Disruptive Forces in Modern Marketing by Randall Beard

RANDALL BEARD
EX GLOBAL PRESIDENT, NIELSEN INNOVATION
EF MIT
A BOLD NEW DAY
The Disruptive Forces in Modern Marketing –
New Age Innovation and Communications to
Drive Revenue Growth

Copyright©2012TheNielsenCompany.Confidentialandproprietary.
2
AGENDA
Topic
1. Disruptive Forces in New Product Innovation
2. Disruptive Forces in Advertising & Media Testing
3. Q & A / Discussion

DISRUPTIVE FORCES IN NEW PRODUCT INNOVATION
A BOLD NEW DAY

4
TRADITIONAL FORMULA FOR SUCCESSFUL INNOVATION…
DISCOVER
DEPLOY
A Compelling Proposition
DEVELOP
A Winning Execution
With Excellent In-market Activation
DELIVER
Incremental
Growth

5
…IS BEING DISRUPTED BY TECHNOLOGY
Big Data & Predictive
Algorithms
Digital Technologies
& Platforms
Mass Personalization
& Adaptive Targeting
E-Commerce

6
COMPANIES WANT TO EVOLVE, BUT THEY STRUGGLE
of CPG marketers think their company is using
outdated technology for innovation
of CPG marketers feel like they are being out-
innovated by their competitors

7
QUESTIONS COMPANIES ARE ASKING
“We need faster methods
for test and learn”
“Better forecasting methods that
take into consideration the
disruptive effect of technology”
“What is the architecture
of launching new brands in
today’s environment?”
“How do you anticipate market
disruption? How do you learn
and adapt more quickly?”
“What will laser-focused targeting do
to companies? Does it create a more
level playing field for all companies?”

8
DISCOVER
DEVELOP
A Winning Execution
DEPLOY
With Excellent In-Market Activation
To deliver incremental volume and share growth
TECHNOLOGY DISRUPTORS NEED TO BE HARNESSED
Keep the essential, Universal Truths intact … But optimize and accelerate with the modern and new

9
BUT HOW ?

10
DISCOVER COMPELLING PROPOSITIONS FASTER -
USING BIG DATA
OLD WAY
• Manually scan industry news / trend reports
• Manually search for interesting new ideas
NEW WAY – MINE SCANNER DATA FOR INSIGHTS
• Quickly mine global innovation launch data
• Find incremental, untapped areas for growth
 Innovation Alerts
 New Initiative Profiling
 New Initiative Tracking & Benchmarking
 Innovation Performance & Drivers

11
DISCOVER COMPELLING PROPOSITIONS FASTER
- USING BIG DATA
OLD WAY
• Manually scan industry news / trend reports
• Manually search for interesting new ideas
NEW WAY – MINE UNSTRUCTURED DATA
• Text analytics of on-line reviews, blogs, reviews etc.
• Quickly and easily identify new opportunities
• Examples: Revuze, SignalsGroup, etc.
 Measure and aggregate “signals”
 Correlate with in-market new item success
 Apply to 1000’s of small, in-market items
 Predict emerging “edge to mainstream” ideas

12
DEVELOP WINNING PRODUCTS DIGITALLY
– USING E-COMMERCE
OLD WAY
Launch into e-commerce with little understanding of
e-comm concept appeal & optimal execution
NEW WAY – E-COMM INNOVATION PLATFORM
• Test execution in private e-comm platform
• Concept, line-up & pricing, shopping optimization
• Optimize, forecast and then go to market

13
DEPLOY WINNING PRODUCTS
– WITH DIGITAL FORECASTING
OLD WAY
• Single point forecast with low and high scenarios
• Highly manual
• Several days to week for re-simulations
• Powerpoint delivery
NEW WAY - REAL TIME FORECAST SIMULATION
• Digital UI
• Clear view of volume drivers
• Real time re-simulations

14
DEPLOY 1:1 LAUNCH MARKETING PLANS
– USING RESPONSE BASED TARGETING
OLD WAY
• Pre-define target group
• Invest in media that addresses target
• Execute broadscale consumer & trade promotion
NEW WAY – RESPONSE BASED TARGETING
• Calculate new item respondent level volume
• Identify and classify top ~80% volume consumers
• Build look-a-like models
• Digitally target high volume buyers

15
DEPLOY IN-MARKET LAUNCH OPTIMIZATION
- USING BIG DATA
OLD WAY
• Slowly piece together multiple data sets
• Determine launch results manually
• Slow learning and ability to react
NEW WAY – AUTOMATED INNOVATION METRICS
• Quickly track in-market performance & drivers automatically
• Understand incrementality – brand & category
• Benchmark against goal, category and past launches
NEW WAY – NEW PRODUCT TOTAL BRAND SIMULATION
• Simulate new scenarios and incremental volume
• Quickly execute plan improvements
• Example: Nielsen Marketing Planner
Innovation Forecast MMM Optimization

16
DISCOVER
DEVELOP
A Winning Execution
DEPLOY
With Excellent In-Market Activation
To deliver incremental volume and share growth
SUMMARY
Keep the essential, Universal Truths intact … But optimize and accelerate with the modern and new

WHERE ADVERTISING & MEDIA TESTING IS GOING
A BOLD NEW DAY

18
HOW DOES ADVERTISING WORK ?

ADVERTISING EFFECTIVENESS
NIELSEN’S 3R FRAMEWORK

20
THE 3R FRAMEWORK
Reach the right people
REACH RESONANCE
Drive purchase
REACTION
Pre-market optimization
In-market measurement
Impact their
opinions & feelings

