The Advertising Agency’s Role in Marketing Communications Demand CreationByBarbara A. PellowGannett Distinguished Professor,School of Print MediaPatricia Sorce, Ph.D.Professor, College of BusinessFranziska Frey, Ph.D.Professor, School of Print MediaLauren OslonKatie Moore A Research Monograph of the Printing Industry Center at RITSvetlana KirpichenkoRochester Institute of Technology October 2003 No. PICRM-2003-05
With Than k s The research agenda of the Printing Industry Center at RIT and the publication of research ﬁndings are supported by the following organizations: bcii Copyright 2003 Printing Industry Center at RIT - All rights reserved.
Table of ContentsExecutive Summary ......................................................................... 3Introduction..................................................................................... 9Method ...........................................................................................11Results ............................................................................................13 Characteristics of Respondents ..................................................13 Media Strategy Determinants ....................................................15 Buying Print and Use of Personalization................................... 22 Results by Agency Type ............................................................ 26Summary of Results ........................................................................31References .......................................................................................33Appendix ........................................................................................35Copyright 2003 Printing Industry Center at RIT - All rights reserved. 1
2 Copyright 2003 Printing Industry Center at RIT - All rights reserved.
Executive SummaryEarly adopters of digital color printing have 4. Deﬁnition of the measures forconsistently been told that they need to campaign effectiveness utilized byeducate the advertising agency market to drive agencies today.digital color print volume. Experience hasyielded mixed results for digital color print- 5. Recommendations for print servicesers who have taken this approach. There have providers and vendors on techniquesbeen several hypotheses suggested why agency for driving digital technology into theeducation has had limited value, including: the advertising agency media mix.price/value equation for digital color printing,limited availability of accurate data for target- The respondents were drawn from The Reded marketing campaigns, and relative lack of Books list, which contains detailed proﬁlesuse of return on investment metrics for one-to- more than 13,000 U.S. and internationalone marketing. agencies. A total of 250 agencies completed a 30-minute telephone interview in the spring,As part of the industry analysis effort for the 2003. In addition, face-to-face interviews anddigital color market, the Printing Industry site visits were conducted with 10 advertis-Center at RIT embarked on a research initia- ing agencies and printers in order to providetive to gain an understanding of the rela- further insight into the key ﬁndings.tionship between the advertising agency, thecorporate marketing executive, and the printservices provider. This report focuses speciﬁ- DEMAND CHAINcally on the impact of the advertising agency DYNAMICS: THE ROLE OFon the demand for marketing communicationmaterials that utilize digital color printing. THE AGENCY Printers with a business focus in the worldSpeciﬁc research objectives for this study of the of digital color will need to initiate alliancesadvertising agency include: with advertising agencies. The top service that agencies perform on behalf of their client base 1. Deﬁnition of the dynamics between is media buying and planning. Forty-eight the advertising agency and the print- percent of agency respondents indicated that er, as well as the advertising agency this was one of the primary services provided, and the marketing executive relative closely followed by creative development and to media decisions and campaign graphic design. The print services provider direction. should understand how to collaborate with those driving the media strategy. 2. Development of an understanding of the media selection process within Agencies also indicate that they take the lead the advertising agency. in overall campaign development and direc- tion, with 47% of respondents reporting that 3. Evaluation of the impact that the they play the primary role and 42% stating agency has on digital printing and the that they collaborate with the client. Only 8% perceived value of targeted and one- of agencies reported that they take direction to-one communications solutions. from the client.Copyright 2003 Printing Industry Center at RIT - All rights reserved. 3
Executive S u m m a r y There were distinct differences in the way third (56%). Forty-three percent of respon- that the agency interacts with business-to- dents indicated that past history with speciﬁc business (B2B) versus business-to-consumer media types was also a consideration. While (B2C) clients. Chicago-based Leo Burnett and new media options were considered, there was Mobium Creative Group indicated that larger still a strong tendency to revert to familiar B2C clients typically had savvier marketing alternatives. Personalization or customization departments that were much more actively of messages was not a major consideration in engaged in campaign design, direction, and media selection (13%). media selection. Large packaged-goods orga- nizations, like Proctor and Gamble, Sara Lee, Synergy for media is critical. Advertising exec- and Pillsbury, provide strong guidance on the utives are reaching target markets via multiple media budget and mix. The B2B ﬁrms like media options that create a force multiplier NEC, MeadWestvaco, and Heidelberg, have effect. Direct mail and catalogs must be linked signiﬁcantly smaller marketing departments with the Web. Web-based customer interaction and a tendency to utilize the advertising agen- centers must follow up with a blend of e-mails cy for marketing strategy development, media and direct mail to ensure that the customer selection, and campaign execution. builds a unique relationship with the supplier. Media needs to be adjusted based on the pref- erences of—and level of relationship with— WHICH MEDIA OPTIONS the target market. AND WHY? Guy Gangi and Gordon Hochhalter, partners Today’s advertising agencies are faced with at the Mobium Creative Group, indicated, “In a vast number of media options. With the today’s market, it is about integrated commu- growing application of wireless and Internet nications. You need to combine strategy, technologies, communications options now creativity, and new technology in compelling include PDAs, electronic billboards, blimps, ways to reach the ultimate customer. True inte- cell phones, and even gas station pumps. The grated communications is a strategic process agencies realize that a critical objective is to that permeates the entire organization, rather utilize media to more effectively target deﬁned than a campaign from the marketing or adver- audiences and communicate quickly updated tising department. Every point of contact with information and promotions. More than ever, customers, prospects, and other stakeholders the use of multi- and cross-media strategies is must be identiﬁed, analyzed and integrated critical to successful business communications. through communications to build proﬁtable relationships.” When the advertising agencies in this study were asked to describe media allocations across According to our in-depth interviews, some their client base, broadcast media accounted advertising agencies still use a paradigm that for 18%, followed by magazines, newspapers, emphasizes building brand awareness using and sales collateral. Media selection varied by more traditional media alternatives. These are client served. The B2C client was much more the ﬁrms that responded positively to using focused on building brand awareness; their historical successes of past campaigns to deﬁne communications emphasis is on mass media. future strategies. Several of the B2C ﬁrms The B2B companies typically had limited rely on mathematical models to assess market budgets, as well as narrower target markets, reach, resulting in slower alterations of the and used trade magazines, direct mail, and media mix. sales collateral for communications. Interviews with organizations like Imagination Respondents were asked to indicate the top Publishing, JGSullivan Interactive, and the ﬁve factors that drive the media decisions for Mobium Creative Group illustrated that campaigns. Target market selection was the there are also a number of ﬁrms that are help- most important factor (71%); cost and budget ing clients build new approaches for effective was second (63%); and marketing strategy was communications. To the agency that is work-4 Copyright 2003 Printing Industry Center at RIT - All rights reserved.
