Innovate 1st Interview Part 3 – Social Media Myths and Truths

January 10, 2011

I was recently interviewed by Innovate 1st for an upcoming edition of Innovate eZine’s “Conversations on the Cutting Edge” series. Following are excerpts from the interview, which was conducted by Doug Berger, Managing Director, The INNOVATE Company.

To read the full interview series, start with my earlier blog post: “Challenges in Advertising & Media Effectiveness.” 

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Social Media Myths & Truths

Doug:        Let’s shift gears to social and digital media.  Why don’t you start with some basic facts and then move into some of the wide-spread fallacies.

Randall:     Globally, in 2007, there were about 210 million people using social media.  Today, it’s over 500 million people.  The time per person spent between 2007 and 2009 has gone up about 82 percent.

So more people are doing it, and they’re doing it a lot more.  Secondly, it is big everywhere.  When you look around the world at the percentage of people using social media, globally it’s 73 percent as of last year, from a low of 59 percent in Germany up to a high of 84 percent in Brazil, with the U.S. at the global average of 73 percent.

It started skewing a bit younger, but as the penetration of social media has grown, it’s become almost a truly representational population.

Social Media Myths & Truths

Doug:        What are the trends around social media in terms of brand building?

Randall:     We all know that a recommendation from a friend, or a family member, or an acquaintance is the most powerful form of marketing there is.  That is the underlying phenomena of social media.   Engaging people to ultimately have them speak positively on your behalf is the real opportunity of social media.

Let me just give you one example of this.  Nielsen (Disclosure: I work at Nielsen) has a partnership with Facebook, where they measure ad effectiveness on Facebook. They have looked at a basic ad for Virgin Atlantic and we can see the recall for the ad.  Facebook can serve up that same exact Virgin ad, except below its ad it says, “The following friends or people in your network are also fans of Virgin.”  These ads score much higher than just the regular ad without the social context.

Virgin Atlantic: Facebook Fan Page

One of the developments that advertisers need to be focused on are ways to leverage social context that validates having people seriously think about using or buying your brand.

A lot of our clients are moving to a media model that we like to call POEM – Paid, Owned, Earned Media.  Paid media is the traditional advertising.  Owned media is your own website, or you own your own content on a website.  Earned media is how consumers are talking about your brand.

This POEM framework is an interesting one to think about for reaching consumers.  Now advertisers can look at people who viewed an ad; the percentage who went online and searched for my brand; the percentage who went onto my Facebook page; the percentage who went to my corporate website.  You can measure all of that.  You can start to understand the interaction of paid and earned media in a way that hasn’t been possible before.

POEM Framework: Paid, Owned, Earned Media

Doug:        In the world of social media, there are myths that companies are acting on, but based on your statistics don’t have validity.  What are turning out to be some of the places where social media is not delivering marketing effectiveness?

Randall:     Social media is part of earned media messaging that’s carried out voluntarily by consumers on behalf of the brand. That voluntary messaging can be positive or negative.

The biggest myth is in viral marketing.  There is a belief that you can do a viral video and achieve much of what you would achieve, for example, with TV advertising at a fraction of the cost.

The reality is, first of all, that there are a rare few videos that ever go viral enough and get enough voluntary messaging by consumers to come anywhere close to the reach you can achieve on TV.  It really has to be earned through consumers giving you great ratings because your brand really worked; the product or service is a great one.

Old Spice & Viral Marketing

I remember a time when my wife and I went on vacation.  We came back to the Philadelphia Airport and her Lexus wouldn’t start.  I called customer service and I expected that they would send a tow truck. Instead, they walked me through a five-step process to get the car started and it all worked out.

That’s a fantastic example of where I could then go online and talk about my great experience with Lexus.  That is what advertisers need to be focused on … how do you drive voluntary positive messaging by consumers on behalf of your brand?

People have gotten hung up on going after something really cool and creative and different and having it go viral, as opposed to focusing on the real activities that build advocacy for your brand.

Doug:        What else have you found people to be really interested in?

Randall:     Let me come back to cross platform measurement.  You know that the cross platform exposure is driving much greater effectiveness among the people who see your ad in more places, and yet the media planning hasn’t caught up.

The media plans are still constructed in a way that drive more reach across each media instead of driving more overlap.  This area is going to get more attention.

