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Greg StuartPresident & CEO, Interactive Advertising Bureau

What Sticks:What Sticks: Why Advertising Fails & Why Advertising Fails &

How to Guarantee Yours How to Guarantee Yours SucceedsSucceeds

Insights from Research against $1Billion in Advertising Spending

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All the News is the Same…All the News is the Same…Broadcasting and Cable

Advertisers Think Twice, look for better return on investment.

Investors Business DailyDeath of The 30-Second

Spot?

AdvertisingAge

“Cracks in the Foundation”

“The business of advertising is under extraordinary pressure. Digital technologies, shifting

consumer behavior and demands for accountability threaten – and in some cases already have damaged – decades-old business models.”

FORTUNENightmare on Madison Avenue; Media fragmentation, recession,

fed-up clients, TiVo—it’s all

trouble

AdvertisingAge

“It’s Broken”

P&G’s Stengel takes the industry to task for clinging to outdated media

model

Making Marketing Measure Up; The pressure is on to take

the guesswork out of Ad Spending

McKinsey

“The average tenure of the CMO is less than 23 months”

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And, We Don’t Seem to Own And, We Don’t Seem to Own Responsibility for a Burden of Responsibility for a Burden of

ProofProofDonny Deutsch speaks to 500 Marketers…

“We did a wonderful spot…on the Superbowl… for Mitsubishi Gallant...that stops at the end and [says]

go to “seewhathappens.com.” We got about 600,000 clicks.

Was that great or that not great? We told the client it was great so it was great.”

[nervous laughter]

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If AdvertisingIf Advertising (as a product) (as a product) had a had a Slogan…Slogan…

Ads Work Wonders Half the Money is Wasted

Courtesy of Erwin Ephron

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The Truth Is…Marketing is HardThe Truth Is…Marketing is Hard

Suppose you have 5 options: 5 Brand Positionings 5 Customer Segmentations 5 Ad Creative Approaches 5 TV Schedules/Plans 5 Online Plans

3,125 combinations

10 to 10th = 1 billionbillion combinations combinations

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And The Future is More ChaosAnd The Future is More Chaos

Broadband HH’s over 50 M (65%) 100 million streams/mo.

DVR’s penetration 30 M in ‘08 85% claim to skip ads

iPods owned by 12% Cell Phones ->130 M subs (75%)Games consoles -> 50 MOther media are challengedConsumers are changing

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So What is a So What is a Marketer to Do?Marketer to Do?

The Following is One Model for Making Sure Your Advertising Sticks!

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$1 Billion Ad Spending $1 Billion Ad Spending ResearchedResearched

Against 30 Brands’ CampaignsAgainst 30 Brands’ Campaigns

1.1 million consumers surveyed

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What Did We Learn?What Did We Learn?

Over $105Billion of Ad Spending is

wasted (1) What makes you think yours isn’t?

(1) Of the $275 Billion in U.S. Advertising Spending

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So How Do You So How Do You Guarantee Your Guarantee Your

Advertising Sticks?Advertising Sticks?

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There are Only 3 Things to Get There are Only 3 Things to Get RightRight

Motivations Messaging Media

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Motivations

36%Missed it

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Who’s Headquarters is This?Who’s Headquarters is This?

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An “Innovative” Financial An “Innovative” Financial Services Co.Services Co.

ING

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Did Jell-O get their Segmentation Did Jell-O get their Segmentation Right?Right?

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0.920.99

Control

(No Online)

Consumers Exposed to Online Ad

Avg Weekly Volume per 100 HouseholdsMeasured in Ounces

Sales Lift: Sales Lift:

++7.5%7.5%

Sales Lift: Sales Lift:

++7.5%7.5%Incremental

Volume

+.1 ozOnline advertising resulted in a 7.5% sales volume lift

The Online Ads Worked…But They The Online Ads Worked…But They Could Have Done BetterCould Have Done Better

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Motivations: InsightsMotivations: Insights

1. Insure universal agreement on success in Company

Why do consumers buy your brand? Are you targeting a valuable customer

segment?

2. Online research = ROI

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Messaging

31%Missed it

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How do Consumers See Your Ads?How do Consumers See Your Ads?

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How Bad is Online Creative?How Bad is Online Creative?

Of the last 5 XMOS programs, creative testing was done prior to the study launch

Only 1 brand’s ads required no adjustment

2 brands found 1/2 the ads were not effective Diluting the effectiveness of the campaign

2 brands discarded ALL ads & started all overBoth developed better ads that scored much better

Who were the 5 Advertisers?

P&G J&J Kraft Nestle FordWho were the 5 Advertisers?

P&G J&J Kraft Nestle Ford

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Nothing Else Matters if Creative is Nothing Else Matters if Creative is WrongWrong

BB

AA

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Creative Makes a Creative Makes a BIGBIG Difference Difference

Ad B, 2%

Ad A, 20%

0% 5% 10% 15% 20% 25%

PurchaseIntent

Percent that Intend to Buy Colgate

Better creative can make the difference between success

and absolute failure

Ad AAd A

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What Made the Difference? What Made the Difference? Persistent Branding!Persistent Branding!