E x e c u t i v e S u mmarying on the leading edge of communications customer for Royal Impressions. A criticaltechnology, media selection varies depend- component of their business is success withing on the relationship the client has with 401(k) plans for large corporate clients. Facingits customer. The selection of media is often challenging ﬁnancial markets, Prudential wasdifferent when a company is building aware- looking for marketing techniques to increaseness in a new market versus building loyalty its base of corporate 401(k) clients, as well aswith an existing client. With advances in tech- to help existing corporate clients maximizenology, these agencies are starting to alter the employee participation.media selection process to improve return onthe marketing dollar and more closely map the Royal Impressions worked with Prudential tocustomer relationship and decision-making develop a full-color solution that was personal-process. ized to each individual, producing an appli- cation that combined personal information relative to individual income, age, and mari-WHERE DOES tal status with a recommended contribution given for the individual employee. Full-colorPERSONALIZATION FIT? communications facilitated user comprehen-There is signiﬁcant discussion in marketing sion of the information presented.about personalization and one-to-one market-ing. Consultants tout the value of reaching The beneﬁts to Prudential were signiﬁcant.the target audience with right-place and right- Prudential attracted new corporate customerstime exactness. One-to-one marketing, they based on the customized marketing approach,claim, allows clients to use knowledge about and with Prudential’s existing corporatecustomers’ preferences to rise above the din customers, employee participation increased.of competitive messages. Based on the surveyresults, though, the market has not broadly Other successes can be found in the entertain-embraced campaigns designed around these ment industry. For example, the resort marketprinciples. While 64% of respondents agreed has struggled with late cancellation of reserva-that they were aware of the technology and tions. A New York City digital printer, Royal57% reported that they had shown samples Impressions, was working with a large resortof these campaigns to clients, only 23% of client that typically had 30% of its reserva-the campaigns used variable data. Moreover, tions cancelled within three weeks prior to a46% of these variable-data jobs involved only scheduled trip. This resort customer was look-a simple mail merge. Personalization only has ing for a marketing tool to reduce these cancel-value if the individual views it as relevant. lation levels. The answer provided by RoyalA mail merge does not create relevance. Impressions was a customized mailing to buildConsumers need offers that are directed to excitement about the upcoming trip and keepthem and their speciﬁc needs. To drive person- vacationers focused on their visit. This hasalization into the market, advertising agencies become especially important given the recentmust understand both the technology and how turmoil in the travel industry.it can be leveraged to build relevant customcommunications that differentiate the messag- Royal Impressions developed a full-colores delivered to the ultimate consumer. custom mailing integrating more than 700 variable elements. Color images were linked toSome industries are recognized leaders in the demographics of the individual visitor. Ifusing personalized communications. The most the person was a previous visitor to the resortcommon industry classiﬁcations requesting destination, the mailer even emphasized pastpersonalization include manufacturing, retail, experiences. As a result, the cancellation rateﬁnancial services, and healthcare. declined, generating several million dollars of incremental revenue for the client.Financial services ﬁrms have had success withcustomized investment proposals and 401(k) In a second example, Radisson Hotels &programs. For example, Prudential is a key Resorts Worldwide engaged Minneapolis-Copyright 2003 Printing Industry Center at RIT - All rights reserved. 5
Executive S u m m a r y based Digital Marketing Inc. to develop a WHO IS MEASURING Web-based marketing program that would allow franchise operators to initiate their own RESULTS? direct marketing programs online, taking While not identiﬁed as a key obstacle to the advantage of historical customer data. This implementation of personalized communi- allowed the parent company to also maintain cations, results measurement for marketing consistent messaging and branding. Radisson campaigns was identiﬁed as a factor driving has good customer intelligence from its loyalty media choices by only 31% of the agencies. program and reservation data. The objective The results of campaigns are most frequently was to use this intelligence to increase occu- measured by the client (37%) and through a pancy rates during slow times of the year. The collaborative effort by both the agency and the communications program was designed to client (34%). The agency itself measures the target speciﬁc customers who are most likely results 22% of the time. to stay at a given hotel, on a given night, at a given time of the year, based on past travel There are a wide range of metrics in place. A history. change in sales is the most frequent measure- ment cited by respondents, at 29%. The The franchise operator indicates a desired number of sales leads is the second most marketing objective and the system queries the common response at 24%, and the response Radisson database for a list of customers most rate for a direct mail piece follows at 23%. likely to meet that objective. The franchise The least used measurement among the survey operator then selects a creative format from respondents is ROI at 6%. a menu of company-approved options with a relevant personalized message and offer. For One of the key points discussed in interviews loyalty program members, it could be double with agencies was the need to build effective or triple incentive points. Digital Marketing measures for success in boardroom terminol- produces the mailings on-demand on its HP ogy. The Mobium Creative Group illustrated Indigo press, and also handles fulﬁllment and this concept with a campaign where every distribution operations. dollar spent on marketing communications resulted in $6,000 in revenue. Mobium With beneﬁts such as improved response rates ensured that the revenue generated could be and increased return on marketing invest- directly attributable to a change in the way ment, respondents were asked why they the company was communicating with its did not recommend personalization more customers. In a time when marketing budgets frequently. The biggest obstacles were price, are being challenged, developing the right lack of a suitable database, and the client’s lack metrics—and communicating those metrics at of perceived need. the senior executive and Board level—is critical. In face-to-face interviews with agencies, it became apparent that the price factor was WHAT ARE THE PRINT linked to the expense associated with building SERVICES VENDOR the appropriate data infrastructure for success- ful execution of an integrated, personalized SELECTION CRITERIA? campaign. In addition, this was a new applica- The above results clearly demonstrate that tion for many agencies. Given that the history agencies play a pivotal role in print demand. of past success was an important part of media The average annual dollar volume of print planning, the “legacy of success” of older purchased by agencies participating in the media forms is difﬁcult to overcome. survey is $1,519,531, with a median of approxi- mately $400,000. The agencies each work Agencies also reported that print was still the with an average of 7 printers and typically have preferred medium for delivery of personalized had a relationship with print suppliers for an campaigns. average of 18 years.6 Copyright 2003 Printing Industry Center at RIT - All rights reserved.