Next:   Marketing in the B2B space

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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 2010 Marketing Landscape – Social Media & Business Predictions for Marketers

March 1, 2010

Marketing is in a state of change perhaps unmatched since the invention of TV advertising and brand management. As marketers consider how to better utilize the social web to build their brand in this rapidly changing environment, one good read is “17 Visionaries Predict Social Business Impact on the Enterprise.” At the start of 2010, Christopher Rollyson asked his colleagues, including me, from the LinkedIn Group CSRA Innovation Group to contribute their thoughts to this “crystal ball” gazing initiative.   

2010 Web 2.0 Predictions

What were some of the predictions from the group on the impact of web 2.0 on the future of Marketing?   

Marketing — More Real Time and More ROI

  • Marketing Will Become More “Real Time” —  My prediction  focused on a seismic shift in Marketing, with  marketers beginning to view  social networks as a significant marketing contact point with broad implications for how marketing is managed and measured. Dri­ven by dig­i­tal and Web 2.0, Mar­ket­ing will increasingly move from an annual marketing planning exercise focused on one-way communication, to a real-time, dynamically planned function focused on interacting with and responding to consumers in real-time. Mar­ket­ing effec­tive­ness will increas­ingly be mea­sured in real-time, and adjust­ments will be made “on the fly,” based on brand equity and ROI met­rics.
  • “Earned Media” Will Become More Measurable — And More Relatable to Paid Media —  The “greater focus for most com­pa­nies will be on demand creation through use of social media & Web 2.0 tech­nolo­gies,” according to Rob Peters.  Marketers will increasingly focus on the creation of “Earned Media,” and will build their measurement capabilities to better understand factors of success. As well, Marketers will increasingly think of media in a more holistic “Blended Media” framework, e.g. the mix of traditional paid TV, Web, etc. and earned media such as Twitter, blogs, organic search and such. This is important since TV viewership continues to increase, and TV advertising seems to work about as well as ever. Understanding the relationship and interaction of paid and earned media will continue to evolve and become more sophisticated in 2010.

Social Networks Will Become Increasingly…

  • More Able to Drive Relationship Marketing — Christopher Rollyson affirmed the increasingly important role of global social networks in “discovering, building and maintaining relationships.” Network theory shows that the more people who are in a network, the more powerful it becomes for all members. As social networks continue to grow and combine in new forms, this network effect will only increase the potential impact of social networks. And continued social media technical innovation will accelerate brands ability to build new and more interactive relationships with their customers.
  • More Cost Effective — On the topic of the growth of social networks, Suzy Tonini points out that Web 2.0’s “reach and cost-effectiveness have been a huge plus” in the midst of the recession. While not free, social media will continue to offer the potential to drive improved results at lower cost. The key will be for brands to understand what aspects of earned and paid media drive word-of-mouth, viral marketing and create a long tail of positive brand impressions on the web that continue to build the brand long after the initial effort is finished.
  • More Mobile with Greater Ability to Share Trust Based Information — Recommendations from people you know is consistently rated by consumers as a top marketing contact point. The continued adoption of Facebook Connect will drive this to a new level as consumers can increasingly log in to their favorite sites with their Facebook ID, and then access their social networks opinions and recommendations as they traverse the web. 
  • More Location Aware — Alvin Chin poses that “location-aware” geo-social networks will allow the recording of “social interactions in real life.” This will allow Marketers to increasingly “map” consumer engagement by geographic location, serve up relevant content, and interact in novel and interesting ways.

Geo-Social Networks Take Twitter and Facebook to the Next Level

Will the Predictions Become Realities in 2010?

Not every prediction comes true. Social media pundits predicted the death of TV and there’s just no evidence yet that it’s dying. That said, there’s no question that web 2.0 and social media will only expand in 2010.

Any marketer who questions the likelihood that these predictions about information sharing, the expansion of social networks, and brand building should consider the advent of Google Buzz. With the ability to share status updates to selected groups, interact with others via location-based software, and find answers via mobile search engines, Google Buzz takes the offerings of social media players like Facebook, Twitter, and Foursquare to the next level. And that’s one digital phenomena that started out as a prediction.   

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Social Media Marketing: Do The Same Marketing Rules Apply ?

February 15, 2010

This is the 5th in a series of periodic guest posts. Catherine Davis is a marketing executive with extensive experience at Diaego, Harris Direct Online, Morgan Stanley, Discover Card, and Leo Burnett. 

