Webcast Prepared for Members of The Advertising Research Foundation Prepared by: Joel Rubinson, Chief Research Officer, The ARF January 14, 2009 [email_address] Empirical Generalizations Regarding the Effectiveness of TV Advertising Over Time

Can TV still work? A prima facie case against… DVR household penetration in 2008 has reached 25 - 30% (Eggerton, 2008; Goetzel, 2008; Steinberg, 2008) and 50% of DVR owners typically fast forward (Morrissey, 2008). Increase in TV commercial clutter. Over the last 50 years, “non-program content” in a 60 minute prime time show has increased from 11 to 18 minutes (Papazian, 2007). Shift in media consumption patterns that have led 50%+ of TV viewers to multi-task, presumably paying less attention to TV as they are simultaneously on the web, using their phones, reading, etc. (MRI, 2008; Papper, Holmes, Popovich, & Bloxham, 2005).

DVR household penetration in 2008 has reached 25 - 30% (Eggerton, 2008; Goetzel, 2008; Steinberg, 2008) and 50% of DVR owners typically fast forward (Morrissey, 2008).

Increase in TV commercial clutter. Over the last 50 years, “non-program content” in a 60 minute prime time show has increased from 11 to 18 minutes (Papazian, 2007).

Shift in media consumption patterns that have led 50%+ of TV viewers to multi-task, presumably paying less attention to TV as they are simultaneously on the web, using their phones, reading, etc. (MRI, 2008; Papper, Holmes, Popovich, & Bloxham, 2005).

Can TV still work? It’s even getting a little ugly… A sense that there is something wrong about push marketing that attempts to “interrupt” viewers and intrude “ What would you rather have, 5 million impressions or 10 quality relationships?” ANA conference speaker “ What is the future of a business where the consumer hates your product — in this case, advertising?” Greg Stuart, former head of the IAB, in AdWeek

A sense that there is something wrong about push marketing that attempts to “interrupt” viewers and intrude

“ What would you rather have, 5 million impressions or 10 quality relationships?” ANA conference speaker

“ What is the future of a business where the consumer hates your product — in this case, advertising?” Greg Stuart, former head of the IAB, in AdWeek

Can TV still work? Some empirical results in favor… Evidence was published in 2007 by professors Hu, Lodish, and Krieger from IRI Behaviorscan testing using experimental design that the average level of effectiveness of TV advertising, using test vs. control methods, has actually INCREASED. Evidence that people are in heightened states of awareness while fast forwarding and still absorb messages (especially those they have seen before).

Evidence was published in 2007 by professors Hu, Lodish, and Krieger from IRI Behaviorscan testing using experimental design that the average level of effectiveness of TV advertising, using test vs. control methods, has actually INCREASED.

Evidence that people are in heightened states of awareness while fast forwarding and still absorb messages (especially those they have seen before).

Anecdote: NYU marketing class I asked students to write down their favorite brand and then to comment on how they became “introduced” to that brand I called on 5 students and no one said that TV was the way they became aware of the brand or even had much influence on them One student said her favorite brand was Apple…here is the conversation that ensued… Can people fully retrieve such information?

I asked students to write down their favorite brand and then to comment on how they became “introduced” to that brand

I called on 5 students and no one said that TV was the way they became aware of the brand or even had much influence on them

One student said her favorite brand was Apple…here is the conversation that ensued…

Can people fully retrieve such information?

The key questions Has the effectiveness of TV impressions changed over time and if so, has it increased or decreased? Is TV a reasonable option in the media mix or has a decline in effectiveness made it an undesirable way to spend your money?

Has the effectiveness of TV impressions changed over time and if so, has it increased or decreased?

Is TV a reasonable option in the media mix or has a decline in effectiveness made it an undesirable way to spend your money?

ARF conducted a meta-analysis of seven US databases, 388 cases The ARF wanted to factually inform this issue via a meta-analysis…let’s harvest what the industry has learned! To integrate the results across databases, we used an indexing approach Choose a “dependent variable” for each database (some measure of impact vs. weight on an “impressions” rather than dollar basis) Average all the cases across time in a given database on this dependent measure and call that an index of 100 Analyze the index of cases over time (trending up or down) and/or compare the index of effectiveness across different media platforms

The ARF wanted to factually inform this issue via a meta-analysis…let’s harvest what the industry has learned!

To integrate the results across databases, we used an indexing approach

Choose a “dependent variable” for each database (some measure of impact vs. weight on an “impressions” rather than dollar basis)

Average all the cases across time in a given database on this dependent measure and call that an index of 100

Analyze the index of cases over time (trending up or down) and/or compare the index of effectiveness across different media platforms

The databases that the ARF had access to Sales lift analysis databases Represent a broad range of CPG product categories IRI – (n = 125) controlled and matched market testing where the level of spending was increased substantially from a non-0 level PM Group (n =37) and Dratfield Analytics (n = 27)—marketing Mix modeling ARS® – (n = 112) modeling wearout factors, and GRP advertising pressure vs. the sales impact associated with advertising. Cross Media comparison databases Represent a broad range of products and services (not limited to CPG) Marketing Evolution (n = 40) and Dynamic Logic (n = 47) – respondent level, post-hoc experimental design methods PointLogic/Compose – Media planning tool for analyzing the relative impact of various advertising platforms

Sales lift analysis databases

Represent a broad range of CPG product categories

IRI – (n = 125) controlled and matched market testing where the level of spending was increased substantially from a non-0 level

PM Group (n =37) and Dratfield Analytics (n = 27)—marketing Mix modeling

ARS® – (n = 112) modeling wearout factors, and GRP advertising pressure vs. the sales impact associated with advertising.

