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“We know that half of all Advertising doesn’t work, the trouble is we don’t know which half!”

Presented by:Salil Bhat – 21121931

Adnan Galabhai – 21077819.

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Earlier Models

As Strong (1925) points out, the earliest and still the best known hierarchical model, AIDA, was reputedly conceived by St. Elmo Lewis in 1898 as a guide to salesmen.

Attention → Interest → Decision → Action

The first model to assess measures developed by Daniel Starch and George Gallup in 1920s

*Noticed → Read → Understood → Desired → Action

*(STARCH MODEL)

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John Wanamaker (1838-1922)

Considered to be, creative a innovator, merchandising and advertising genius and therefore ‘Father of Modern Day Advertising’

Opened the first ‘Departmental store’ in Philadelphia but also had multiple stores in US

Quoted – “Half the money I spend on advertising is wasted; the trouble is I don’t which half!”

Triggered the need for research in area of advertising (Scott W.D 1903; Lucas and Britt 1963; Krugman 1971; Brown 1985)

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Traditional Measurement Methods of Advertising effectiveness

According to Lucas and Britt (1963), following methods are applied before the final advertisement

Test Based on Memory- Recognition test(s) and Recall and association test(s)

Opinion and Attitude ratings Projective methods Auditorium and Laboratory Tests (Pre-testing)

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Limitations of the Traditional Methods (Dixon & Shapiro,2006)

Predictability – Low in rapidly changing environments

Granularity – Lack the ability to capture media planning realities

Relevance – Failure to consider full impact of marketing programmes

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Marketers under Pressure

Accountants department and the CFO want to see that marketing campaign contributes ‘X %’ to the profit. (Return on Marketing Investment)

The problem is not a new one, but has been inflated by the increasing influence of CFOs to be convinced that the money spent.

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How can modern marketers be accountable?(Zealey,1996; Rosenwald,2005;White,2007)

Advertising objectives should be specific, measurable, achievable and consistent

Marketers need to decide what to do and know

what percentage of ROMI (Return on Marketing Investment) will be achieved as a result.

Advertising effectiveness will be much significant when marketers have an accurate understanding of the target market.

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Need for ‘True ROI’.

Short term advertising objectives are vital as they are indicators of the possibility of achieving long term objectives.

Econometric analysis (marketing mix modelling) will help to explain short-term and long- term sales trends and attribute value to communications

How can modern marketers be accountable?(Zealey,1996; Rosenwald,2005;White,2007)

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Brand Actional Advertising (Haggin,2006):Measurable Sales

Transactional Media: Immediate Response and Measurable Results through Direct Response Element

Continuous Improvement Marketing(CIM): Immediate Return on Advertising Investment

CIM is the proverbial ‘tortoise’ : Adds value to the buyer-seller relationship

Top-down Approach: Prospective customers ‘vote’ on effectiveness

Dell: Measurable marketing programs responding to customer feedback

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The Kraft Approach to Measuring the Impact of Advertising (Stone & Duffy,2003)

In-market Tests: Detailed marketing data, store sales, etc.

Empirical Analyses: Quantifying the relationship between marketing and sales

Model: Sales is a function of a series of coefficients behind marketing efforts, competitive actions and other factors like weather and commodity pricing.

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Empirical Model

Fig 1.1: Relationship between sales and advertising (Source: Stone & Duffy,2003)

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Finding the Optimum Spend Level & ROI

By quantifying sales responses to various levels of advertising, we can calculate profits and hence, ROI.

Reach a level that maximizes profitability.

Fig 1.2: Advertising Elasticity Index used by Kraft Foods (Source: Stone & Duffy,2003)

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New Thinking: Cognitive Tracking (Beirne et al.,2003)

Key Dimensions: Consumer-centric, Segment Based & Holistic

Associative Networks: Consumer-Brand Relationship for each segment

Exposure Study: Relative strength of brand associations ( Recognition Tests) Experience with brand through both managed and unmanaged

communications

Modeling: Statistically tests how exposure to advertising has reinforced or undermined any attitudes or perceptions.

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Case Study: Kit Kat Chunky Sun Special Edition

Fig 1.3: Kit Kat and Sun in partnership (Source: Beirne et al.,2003)

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Background

Kit Kat Chunky launched in April 1999.

2 million advertising budget and 200 million bars sold within a year

Two years on, impulse sales were feeling the squeeze

Nestle wanted to talk directly to young chocolate snackers and hence, Sun created a dedicated supplement for the Chunky brand.

