always watched less TV than older people. Instead, younger consumers are supplementing TV with new web and mobile mediums.  

MYTH #2:  Ratings are Down Due to People Watching Less TV
REALITY: Ratings are Down Due to Network Fragmentation

TV viewership in the U.S. is actually up over the past decade. The number of TV channels in the U.S. has more than tripled since 1990, and the availability of more channels has spread audiences more thinly. As a result, the average channel audience and program becomes smaller, driving lower ratings.

TV Viewing -- More Channels Means Lower Ratings

Accenture research on television viewership shows that over the past year, there has been a 5% increase in viewers watching six or more television channels and a 6% increase in viewers watching eight or more television programs per week. For marketers, fragmentation means that TV program engagement metrics to measure the engagement of viewers with TV programs become even more important.

MYTH #3:  Small Channels Have Highly Loyal Audiences
REALITY: Small Channels Are Small and Disloyal

Small channels face the same “Double Jeopardy” laws of small brands. Fewer people watch small channels and those who watch don’t watch for very long. Even when a small channel has an above average amount of viewers, viewers still only spend a small proportion of their total viewing time on small channels.So, the commonly held belief that you can reach a small, but highly loyal group of viewers on a small channel is false–small channels, just like small brands, are small because of fewer viewers and the viewers they do have aren’t that loyal.

MYTH #4:  Audience Demos Differ by Channel
REALITY:  Demos Are Similar Across Large Channels

Audience demographics vary far less than expected among large network television channels.

Large channels have almost identical demographic profiles. (Data courtesy of Nielsen Media Research, Inc. 2009)

 

Most network content is so broad based in appeal that, apart from obvious exceptions (Kids channels, music channels, etc.) the larger channels and networks do not have significantly different audiences.

MYTH #5:  Programs Have Highly Loyal Audiences
REALITY:  Programs Have Relatively Low Loyalty

Research shows that repeat rates for TV programs are generally low — around 38%. Repeat rates are lowest for comedies and low rated shows (see Double Jeopardy above). For perspective, most CPG companies consider a 50% repeat rate the bare minimum hurdle for a successful new product.While admittedly not a perfect comparison, the reality is that the same exact viewers are generally not watching a program week in and week out. Viewers tune out because of inconvenience, availability, lack of interest, family preferences, and other reasons.

TV Viewing — Myths No More

Research shows TV will continue to reign as the preeminent advertising platform for the foreseeable future. TV viewing habits have proven to be remarkably impervious to social and technological changes and the introduction of new media. In fact, the research that’s been done on the topic suggests that there has been no significant decline over the past 15 years in the effectiveness of TV advertising generating sales lift (see Joel Rubinson blog).

Where Should CMO’s Focus ?

CMO’s should focus on creating media strategies based on the fundamental truths about longstanding TV viewing behaviors. Avoid the popular urban media myths that are so rampant — e.g. TV is dying.

Focus instead on how your brand can use TV advertising in a more integrated way with new digital, social and earned media. This will be the real space for innovation in the future.  After all, those fictional New York City alligators have yet to migrate out of the sewers and into TV land.

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