Cross Media comparison databases

Represent a broad range of products and services (not limited to CPG)

Marketing Evolution (n = 40) and Dynamic Logic (n = 47) – respondent level, post-hoc experimental design methods

PointLogic/Compose – Media planning tool for analyzing the relative impact of various advertising platforms

TV Advertising does NOT appear to be declining in effectiveness, and perhaps is even increasing

TV Advertising does NOT appear to be declining in effectiveness, and perhaps is even increasing

TV Advertising does NOT appear to be declining in effectiveness, and perhaps is even increasing

TV Advertising does NOT appear to be declining in effectiveness, and perhaps is even increasing

TV Advertising does NOT appear to be declining in effectiveness, and perhaps is even increasing Even when controlling for copy quality and wearout, TV advertising effectiveness appears to be increasing. Index of Incremental Days of Sales / Persuasion Points Delivered

Even when controlling for copy quality and wearout, TV advertising effectiveness appears to be increasing.

TV Advertising does NOT appear to be declining in effectiveness, and perhaps is even increasing Index of Incremental Days of Sales / Persuasion Points Delivered

TV can be an effective platform

TV can be an effective platform

TV can be an effective platform

TV can be an effective platform

Conclusions TV advertising does not appear to be declining in effectiveness, and perhaps is even increasing TV can be an effective platform TV appears to work best at generating brand awareness Marketers must be alert to the dynamic nature of TV as long-form video becomes more available via other platforms and as TV becomes interactive and targetable

TV advertising does not appear to be declining in effectiveness, and perhaps is even increasing

TV can be an effective platform

TV appears to work best at generating brand awareness

Marketers must be alert to the dynamic nature of TV as long-form video becomes more available via other platforms and as TV becomes interactive and targetable

The ARF helps to equip members for a brave new marketing world via Level A priorities This analysis and Webcast are part of an ongoing commitment to help marketers and media companies make the most informed media decisions possible. 360 Media and Marketing Planning Testing ROI Accountability metrics New ARF media model

Planning

Testing

ROI

Accountability metrics

New ARF media model

The ARF helps to equip members for a brave new marketing world via Level A priorities 14 Industry councils, consortium-based initiatives, knowledge dissemination, member services team Research Transformation New mission/vision Drive awareness of unmet needs Drive innovation of research methods via: Listening lab Spotlight Credentialing Research as a profession 360 Media and Marketing Planning Testing ROI Accountability metrics New ARF media model Research Excellence Online research data quality initiative “ Foundations of Quality is the largest research on research learning project regarding online research in US history (well over $1MM)

New mission/vision

Drive awareness of unmet needs

Drive innovation of research methods via:

Listening lab

Spotlight

Credentialing

Research as a profession

Planning

Testing

ROI

Accountability metrics

New ARF media model

Online research data quality initiative

“ Foundations of Quality is the largest research on research learning project regarding online research in US history (well over $1MM)

Transform Your Research by Listening... West Coast Edition January 27, 2009 • Bently Reserve, San Francisco On October 29th, over 200 research and marketing leaders assembled in New York and the way they thought about research was transformed. This sold-out event illustrated the industry opportunities as listening redefines the future of research. Kim Dedeker of P&G will keynote, sharing her views and issuing a clarion call on the transformation she believes is needed to keep the research industry relevant and valuable to advertisers Joel Benenson , pollster for Barack Obama will provide insight into why we need to move beyond norms and challenge some of our current research assumptions Michael Perman from Levi Strauss will share proven storytelling methods for effectively communicating research results Pete Blackshaw , Nielsen Online , one of the true innovators in this space, will share a vision of how organizations must embrace a listening culture and what that means Industry Leader Panel featuring Microsoft , Clorox , Intel , Hewlett-Packard , Crispin Porter + Bogusky , Facebook and Millward Brown The ARF will update attendees on its “Research Transformation” initiative, the proposed new mission, vision, and scoping for research and how those in attendance can benefit

MARCH 30–APRIL 1, 2009 No one can predict the future, but preparation is everything. Re:think 2009, the 55th ARF Annual Convention + Expo, is where forward-thinking companies will gather for three seminal days on three transformative issues essential to the systemic change advertisers, agencies, media and research companies must make now. www.thearf.org/assets/rethink-09 MARCH 29, 2009 Two Great Courses! Storytelling : Research Results for Maximum Impact. Social Media Bootcamp: Think a vlog is something your grandmother used to bake? Learn the ins & outs of social media technology from a Marketing & Market Research perspective in this one-day intensive course. Advance Intelligence APRIL 1, 2009 ARF celebrates outstanding research minds in the industry with our ARF Great Mind Awards. Honoring rising stars, research innovation and important member contributions to the field, the ARF Great Mind Awards recognize individuals who contribute to the excellence of advertising research and the ARF. www.thearf.org/assets/great-mind-09 March 31, 2009 Named after advertising legend David Ogilvy, The ARF David Ogilvy Awards annually celebrate his spirited advocacy of research in making good advertising better. www.thearf.org/assets/ogilvy-09 JUNE 22–24, 2009 The ARF’s Audience Measurement symposium examined the most urgent industry measurement need – getting out in front of the consumer. The challenge for audience measurement is keeping up with the consumer, not technology. U ARF