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Half Of All Advertising Doesnt Work, The Trouble Is We Dont Know Which Half!
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Half Of All Advertising Doesnt Work, The Trouble Is We Dont Know Which Half!

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  • 1. “ 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 .
  • 2. 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)
  • 3. 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)
  • 4. 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)
  • 5. 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
  • 6. 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.
  • 7. 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.
  • 8.
    • 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)
  • 9. 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
  • 10. 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.
  • 11. Empirical Model Fig 1.1: Relationship between sales and advertising (Source: Stone & Duffy,2003)
  • 12. 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)
  • 13. 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.
  • 14. Case Study: Kit Kat Chunky Sun Special Edition Fig 1.3: Kit Kat and Sun in partnership (Source: Beirne et al.,2003)
  • 15. 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.
  • 16. Cognitive Tracking Results
    • Sun’s Impact on Brand Perceptions
    Fig 1.4: Sun’s Impact on Brand Perceptions (Source: Beirne et al.,2003)
  • 17.
    • ‘ Kit Kat Chunky really satisfies my hunger’
    Fig 1.5: Impact of Managed and Unmanaged Communications on Brand Perceptions (Source: Beirne et al.,2003)
  • 18.
    • ‘ Chunky is a Man’s Bar’
    Fig 1.6: Impact of Managed and Unmanaged Communications on Brand Perceptions (Source: Beirne et al.,2003)
  • 19. 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.
  • 20. “ 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.
  • 21. 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.
  • 22. Moving down the path to Marketing Accountability Fig. 1.7: Moving down the path to Marketing Accountability (Source: Adapted from See,2007) Risk Taking Transformation Visibility and Financial Controls Senior Level Sponsorship Cross Functionality Marketing Accountability
  • 23. 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.
  • 24. 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.