E x e c u t i v e S u mmaryThe agencies also identiﬁed key factors consid- 2. In identifying high potential agen-ered when selecting a print services provider. cies, the print services providerBased on the pressure that the agency is under should focus efforts on agencies withto meet deadlines and deliver a quality product major B2B clients. The B2C marketto its clients, the ﬁrst priority is dependability more heavily emphasizes mass media,and the second is quality. Turnaround time including television and radio. Theand ease of doing business ranks third and B2B market has a tendency to befourth. Price is ﬁfth on the agencies’ list. more targeted in their approach to the market and may more likely toAgencies also identiﬁed the primary contact in use relationship marketing tactics.the print buying relationship. The productionmanager at the agency is the most common 3. There is clearly a target title withininterface to the print community. In several the agency—the production manager.agencies, including LB Works, Saatchi and The print services provider needs toSaatchi, and Catalyst Direct, the produc- build a relationship with this posi-tion manager also plays a role in educating tion and insure effective educationthe creative department on new technology on their capabilities and the impactoptions. the solutions offered can have on the marketing ROI.LESSONS FOR THE PRINT 4. There are a variety of ways to track the overall return on marketingSERVICES PROVIDER campaigns. Print services providersPrint services providers must include the should investigate the precise metricsagency market in their own business expansion that the agencies they work withand use of digital color technologies. There are utilize. Where metrics are insufﬁ-some key ingredients that the print services cient, print services providers may beprovider needs to comprehend in developing able to offer this service to the client.the agency relationship: 5. While a majority of the agencies are 1. The print services provider needs aware of personalized print tech- to link the solutions they offer with nologies, relevant personalization is the most important agency media not widely used. The print services selection criteria. The agency makes provider should have examples of media decisions based on reach- campaigns that have yielded results ing target markets, cost and budget as part of the agency education considerations, and marketing strate- initiative. In addition, print services gy implementation. The print services providers need to invest in a tech- provider needs to demonstrate to the nical infrastructure to deliver the agency that digital color is one of the campaign. most cost effective alternatives for successfully reaching target markets. 6. Print services providers need to be The value proposition needs to be cognizant of the fact that price is succinct and backed with examples not the key determinant in vendor of how the technology has yielded selection. While the print services a return on the marketing invest- provider needs to be competitive, it ment. Realistically, it must be a part is far more important in the agency of a broader, integrated marketing market to demonstrate dependability communications plan that utilizes a and quality. variety of media vehicles.Copyright 2003 Printing Industry Center at RIT - All rights reserved. 7
Executive S u m m a r y HOW SHOULD THE 3. Tools for ease of implementation of customized communication programs PRINTING EQUIPMENT need to be developed. AND SOFTWARE SUPPLIERS HELP? 4. Equipment delivered to the market Printing industry equipment vendors want to needs to have the highest levels of assist print providers in volume building activ- reliability and quality to map to the ity. Eighty-three percent of the agencies indi- agency requirement for dependabil- cate that they are involved in media buying ity and quality. The print services and purchase an average of $1.5 million of provider needs to have appropriate print annually (a median value of $400,000). samples and statistical data that help This represents signiﬁcant page volume oppor- communicate the fact that “digital tunities for their user base. is dependable” and it offers “quality with no excuses required.” The equipment vendors need to support market development activity. Key areas that This is a time of great change in the world of they should be emphasizing include: media. The industry has weathered change in the past and has both survived and thrived on 1. Market development through the it. While the agency market is facing difﬁcult publication of case histories that link and challenging economic times, market- the value of digital color technol- ing executives are looking for efﬁciencies in ogy with a return on the marketing how they communicate and share business investment. information. The use of digital technology is one solution in the media mix that offers this 2. Appropriate educational events and opportunity. trade publications should be identi- ﬁed for reaching the agency produc- tion manager. Vendors should partici- pate in building awareness in these venues. Examples identiﬁed during the agency interviews include publi- cations like Creative Arts Magazine, as well as paper shows and creative awards events.8 Copyright 2003 Printing Industry Center at RIT - All rights reserved.