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Do traditional marketing rules apply to Social Media ? Just before the holidays, I attended the CMO Club Summit in San Francisco, where the topic of discussion quickly turned to social media. Industry experts from Guy Kawasaki to Hewlett Packard’s Michael Mendenhall weighed in on whether marketers should incorporate social media as part of their overall strategy.  

Our conclusion? While social media marketing is driven by unique characteristics, the marketing evaluation process follows that of traditional media planning.  

 

When embarking on a social media marketing plan, marketers must consider the following points:   

1.  Social Media Marketing is Particularly Well-Suited to Building Brand Affinity

Estee Lauder created a powerful and actionable social media marketing campaign, where they encouraged women to try new products and have a makeover done at department store locations. Sounds ordinary? Well, post-makeover these women were photographed — and the photo was uploaded to the social networking site of their choice.  

Estee Lauder: Social Media Marketing to Women

There are fewer examples of social media driving sales.  Dell is probably the best known example.  Reuters reported that Dell attributes more than $3 million in sales to Twitter, where the company has  600,000 followers.  Considering these figures as a sole output of viral marketing, it is clear that  Dell will continue to make headway with its  integrated social media program.  

2.  Understanding  Your Target and Whether They Actively Participate in Online Social Networks are Equally Important

One of the best examples of understanding the target consumer comes from  Sears.com. The online retailer created a website for teenage girls called “Prom Premiere.” On the site, girls are encouraged to use Facebook applications and email to share photos of prom dresses with family and friends. This initiative demonstrates a concrete understanding of the target audience, as well as the purchase decision process for prom dresses.  

Sears: Prom Dress Sharing via Facebook

  

3.  Social Media Campaigns Require Scalability and Measurement

How do brands develop scalable initiatives? Take Nike’s  “Nike Human Race,” which leveraged Nike’s legacy of sponsoring local races and supporting running training programs.  By rallying an international community of devoted athletes, Nike converted 40% of previous non-consumers after only one year, and had 800,000 runners participate in the 2008 race.  

The “Nike Human Race” is clearly scalable and impactful in long-term brand building. The next level of scalability is understanding how the program translates into sales. Digital campaigns are more easily measurable, more timely, and therefore more usable in a yield management model. Put in place precise metrics to measure the marketing ROI on your social media initiative.  

4.  Make Sure There is a Strong Strategic Link to Your Product or Brand

Estee Lauder’s program works because their makeover inspires confidence in the picture a woman posts on LinkedIn or Match.com. Sears Prom Premiere made it interactive and fun to choose just the right dress for prom.  Each brand offered a product that was part of the solution and that made it ownable. 

5.  Nothing is Free – Budget Carefully

Marketers often think of social media as an inexpensive way to build a brand or promote a new product.  While there are a few high profile exceptions, that is generally false. Social media marketing requires the right resources, a budget to seed and then support the program, and time to build.  Like any other marketing campaign, maintaining realistic expectations and timeline will help lead to success.  

What’s the Bottom Line in Social Media Marketing ?

Social media can be an incredibly creative way to engage your customers and help define your brand.  If you haven’t done a social media campaign yet, begin monitoring any large or influential communities where your products or your competitors are frequent topics of conversation.  Identify the role your brand plays in their lives and how you can add value. 

Evaluate your in-house assets –many companies have a wealth of information that can be used to create and syndicate content on highly trafficked sites.  Start small and create a test and learn environment. You will quickly learn what works and should be scaled up.  If you are already actively involved in social media, take a step back and evaluate your program.   It needs to be assessed on it’s own merit and against the channels it is replacing.  It should be just one part of a fully integrated marketing program. 

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Catherine Davis was most recently SVP Marketing at Diageo, the world’s largest alcoholic beverage company including Johnnie Walker, Guinness, and Smirnoff.  She is a marketing executive who builds brands and creates new media and marketing models to drive business growth. Catherine is experienced in CPG, financial services, and online businesses and has demonstrated leadership across all marketing functions, including digital.  

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Learning From the Dynamics of Viral Marketing

January 25, 2010

In what context do viral marketing strategies work? How do on-line product recommendations develop, multiply, spread and ultimately, dwindle and die? And, can Marketers influence any of this?  