NIELSEN’S PHILOSOPHY OF
ADVERTISING EFFECTIVENESS

22
HOW ADVERTISING WORKS, CIRCA 1980
“Advertising works like the grass grows; you never see it
happen but you have to mow the grass every week.”
--Nielsen, 1980

23
HOW ADVERTISING WORKS, MAX SUTHERLAND

24
INFLUENTIAL ACADEMICS
Antonio Damasio
Influence of emotion on behavior
Somatic marker theory
Daniel Kahneman
System 1 / System 2 Thinking
Robert Heath
Application of emotion theories
to consumer advertising

25
THINKING – FAST & SLOW
Based on D. Kahneman, Thinking, Fast and Slow 2011

26
ADVERTISING WORKS IN TWO WAYS…
NON-CONSCIOUS
VALUES
Often, emotions
(instinct) lead directly
to purchase
Emotions bias
what we believe
CONSCIOUS FACTS
(taste, refreshment, price)

27
THE ROLE OF THE SUBCONSCIOUS
Our brains process 11,000,000 bits of sensory information every second.
But our conscious minds can only handle about 40 bits per second.
That’s a selection ratio of 0.000004%.
What happens to the other 10,999,960 bits of information?
Consumer brains process them subconsciously.

28
DID YOU NOTICE ?
• McDonald’s ?
• Beauty and the Beast ?
• Canon ?
• Howard Johnsons ?
• Grease…

29
SHOPPING FOR WINE – ITALIAN OR GERMAN ?
Music made a difference in what people bought
vs
Italian Music German Music

31

32
NEURO MEASUREMENT TOOLS
What consumers
say they think, do
or plan to do.
SELF
REPORT
Overall level of
emotional engagement,
the most and
least engaging
moments.
CORE
BIOMETRICS
Discrete facially
expressed
emotions, such as
surprise, confusion,
joy and sadness.
FACIAL
CODING
Pinpoint visual
attention to content,
including specific
areas that attract the
most and least
attention.
EYE
TRACKING
32 sensors collect
data 500 times
every second to fully
capture activity
across all brain
regions
EEG

33
KEY NEURO EEG METRICS
EMOTIONAL
ENGAGEMENT
MEMORY
ACTIVATION
ATTENTION
NEUROLOGICAL
EFFECTIVENESS
Relevant Neurological research: ADD (Attention), Alzheimers (Memory), Autism (Emotion)

34
NEURO: MEASUREMENT FOR OPTIMIZATION
Deep diagnostics, database comparisons, and key insights
Overall Effectiveness
Vs. Database
Second-by-Second
Diagnosis
Brand Resonance
Vs. Database
AD PERFORMANCE
Brand Resonance
Neurometrics

35
AD PERFORMANCE – SECOND BY SECOND
0
5
10
0 5 10 15 20 25
0
5
10
0 5 10 15 20 25
ATTENTION:
7.6
EMOTIONAL
ENGAGEMENT:
5.2
MEMORY
ACTIVATION:
6.4
High in first third
due to challenging
visuals and frequent
scene shifts.
Downward
engagement trend
early, improving
toward the end.
Memory activation
drops initially, but
then remains above
average for most
of the ad
0
5
10
0 5 10 15 20 25
Example Ad

NEURO VALIDATION:
DOES IT WORK ?

37
NEURO VALIDATION
strong
correlation
R2 = 75%
validation study across multiple brands,
companies and categories
Vs.
neuro metrics in-market outcomes

38
NEURO VALIDATION BY NEURO TOOL
EEG and combination of Neuro measures have strongest correlation.
9%
27%
62%
77%
0%
20%
40%
60%
80%
100%
FAC Biometrics EEG Combined
R-Squared for Neuro Measure to Sales Lift*
* Preliminary analyses

39
HOW DOES THIS AD WORK ?
“Gorilla”
https://www.youtube.com/watch?v=TnzFRV1L
wIo

SHELTER PET PROJECT:
TV AD OPTIMIZATION

42
OBJECTIVES
• How is ad being processed neurologically ?
• What are the strengths ?
• Which elements can be improved ?

43
JULES - ORIGINAL
Jules

44
Very strong creative approach with a few potential optimization areas
Effectiveness:
6.8
Attention:
6.2
Emotion:
7.1
Memory:
5.6
0
5
10
0 5 10 15 20 25 30
Jules - Original
EFFECTIVENESS
Jules 1st Appearance 2nd Appearance 3rd Appearance Message Call to Action
NEURO IDENTIFIES DRIVERS & DETRACTORS

45
JULES - REVISED
Jules II
https://www.youtube.com/watch?v
=Xpnvug7Uwg8

46
Jules is dialed down a bit at key points to focus on message and call to action
Memory: 7.4 Memory: 9.9
Memory: 6.6 Memory: 7.3
Jules Original Jules Revised
GOOD TO GREAT

47
CREATE SHORTER, MORE EFFECTIVE ADS
Ad compression
Identify the most neurologically effective scenes
and edit into a shorter and often more effective version
0.0
5.0
10.0
0 5 10 15 20 25 30
NEUROLOGICALEFFECTIVENESS
SECONDS

…in New Product Innovation
• Discover
 Big data & predictive analytics - ID White Space Opportunities
 Digital platforms - genetic algorithm concept optimization
• Develop
 e-Commerce platform - develop and optimize new products
 Digital platforms - Real time simulation and optimization
 Demand based targeting - Target likely new product buyers
• Deploy
 Big data & predictive analytics - real time tracking and drivers
 Digital platforms - real time total brand re-simulation
…in Advertising & Media Measurement
• Neuroscience
 Prediction and second by second optimization
 Ad compression
A BOLD NEW DAY…

Disruptive Forces in Modern Marketing by Randall Beard

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