IntroductionDigital color printing technology was ﬁrst corporate marketing executives, and printintroduced in 1993. Among the advertised service providers to determine the demandcapabilities were short runs, fast turnaround, for printed marketing communications. Thisand virtually no make-ready (Toth, 2001). In report focuses speciﬁcally on the impact of thespite of the new possibilities that variable-data advertising agency on the demand for advertis-printing offers to the printers, 10 years after its ing materials that are produced using digitalintroduction the technology is still underuti- color printing technology. Research objectiveslized. Surveys conducted by WhatTheyThink. include:com (2003; 2001), the leading online researchﬁrm in the graphic arts industry, show that 1. To deﬁne the dynamics between thealthough 46% of the print customers are either advertising agency and the printervery or extremely interested in on-demand and the advertising agency and theprinting, only 21% are currently using variable- marketing executive relative to mediadata printing. Previous studies suggest several decisions and campaignreasons for such low market response to the direction.technology. Insufﬁcient customer data and highcost per piece of variable-printed publications 2. To establish the advertising agencies’(Smith, 2001) are the most commonly cited. current preferences for print or non- print marketing programs and theirPrinters who were early adopters of digital perspective on the best media optionscolor have consistently been told that they for speciﬁc types of campaigns.need to educate the agency market. Experiencehas yielded mixed results for digital color 3. To understand the agency view ofusers. Printers have had a difﬁcult time work- target marketing and personalizationing with advertising clients on the value propo- incorporating varying levels of indi-sition. Price has been a barrier to utilization vidualization.of the technology. Limited customer data has a. To determine if there is a differ-caused corporate executives to move slowly ence in agency involvementinto target market campaigns. based on the clients the agency serves.To overcome the above mentioned obstacles in b. To identify the volume of printmarketing the new technology, manufactur- the agencies procure on behalf ofers turned to the print buyers in their attempt their customer base.to promote the variable-data printing systems.Smith (2001) states that marketing variable- 4. To deﬁne how the agency measuresdata printing systems to advertising agencies the effectiveness of a campaign.proved to be unsuccessful. However, there islittle statistical evidence presented to support 5. To develop recommendations andthis. The purpose of this research was to strategies for enhancing the commu-address this information gap. nication between the print service provider and the advertising agencyThe Printing Industry Center is investigating to create awareness of the beneﬁts ofthe relationships among advertising agencies, digital color printing.Copyright 2003 Printing Industry Center at RIT - All rights reserved. 9
10 Copyright 2003 Printing Industry Center at RIT - All rights reserved.
MethodSAMPLE and their experiences with personalized print.The sample was drawn from The Red Books The ﬁnal wording and order of the questionslist, which contains detailed proﬁles of nearly is presented in the Appendix along with the13,500 U.S. and international advertising percentage responding to each question.agencies. The sample of 5,325 unique recordswas randomly selected from The Red Bookslist. The agencies that indicated that they PROCEDUREoffered direct-marketing services were overs- A screener was used to identify the role of theampled to produce 100 completed question- interviewee within the agency. Quotas were setnaires from direct-marketing agencies. The for respondents who were classiﬁed as “strat-agencies in the sample were randomly selected egy-focused” only (n = 100) or “production-by an automated phone dialing system. A total focused” (n = 150). The following script wasof 731 agencies were contacted by phone to used as the screener:produce the 250 completed surveys. Of theremaining 481, 453 refused to complete the Hello, this is (INSERT NAME) callingsurvey. The other 28 records were either dupli- from Harris Interactive. We are conduct-cate phone numbers or represented agencies ing research on behalf of the Rochesterthat did not qualify or that could not partici- Institute of Technology Printing Industrypate because of a language barrier. Sizes of Center to learn more about how agenciesall agencies in the database and of the direct like yours make media decisions. If youmarketing agencies are presented in Table 1. are qualiﬁed and complete the survey, you will receive an honorarium of $50. Would you please tell me the name of theQUESTIONNAIRE person in your agency who is responsibleThe questionnaire was designed in accordance for selecting media to use for a campaign?with the research objectives. The choice of (The following titles might qualify: Mediaspeciﬁc questions to ask was based on insights Director, Print Production Director,obtained through in-depth interviews with Account Executive, Creative Director)a number of advertising agencies about theirinteractions with clients, their media attitudes, Direct Marketing Annual Billing All Agencies Agencies Up to $5 million 34% 45% From $5 to $50 million 34% 42% $50 million or more 31% 13% Table 1. Sizes for All Agencies in Database and Direct Marketing Agencies in DatabaseCopyright 2003 Printing Industry Center at RIT - All rights reserved. 11
Method Which of the following best describes 4. Both advise clients on media your role in selecting media for your agen- strategies AND are involved in cy? Would you say you… the production of advertising materials. 1. Advise clients on media strate- gies and media selection but are Respondents who reported either option 1 or not involved in the production of option 2 above were grouped into the “strat- advertising materials. egy-focused” sub-sample. The remainder was grouped into the “production-focused” sub- 2. Have creative responsibilities sample. that impact media choices. 3. Are involved in the production of advertising materials, but do not advise clients regarding media strategies and selection.12 Copyright 2003 Printing Industry Center at RIT - All rights reserved.