BB

AA

Source: XMOS

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Messaging: InsightsMessaging: Insights

1. Does your advertising pass the glance test?

• Online is NOT linear (maybe other media are not too)

2. Online creative testing is cheap – SO DO IT!

• Not Testing is REALLY expensive! By the way…

47%got either Motivations or Messaging

wrong

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Media

83%Missed it

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10.0%10.0%

20.0%20.0%

30.0%30.0%

40.0%40.0%

50.0%50.0%

60.0%60.0%

0.0%0.0%

When Does Your Medium Wear When Does Your Medium Wear Out?Out?

Introducing New Menu Item: Grilled Chicken Flatbread Sandwich

Budget

% A

ided

Aw

aren

ess

20% of Broadcast Budget

Reinvested 13.6%

in Online

Po

int

of

Dim

inis

hed

Ret

urn

s

5pt Gain!

Cut6.4%

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Also, No Medium Can Do it AllAlso, No Medium Can Do it All

TV Use

On

line

Use

Heavier

Heavier

Lighter

Lighter

Heavy TVHeavy Online

Heavy TVHeavy Online

Heavy TVLight Online

Heavy TVLight Online

Light TVLight Online

Light TVLight Online

Light TVHeavy Online

Light TVHeavy Online26%26% 38%38%

15%15% 21%21%

Med

ia U

sage

am

ong

18-4

9 ye

ar o

ld ta

rget

34.3 Million!

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Figure Out What Works BetterFigure Out What Works Better

30%

35%

40%

45%

50%

3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

Top 2

LunchLunch

Average

If Marketer had focused impressions on the 6 hours around lunch time, impact would have been significantly better

Simple Timing Can Really Change Impact

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““Most Important Launch In History Of Most Important Launch In History Of Ford”Ford”

- Bill Ford- Bill Ford

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0

2

4

6

8

10

12

14

Consumers NotExposed to

Online

ConsumersExposed to

Online

Media Budget Trucks Sold

Did Online Really Produce Sales?Did Online Really Produce Sales?

Online, therefore, contri-buted to 6% of sales, or

$750,000,000(1

) in truck sales

(1): 500,000 trucks sold a year, 6% equals 30,000 trucks x’s $25,000 per truck, or $750,000

+21% Increase in

Sales

2.5% 2.5% OnlineOnline

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What is Impact of Increased What is Impact of Increased Online?Online?

Online included Roadblocks & In-Market

Plan would then sell +5%, or 25,000 trucks

Results in additional $625,000,000 annual sales

Optimization and Judgment suggested

+6% increase in Online

Optimization and Judgment suggested

+6% increase in Online

@ $25,000 per Truck

@ $25,000 per Truck

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Media: InsightsMedia: Insights

1. Measure, Measure, Measure• Media is an investment

2. Mix MATTERS (It’s everything) Get a handle on diminishing return curves More than 50% of brands are over invested in

TV

3. Online in 75% of studies was most cost effective medium in mix

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The 4The 4thth M M

Maximization

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Maximization is Applying Classic Maximization is Applying Classic Innovation Theory To MarketingInnovation Theory To Marketing

70-20-10

70% of budget to what you know works

20% to innovating off of what you know works

10% to new ideas

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The “Next” F-150 TV AdsThe “Next” F-150 TV Ads

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The “Next” F-150 Magazine AdsThe “Next” F-150 Magazine Ads

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The “Next” F-150 Online AdsThe “Next” F-150 Online Ads

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Roadblock

Trying Something Brand New:Trying Something Brand New:Home Page Takeover Ad Home Page Takeover Ad Run On One Day on Each PortalRun On One Day on Each Portal

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Cost Effectiveness of Each Cost Effectiveness of Each MediumMedium

Cost to Increase Purchase Consideration Cost to Increase Purchase Consideration

Brand Metric:Purchase Consideration (top 2)

Relative Cost Index

Sample Cost

TV 2153 $21.53

Magazine 354 $3.54

Roadblock 196 $1.96

Online 100 $1.00Interpretation: If it cost Online $1 (indexed of 100) to increase purchase consideration, then it cost $1.96 for the roadblock, $3.54 for magazine and $21.54 to TV to achieve the same increase.

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Getting Each M Right Guarantees Getting Each M Right Guarantees Your Advertising “Sticks”Your Advertising “Sticks”

MotivationsMessaging Media Maximization

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How Do we Know Advertising How Do we Know Advertising Succeeds?Succeeds?

Accountability is not measurement, Accountability is doing something about it

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Greg Stuart631.702.0682greg@iab.net

Thank YouThank You

What to know more?What to know more? Book is out this Fall Book is out this Fall