Objectives: Understanding key differences between the sub-brand and parent brand, isolating the impact of all forms of Kit Kat communications on the Chunky brand & putting the contribution of Sun into context.

Cognitive Tracking was used since it would assess the true impact of the Sun, as part of the total communication mix.

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Cognitive Tracking Results Sun’s Impact on Brand Perceptions

Fig 1.4: Sun’s Impact on Brand Perceptions (Source: Beirne et al.,2003)

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‘Kit Kat Chunky really satisfies my hunger’

Fig 1.5: Impact of Managed and Unmanaged Communications on Brand Perceptions (Source: Beirne et al.,2003)

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‘Chunky is a Man’s Bar’

Fig 1.6: Impact of Managed and Unmanaged Communications on Brand Perceptions (Source: Beirne et al.,2003)

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Sun, Kit Kat Chunky: Conclusions

Sun delivered on Nestlé's to build perceptions among young chocolate snackers that Chunky can deliver satisfaction on the move

Sun had a positive impact for Kit Kat Chunky on a similar scale to Kit Kat’s TV activity

Had the biggest impact on the perception “Chunky is a man’s bar” as compared to all other forms of managed and unmanaged communications.

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“We know that half of all Advertising doesn’t work, the Trouble is we don’t know which half?”

We disagree with this viewpoint.

Scenario different when quote was made.

Now, increasing technology and credible metrics available to marketers.

Modern day marketers have proven that advertising expenditure can be effectively measured and justified.

For ex. Kraft Foods, Nestle, etc

However, only a few companies have been successful.

It takes commitment and patience.

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To conclude…

“Detective work caught Saddam Hussein, marketing needs more of it” (Cowan,2004).

Marketing’s financial accountability growing louder

Companies need to re-invent themselves in the new media landscape

According to Association of National Advertisers (ANA), only a fraction of senior management surveyed displayed knowledge of credible marketing metrics.

Brand Marketers heavily focusing only on the creative side of marketing

Marketers need to justify advertising ROI like Kraft, Nestle; otherwise marketing’s role as a top-level strategic driver of the firm will diminish.

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Moving down the path to Marketing Accountability

Risk Taking

TransformationVisibility and Financial

Controls

Senior LevelSponsorship

Cross Functionality

Marketing Accountability

Fig. 1.7: Moving down the path to Marketing Accountability (Source: Adapted from See,2007)

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References

Beirne, H., Drummond, A. & Dodd, M. (2003), “Measuring the outcome of marketing activity”, Admap Magazine, February, No.436.

Brown, G. (1985), “Tracking studies and sales effects: A UK perspective.” Journal of Advertising

Research, Vol.25, No.1, pp.52–64.

Cowan,D.(2004), “Detective work caught Saddam Hussein: Marketing needs more of it”, Market Leader, No.27.

Feldwick, P. (2002), “How can you tell if advertising is working?”, WARC Monograph.

Haggin, J. (2006), “Brand actional advertising: Building brands by driving sales”, Admap Magazine, June, No.473.

Krugman, H. E. (1971), “Brain wave measurement of media involvement”, Journal of Advertising Research, Vol.11, pp.3-9.

Lucas, D.B. & Britt, S.H. (1963), Measuring advertising effectiveness, McGraw-Hill Inc, U.S.A.

Olson D., (2001), ‘Principles of measuring ad effectiveness’, American Marketing Association, Chicago.

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References Rosenwald, P. (2005), “ROMI: Putting the marketing 'M' into ROI”, Admap Magazine, May,

No.465.

Scott, W. D. (1903), The psychology of advertising, Boston: Small, Maynard & Co.

See,E.(2007), “Marketing accountability-are you ready?”, Admap Magazine, June,No.484.

Starch, D. (1923), Principles of advertising, Chicago: A.W. Shaw Company.

Stone, R. & Duffy, M. (1993), “Measuring the impact of advertising”, Journal of Advertising Research, Vol.33, No.6.

Strong, E. K. (1925), “Theories of selling”, Journal of Applied Psychology, Vol.9, No.1, pp.75-86.

White, R. (2006), “Campaign evaluation - measuring advertising performance”, Admap Magazine, February, No. 469

— (2007), ‘Accountability and practicality’, Admap Magazine, June, No.484

Zealey, J. (1996),'Setting advertising objectives', Monitoring Advertising Performance Seminar.