ResultsThe advertising agency survey was designed The respondents (n = 249) have worked anwith three major sections: 1) questions about average of 19 years in the advertising indus-the characteristics of respondents and their try; in addition, they (n = 248) have workedagencies; 2) questions about media alloca- an average of 10 years for their current agencytion strategies, attitudes towards the media, employers. Sixty-four percent of survey respon-and client relationships; and 3) print-speciﬁc dents have obtained a college degree, and 20%questions about print production and the level have received a graduate degree.of personalization in the agencies’ marketingcampaigns. A summary of the responses to thequestions is presented in the Appendix. Agencies’ Role in Selecting Media The respondents were asked about their rolesCHARACTERISTICS OF in selecting media for their agencies: halfRESPONDENTS (51%) indicated that they are involved inThe average number of employees for the advising a client regarding media strategiesagencies that participated in the survey is as well as in producing advertising materials.56 (n = 223); the average annual billings are One third (33%) are involved only in advis-$26 million (n = 198). Grouping the agency ing a client on media strategies and selection.by billings revealed that 48% of the agen- Most respondents are from agencies involvedcies surveyed are deﬁned as “small”, with $5 in advising a client on media strategies and/ormillion or less in annual billings. Thirty-nine producing advertising materials, as shown inpercent of the agencies surveyed are deﬁned Figure 1.as “medium”, with $5,000,001 to $50 millionin annual billings. Agencies with over $50million in annual billings, deﬁned as “large,”represent 13% of the respondents. Advise clients on media strategies and media selection but are not involved in 33% the production of advertising materials Have creative responsibilities that impact media choices 51% Are involved in the production of advertising materials, but do not advise clients regarding media strategies and selection Both advise clients on media strategies and 7% are involved in the production of advertising materials 9% Figure 1. Agencies’ Roles in Selecting Media (n-250)Copyright 2003 Printing Industry Center at RIT - All rights reserved. 13
Results Primary Services Provided primary service. Creative development is the by Agencies second most common response, with 43% of agencies chosing it as a primary service. Agencies were asked to name the top three Customer relationship management is the least services that they provide. Media planning/ common answer at 9%. Table 2 provides a buying is the most common response; nearly complete summary of the responses. half of the agencies (48%) indicated that as a Percent Primary Services of Agency Answered Yes Media Planning/Buying 48% Creative Development 43% Graphic Design 28% Sales Promotion/Collateral Development 25% Public Relations 23% Brand Consulting 23% Direct Marketing 22% Digital Branding/Web Development 19% Corporate Identity 17% Other Services 12% Customer Relationship Management 9% Note. Accepted ﬁrst three responses; n = 247. Table 2. Primary Services Provided by Agencies. Of the agencies that gave open-ended answers with which the respondents were involved, (n = 18), 56% said advertising production and over half (54%) were Business-to-Consumer print is a primary service that they provide. (B2C) and 41% were Business-to-Business Other answers include “all of the above” (B2B). Survey respondents handle accounts (17%), “communications and full service” that are both B2B and B2C 5% of the time. (11%), and “social marketing” (11%) Agencies that are on project contracts and Nature of Accounts agencies on retainer are split nearly ﬁfty-ﬁfty, The respondents work with an average of 11 with agencies on project contracts having a accounts at any given time. Of the accounts slightly higher percentage (52%).14 Copyright 2003 Printing Industry Center at RIT - All rights reserved.
ResultsMEDIA STRATEGY 1%DETERMINANTS 2% 8%Taking Direction from orProviding Direction to the Taking direction from the clientClient in Campaign Strategy Providing direction to the clientForty-seven percent of respondents provide 42% Collaborative interactiondirection to the client in matters of campaign 47% It all depends on the nature ofstrategy, while 42% of agencies collaborate the relationship with the clientwith their client on matters of campaign strat-egy. Only 8% of agencies take direction from It all depends on the situation or campaignthe client. See Figure 2. Figure 2. Agency Campaign Strategy: Taking or Providing Direction (n=249)Media Allocations on Media Allocation Category Average PercentageDifferent Media Types Broadcast (TV/Radio) 18%The agencies were asked to describe mediaallocations across their client base. Broadcast Magazines 17%media (television and radio) accounts for 18%of the agencies’ media allocations; magazines Newspapers 14%are next at 17%. Newspapers (14%), collateral(12%), and direct mail/direct marketing (11%) Collateral 12%follow. The lowest amount (3%) is spent oncommercial photography. Table 3 provides a Direct Mail/Direct Marketing 11%complete summary of the responses. Strategic Planning 9%Of the open-ended answers given by agencies(n = 119), e-marketing/web buying accounts Other Print Media 9%for 48% of media allocations. Outdoor and Other Media 5%out-of-home advertising is second at 30%. Merchandizing/POP 4% Commercial Photography 3% Table 3. Media Allocations on Different Media Types Across Agency Client BaseCopyright 2003 Printing Industry Center at RIT - All rights reserved. 15
Results Specific Factors Driving the marketing strategy is third at 56%. The least Media Choices for Campaigns important speciﬁc factor driving media choices for campaigns is the need for a personalized Respondents were asked to indicate up to message (14%). Personalization is not a major ﬁve factors that drive the media choices for consideration when choosing the medium for campaigns. Target market selection or demo- a campaign. A summary of the responses is graphic is the top factor at 71%. Cost/budget shown Table 4. is the second most important factor at 63%; Percent Factors Driving Media Choices Answered Yes Target market selection or demographic 72% Cost/budget 63% Marketing strategy 56% Past history of success 43% Client speciﬁcations 35% ROI target 31% Creative ﬂexibility 23% Need for measurement 19% Time available 15% Availability of data/databases 15% Need for a new look 15% Need for personalized messages 14% Other services 4% Note. Respondents could indicate up to 5 factors; n = 249. Table 4. Factors Driving the Media Choices in a Campaign16 Copyright 2003 Printing Industry Center at RIT - All rights reserved.