These were important questions posed by Leskovec, Adamic, and Huberman in their 2008 study “The Dynamics of Viral Marketing.” This is one of the few studies I’ve seen to actually study how on-line recommendations grow virally and how this growth impacts purchase behavior throughout the viral network.  

Viral Marketing -- When and Where Does it Work?

 

Admittedly, the study had limitations, notably that it was only four categories, just measured on-line viral activity, and included a discount incentive to help motivate purchase. But, even with these limitations, it uncovered deeper insights into the systematic patterns in knowledge sharing and persuasion online—all of which are of high interest to Marketers.  

What Did the Study Entail?

Lescovec et al. examined an online recommendation network composed of 4 million people who made 16 million recommendations for 0.5 million products. Each time a consumer purchased a book, music, or movie, he or she could  send e-mails recommending the item to friends. The first person to purchase the same item through a referral link received a 10% discount.  

What was Measured

  • When and at what price a product was purchased
  • If the product was recommended to others
  • Whether the recommendation resulted in a subsequent purchase and discount

They then modeled the effectiveness of recommendations as a function of the total number of previously exchanged recommendations.  

Recommendation Networks Grow Slowly Over Time.

 

Important Viral Network Learnings & Insights

Finding #1:  Consumers recommended a large number of products to the same group of people. As a result, recommendation networks became heavily locally-based. For example, in the DVD recommendation network there are 182,000 pairs that exchanged more than 10 recommendations.  

Consumers Tend to Recommend Products to the Same People

 

Finding #2: Recommendation networks centered on a specific product category. That is, the people tended to focus on recommending a particular product category and thus created a “community of interest.” Having said this, most all networks shared recommendations for all types of products.  

Finding #3: Trust, influence, and perception of “spam” affected purchase. As people exchanged more recommendations, the likelihood they would purchase the product increased due to a growing foundation of trust. However, purchase likelihood increased, peaked, and then fell as consumers received additional recommendations for a specific product. A few recommendations built credibility; too many appeared as “spam.”  

Finding #4:  Most recommendation chains didn’t grow very large. In fact, most terminated with the initial product purchase, and even the largest connected networks were very small as a percentage of the total population.  

Recommendation Chains Don’t Typically Grow Very Large

 

Finding #5: 20% of recommendations accounted for 50% of sales. This is not far from the usual 80-20 rule, where the top 20% of products account for 80% of sales.  

What are the ‘Viral’ Implications for Marketers?

1. Identify the “Amplifiers.” Given that 20% of recommendations generate 50% of sales, it’s key to figure out whom the amplifiers are and focus your efforts on them.  

2. Determine Where the “Amplifiers” Congregate. Where do they exchange product information? On what platforms do they consume media? Web behavior can be linked to off-line purchase panels to quantify the effectiveness of recommendations (see “What Really Drives Web Advertising ROI”).  

3. Take Online Recommendation Networks to the next level Through Social Media Marketing. Marketers should explore development of models to measure recommendation systems on Twitter, Facebook, Foursquare, and the larger online arena. Through broader web 2.0 outreach, marketers can quantify consumer engagement on recommendation networks by volume, reach, tone, and source.  

Marketers can optimize paid media and earned media with viral marketing.

 

4. Be Wary of Creating “Recommendation-Fatigue.” A fine line exists between trust and influence in recommending a product and what is widely considered “spam.” Consumer engagement via any online channel must be done with careful consideration of earned media and buzz promotion.  

Viral Marketing: Limitations…

What’s not yet so clear from the research is how to minimize transmission “breakdown” – e.g. how do you minimize the likelihood that a product recommendation is the last one. As the research showed, most viral networks don’t grow very large. Marketers will only invest significant money if they can truly scale viral marketing programs.  

…And Future Opportunities

With the right tools and metrics, marketers can diversify their marketing plans to incorporate viral marketing strategies. The research clearly shows that viral marketing can build unique and niche recommendation networks, bolster consumer engagement, and lift sales.  

And as consumers continue to favor a digitally-based, social network-centric world, it’s critical that Marketers become more expert at viral marketing. Key to this will be identifying amplifiers, focusing on congregation points, leveraging social media opportunities—all without overdoing it. As importantly, Marketers must discover new approaches to spread and scale viral marketing just as effectively as the flu seems to proliferate every flu season.  

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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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