ResultsMeasuring the Results Method of Measuringof a Campaign Campaign ResultsThe results of a campaign are most often When asked how campaign results weremeasured by the client (37%), though a collab- measured, respondents were able to selectorative measurement by both the client and the multiple responses from a given list (see Tableagency is not far behind at 34%. Advertising 5). Of the measures listed in the survey, aagencies measure the results of a campaign change in sales (a before-and-after measure)22% of the time; a third party is least likely to was the most common response at 29%. Salesbe involved (7%). leads were the second most common response at 24%, and the response rate for a direct mail piece followed at 23%. The measure used least among survey respondents was ROI (6%). Percent Method of Measuring Campaign Results Answered Yes Other 41% Change in sales (before/after measure) 29% Sales leads 24% Response rate of a direct mail piece 23% Post-advertising awareness measures 19% Happy, satisﬁed client who returns 12% Change in number of calls to an 800 # 10% Change in number of hits to a Web site 10% Number of orders placed 6% Retail trafﬁc/store counts 6% ROI 6%Note. Multiple responses were accepted; n= 234. Table 5. How Campaign Results Are MeasuredCopyright 2003 Printing Industry Center at RIT - All rights reserved. 17
Results Changes in Marketing average relationship length of eight Strategy Effecting a Change years with clients for whom a change in the media mix was made or recom- in Recommended Media Mix mended. The clients are primarily Three quarters of agencies have made or B2C clients (60%); more than one recommended a change in a client’s market- third (37%) are business-to-business ing strategy that resulted in a change in the clients. The other 3% are categorized media mix in the past year. Respondents who as both. answered “yes” were asked to answer a series of questions about a speciﬁc client for whom a • Speciﬁc Changes Recommended change in the media mix was made or recom- The most common speciﬁc change in mended in the past year. media mix recommended is for more print mail/direct mail at 34% and • Client Size the second most is for more broadcast Seventy-one percent of these clients advertising at 32%. In direct contrast are classiﬁed as “small” (having $100 to the most common response, the million or less in annual revenues). third most commonly recommended A quarter of the clients (24%) are change was less print mail/direct classiﬁed as medium (having $101 mail (19%). The two least common million to $1 billion in annual reve- changes recommended—less point nues). The remainder (5%) is clas- of sale (POS) and less sales support/ siﬁed as large, with more than $1 collateral—both had a response of billion in annual revenue. 0%. Table 6 provides a summary of all of the responses. • Type of Business The respondents (n = 169) have an Media Recommendation Percent Answered Yes Other changes 41% More print mail/direct mail 34% More broadcast advertising 33% Less print mail/direct mail 19% Development of website 18% Less broadcast advertising 9% More e-mail 6% More sales support/collateral 3% More POS 1% Less POS 0% Less sales support/collateral 0% Note. Multiple responses were accepted; n = 163. Table 6. Speciﬁc Changes in the Media Mix Recommended18 Copyright 2003 Printing Industry Center at RIT - All rights reserved.
Results • Reasons for the Change • Title of Person Initiating in Media Mix the Marketing Campaign The most common reason for a on the Client Side change in the media mix is a new As shown in Figure 4, the speciﬁc job target market at 43%; a new strategy title on the client side initiating the is close behind at 41%. The third marketing campaign that resulted in most common speciﬁc reason is to a change in the media mix is most save money at 14%, while a client commonly the president or CEO at request is the least common reason 26%; the VP of marketing follows at for a change (2%). Figure 3 illustrates 25%. A response of “other” accounts the spectrum of reasons for changing for 38% of the job titles; names for the media mix. speciﬁc positions are not consistent among different companies. 45% 40% 35% 30% 25%Percent 20% 15% 10% 5% 0% New target New Other Save New To identify ‘Spice up’ To develop The client market strategy reasons money product prospects the look a database requested for client it Reasons for the Change Figure 3. Reasons for the Change in Media Mix (n=167) President or CEO 26% Other 38% VP of Sales 3% Chief Marketing VP of Marketing Ofﬁcer 25% 8% Figure 4. Title of Person Initiating the Marketing Campaign on the Client Side (n-156)Copyright 2003 Printing Industry Center at RIT - All rights reserved. 19
Results The respondents (n = 59) of this the media mix is overwhelmingly open-ended question were separated positive; 94% of clients agree to the into four groups: marketing (n = 36), changes suggested. Five percent of advertising (n = 7), PR/corporate (n = clients don’t agree to the suggested 10), and miscellaneous (n = 6). Over changes in the media mix half of the respondents in the market- ing group (53%) said the market- ing director initiated the marketing Media Perceptions campaign. Almost half of the respon- Approximately two-thirds of the respondents dents in the advertising group (43%) agree with the statements “targeted campaigns said the ad manager initiated the outperform mass-market campaigns” (67% marketing campaign. In the corpo- agreement) and “I am aware of the new print rate group, responses are evenly divid- technology capabilities for personalization ed between VP, director of commu- (64% agreement). The statements with the nications, and account supervisor at least agreement are: “given the new design and 30%. In the miscellaneous group, production technologies, our clients are print- human resource manager and owner ing their own sales collateral in-house” (22%) both are 33%. and “we get better response rates from e-mail campaigns than printed mail” (19%). Table 7 • What was the Result provides a complete summary of the responses. of the Recommendation? The response of the client to the agency’s recommended change in Percent Agree— Statement 4 & 5 rating Targeted campaigns outperform mass-market campaigns 67% I am aware of the new print technology capabilities for personalization 64% I have shown samples of printed communications material to clients to illustrate capabilities 55% of the new technologies When my client needs to know the direct ROI from a campaign, I recommend a direct 51% response advertising medium Broadcast media advertising is the best for brand building 50% Free-standing inserts will continue to play an important role in the media mix for retail clients 49% Broadcast media advertising is best for driving store trafﬁc 43% Given the new design and production technologies, our clients are printing their own sales 22% collateral in-house We get better response rates with e-mail campaigns than printed mail 19% Note. Measured by a ﬁve-point scale, where 5 = “strongly agree,” and 1 = “strongly disagree.” Table 7. Media Perceptions of Advertising Agencies20 Copyright 2003 Printing Industry Center at RIT - All rights reserved.
ResultsRecommending Print situation in which print is recommended as aas a Marketing marketing communications tool. The second most common response is promotions orCommunications Tool special offers at 75%; increasing brand aware-Agencies were able to select more than one ness follows at 74%. Cross-selling/up-sellingresponse to a question regarding those situ- is the least recommended situation at 49%; allations in which they recommend print as a the other situations were selected by a majoritymarketing communications tool. As Table 8 of the respondents.outlines, 77% of respondents selected intro-duction of a new product as the most common Situations Recommending Print Percent Answered Yes Introduce a new product 77% Promotions or special offers 75% Increase brand awareness 74% Brand positioning 70% Sales support 67% Customer retention/loyalty 65% Lead generation 62% To drive retail trafﬁc 58% Customer acquisition 57% Cross-selling/up-selling 49% Other 5%Note. Multiple responses were accepted; respondents are categorized as strategic or bothproduction and strategic; n = 218. Table 8. Recommending Print as a Marketing Communications Tool in Speciﬁc SituationsCopyright 2003 Printing Industry Center at RIT - All rights reserved. 21
Results BUYING PRINT AND USE manager is the person who buys print. The creative director is second at 12% followed by OF PERSONALIZATION the account manager at 9%. The president is Of the agencies surveyed (n =235), 83% buy last at 8%. print for their customer base. The respondents who buy print work with an average of seven printers (a median of 9) (n = 116); the agencies Importance of Factors (n = 121) have an average length of relation- When Selecting a Print ship with a printer of 18 years (a median of 7 Service Provider years). The average annual dollar volume of When selecting a print service provider, the print purchased by agencies participating in factor of greatest importance to the respon- the survey (n = 96) is $1,519,531 (median is dents on average is dependability at 9.4, approximately $400,000). followed by print quality at 9.1 and turn- around time at 8.4. The factor of least impor- tance is geographic proximity. As shown in Who Buys Print on Table 9, these factors were ranked on a scale of Behalf of the Client 1 to 10, where 1 meant “not at all important” Of the respondents (n = 121) to this open- and 10 meant “very important.” ended question, 36% said that the production Factors to Consider when Selecting a Print Importance Services Provider Dependability 9.45 Print Quality 9.15 Turnaround time 8.41 Ease of doing business 8.19 Price 7.93 The speciﬁc technology used by the provider 6.85 Other factors 6.16 Unique Capabilities 6.04 Geographic proximity 5.79 Note. Ranked on a scale of 1 to 10, where 1 meant “not at all important” and 10 meant “very important.” Table 9. Importance of Factors When Selecting a Printing Services Provider When questioned about the most important aspect of technology to consider when selecting a print provider, 39% of the respondents (n = 31) indicated digital printing and prooﬁng with quick turnaround.22 Copyright 2003 Printing Industry Center at RIT - All rights reserved.
ResultsProportion of Printing Services As shown in Figure 5, an average of 23% ofUsing Traditional Printing the print work purchased by advertising agen- cies that responded to the survey (n = 139)Technology Versus Digital involves variable information or personaliza-Printing Technology tion. For the respondents (n = 129), 20%According to the respondents, traditional of the print work that is purchased involvesprinting technology (offset, ﬂexography, and offset-printed shells that are later imprintedgravure) accounts for nearly two-thirds (62%) with variable information using a digital laserof the printing services purchased, while digi- printer (see Figure 6).tal printing technology accounts for 38%. 40% 37% 35% 30% 25% Percent 22% 20% 15% 13% 10% 7% 7% 5% 3% 4% 4% 4% 0% 0% 0-9% 10-19% 20-29% 30-39% 40-49% 50-59% 60-69% 70-79% 80-89% 90-100% Percentile Figure 5. Percentage of Agency Work Involving Personalization or Variable Data (n=139) 50% 45% 45% 40% 35% 30% 25% Percent 20% 20% 15% 10% 10% 4% 4% 4% 5% 3% 2% 4% 5% 0% 0-9% 10-19% 20-29% 30-39% 40-49% 50-59% 60-69% 70-79% 80-89% 90-100% Percentile Figure 6. Percentage of Agency Work Involving Offset-Printed Shells Later Imprinted with Variable Information on Digital Laser Printer (n=129)Copyright 2003 Printing Industry Center at RIT - All rights reserved. 23
Results Biggest Obstacle In 15% of clients requesting personalization are Recommending Personalized categorized as medium, with annual revenues of $101 million to $1 billion. Clients catego- Communications to Clients rized as large, with annual revenues of over $1 Respondents to this question had already billion, make up only 6% of the total. indicated that less than 10% of their agen- cies’ work involved variable communication or • Business Type of Clients personalization. The biggest speciﬁc obstacle Nearly half of clients (47%) who keeping these respondents from recommend- requested personalization are catego- ing personalized communication to their rized as B2B companies; 42% of clients is price at 28%, with lack of a suitable clients who requested personalization database following at 23%. Nearly half of the are categorized as B2C companies. respondents (46%) stated that “some other The remaining 11% are categorized obstacle” keeps them from recommending as both. personalization to their clients. Of this last group (n = 18), 29% said that there is a lack of • Classiﬁcation by Industry of need for variable data, and 17% said they don’t Clients recommend it because their clients are not the The two most common industry type to use it. classiﬁcations for clients who request personalization are manufacturing Typical Size of Clients and retail, both at 40%. The third most common industry classiﬁcation Requesting Personalization for clients requesting personalization Respondents who answered that their work is ﬁnancial at 34%; the least common involved some variable information or person- industry classiﬁcation for clients alization were asked to answer a series of ques- requesting personalization is phar- tions about clients who typically requested maceutical at 16%. Figure 7 shows personalization in their campaigns. Over the responses for the full spectrum of three-quarters of clients (79%) who request- industries offered as responses. ed personalization are categorized as small, with annual revenues of $100 million or less; 40% 35% 30% 25% Percent 20% 15% 10% 5% 0% Manu- Retail Financial Health Care Other Education/ Entertain- Pharma- facturing nonproﬁt/ ment/ ceutical charitable Gaming giving Industry Figure 7. Classiﬁcation by Industry of Clients Requesting Personalization (n=113)24 Copyright 2003 Printing Industry Center at RIT - All rights reserved.
Results • Types of Media Best for points among the items in order to Personalization indicate how often they produce In response to the question of which personalized communications and to types of media are best for person- what degree they are personalized. As alization, direct mail was selected as shown in Figure 8, the lowest degree best for personalization at an over- of personalization, variable address whelming 86%. E-mail was selected and/or salutation, is the highest at as the second best for personalization 46%. The highest degree of person- at 56%. Phone/call center/telemar- alization, variable text or numerical keting was selected as the worst for information and variable graphics, is personalization at only 18%. 13%. The lowest rate of response is for the middle degree of personaliza- • Frequency and Degree of tion (variable address, text, and/or Personalized Communications numerical information that goes into In answering the question of how dynamic ﬁelds) at 12%. often the agency produces personal- ized communications and to what • Impact of Personalized degree they are personalized, respon- Communications dents were asked to distribute 100 According to the survey respon- 50% 45% 40% 35% 30% 25%Percent 20% 15% 10% 5% 0% Variable address Variable address Variable address, text Variable text or Variable text or and/or salutation and/or numerical in- and/or numerical in- numerical informa- numerical information formation that goes formation that goes tion and graphics and variable graphics into ﬁxed ﬁelds into dynamic ﬁelds Degree of Personalization Figure 8. Degree of Personalized Communications (n=106) Copyright 2003 Printing Industry Center at RIT - All rights reserved. 25
Results dents, personalization has the highest er retention at 6.8. Personalization impact on improving response rates had the least impact on reducing at 7.2. Personalization has the second print and mailing costs at 5.2 (see highest impact on improving custom- Figure 9). 10 9 10 - an extremely positive impact) 8 Impact (1- no impact at all, 7 6 5 4 3 2 1 0 Reducing print Improving the Improving Improving Improving reader’s and mailing costs reader’s ability to response rates customer ability to under- locate information retention stand and retain information Attributes Figure 9. Impact of Personalized Communications on Selected Attributes (n=143) RESULTS BY Annual Billings AGENCY TYPE The average annual billings (n = 198) are Additional analyses were conducted based on $26 million. High B2C agencies have aver- the nature of the ad agency. The agencies were age annual billings of $8.5 million and High divided into three groups according to the B2B agencies average annual billings of $26 types of clients they serve: business-to-busi- million. The mixed group’s average is the high- ness (B2B), business-to-consumer (B2C), or a est at $43 million. balance of both. Agencies that reported a client base that is 80% or higher B2C are classiﬁed Primary Services Provided as the “High B2C” group (n = 91). Those by the Agency whose client base is less than 30% B2C are classiﬁed as the “High B2B” group (n = 91). Agencies were asked to name the top three The remainder are classiﬁed as the “mixed” services that they provide. Almost half (48%) group (n = 61). Responses to each question of the agencies in all three groups chose media by the three groups of agencies are presented planning and buying as their primary service. in the Appendix. Only statistically signiﬁcant Over half of B2C and mixed agencies picked results are presented. this as their primary service, with both at 54%. Thirty-eight percent of B2B agencies chose media planning and buying.26 Copyright 2003 Printing Industry Center at RIT - All rights reserved.
ResultsRetainer Vs. Project Contracts 43% and the most retainer contracts at 57%. Project and retainer contracts for High B2CHigh B2B agencies have the most project agencies are split almost evenly at 49% andcontracts at 61% and the fewest retainer 51%, respectively. Figure 10 illustrates thecontracts at 39%. Mixed agencies are the breakdown for each of the client types.opposite, having the fewest project contracts at 100 80 percent 60 40 Retainer 20 Project Contracts 0 B2B B2C Mixed Figure 10. Retainer vs. Project Contracts by Client Type (n=233)Spending Allocations on (TV/radio) accounts for 25% of High B2CTypes of Media allocations with newspapers following at 24%; collateral is last at 8%. For mixed agencies,Each type of agency was asked to describe broadcast (TV/radio) accounts for 23% ofthe media allocations across their client base. allocations, with magazines coming in secondMagazines account for 25% of High B2B at 16%; direct mail/direct marketing is last atmedia allocations; collateral is next at 18%, 9%. Table 10 provides a complete summary ofand newspapers are last at 7%. Broadcast the analysis. Media Type B2B B2C Mixed Collateral 18% 8% 11% Direct Mail/Direct Marketing 14% 9% 9% Magazines 25% 9% 16% Newspapers 7% 24% 13% Broadcast (TV/Radio) 7% 25% 23% Note. Highest values for each media type are shaded. Table 10. Percent Spent on Media by Client TypeCopyright 2003 Printing Industry Center at RIT - All rights reserved. 27
Results Changes in Marketing Introduction of a new product (84%), sales Strategy Affecting a Change in support (81%), and brand positioning (76%) are the top three situations where High B2B Recommended Media Mix agencies would recommend print as a market- When respondents were asked if they recom- ing communications tool. Introduction of mended more broadcast advertising to their a new product (68%), driving retail trafﬁc clients, 33% said yes. High B2C agencies are (62%), and brand positioning (58.4%) are the the most likely to recommend this change with top three situations where High B2C agencies 45% saying yes; High B2B agencies are the would recommend print. Introducing a new least likely at 14%. The other 42% is repre- product (77%), brand positioning (75%), and sented by mixed agencies. driving retail trafﬁc (74%) are the top three situations where mixed agencies would recom- mend print as a marketing communications Buying and tool. Table 11 provides a complete summary of Recommending Print the analysis. Ninety percent of High B2B agencies, 84% of mixed agencies, and 74% of High B2C agen- cies buy print for their customers. Situation B2B B2C Mixed Lead generation 73% 44% 67% Brand positioning 76% 58% 75% Cross-selling/up-selling 61% 34% 51% To introduce a new product 85% 68% 77% To drive retail trafﬁc 41% 62% 74% Sales support 81% 52% 67% Note. The three highest values for each client type are shaded. Table 11. Situations Where Print Is Recommended as a Marketing Communications Tool by Client Type28 Copyright 2003 Printing Industry Center at RIT - All rights reserved.