Recession - marketing still works doesn't it?

Long time since last post which shows that either I’ve:

1. Given up
   
2. Been very busy
   

The answer is (fortunately for me) 1 – been busy – in fact I still am. I’m one of the lucky ones. Given the current economic climate, being busy and gainfully employed is starting to feel almost like a luxury.

Assuming that we all now agree that there is a recession on, one question was put to me over the weekend – does marketing in a recession still work in the same way?

I have to admit that I’ve only seen a mild adjustment rather than a full recession in my working life but to be honest, I think we can all see from the high street that the rules are shifting a little bit. In the last week, lots of retailers have been having “extravaganza” events or similar – 20% off everything, Buy One Get One Free etc….

I think a quote from Time magazine best summed up the feeling of many consumers towards these offers – “Is that the best you’ve got to offer”. That’s a dangerous message but it’s what many people seem to be saying. The danger is that we all wait until tomorrow then the next day to spend. Here in the UK, we’re about to get a sales tax reduction (if you believe the papers) but retailers are warning that it’s going to cost them to pass on this reduction.

What then are the tactics that will work in the current climate? If conspicuous consumption is out of fashion, what’s the solution for marketers? Maybe things aren’t as bad as they seem here in the UK or maybe they are worse than many realise.

In terms of making sure that marketing is effective, many advertisers and retailers are turning to “tried and tested” direct tactics – Direct Mail, Vouchers, Online etc to try and buy short term sales. This undoubtedly makes sense for most and must be a real worry for the big media companies. Whether this type of activity damages brands in the long term doesn’t really matter right now when everyone is just trying to improve cash flow. The price of traditional brand building activities will certainly be reducing as competition for spots or sponsorship opportunities dries up. At some point the pendulum will swing back as brands stop fighting fires and look to rebuild. Those that are nimble will undoubtedly do well – others will fail.

What is clear is that unaccountable marketing is going to be one casualty of this whole economic event. If you’re marketing budget is delivering only unquantified benefits then you’re about to lose it. The good news for some is that there is no marketing activity out there that needs to be unaccountable.

25 Pieces of Data for You to Review

John Billett is writing a fantastic series of articles currently called “25 Things we know about what we don't know about Marketing Effectiveness”. This is one of the most concise series of its type that I’ve had the pleasure to read. I suggest you take a look at this since John has essentially covered all the great myths about effectiveness in one simple to digest framework. He’s now up to number 18 so let’s see what the next 7 installments bring.

See http://blog.johnbillett.com/

It may not be the catchiest title but it’s certainly worth reading.

New Media driving out Old?

The common perception is that new media is driving out old. Given the current recession, many DM and digital agencies are hoping this is going to be the case. However market forces are at work....

Traditional media is going cheap or at least cheaper. It's also getting it's act together re accountability.

An interesting battle awaits...

Way Off Topic - don't sync your RSS feeds with Microsoft Outlook

Just a quick FYI – unless you have a great reason to do so, don’t sync your RSS feeds between Outlook 2007 and Explorer. Outlook maintains all your RSS history which can stack up over time – at least Explorer doesn’t do this.

Great Ad but Did it Sell?

I always thought this was a very underrated advert. However given that it's never won any awards that I'm aware of nor is it well known, I can only presume I'm missing something.

Did it sell any product? No idea. What I do know is that Alan Sugar hasn't got a clue either. On room 101 this week, he suggested that both the Honda Cog and launch adverts for Orange were both worthless since they can't have sold any product. I can't comment about the Honda ad (although I have a stong belief that it did very well) but I can be certain that the launch ads for Orange were vastly more successful that the traditional positioning employed by One2One (now T-mobile in the UK). For more on this, check out Simply Better by Patrick Barwise.

I think Alan Sugar may have misunderstood the nature of building a brand or he's being deliberately obtuse about the whole thing. More on this another time...

Some Thoughts on Software Brands

Just an observation that occurred to me earlier

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Software brands (and I know that Apple isn't really the software brand) are rarely loved. However why do creatives all love their Apple systems. They still crash sometimes and there's only one mouse button....

Irrespective, I would love one.

Dashboard Competition Notice

Two nods to XLCubed.

1) They just published an excellent article on their blog about using different data sources for an Excel dashboard - see http://blog.xlcubed.com/data-sources-for-excel-dashboards-avoid-spreadsheet-hell/

2) XLCubed is also running an Excel dashboard design contest - see http://www.bonavistasystems.com/NewsMicroChartsCompetition.html if interested in entering. Looks like it could be interesting and offer learnings to all interested in the subject.

Can we forecast marketing performance?

One issue which I've been looking at recently is that of forecast accuracy in marketing. The question I've been asking myself is this - how accurate can a forecast be and if we're not sure of the forecasts accuracy, what should we do - ignore it?

Tim Harford (the Undercover Economist) recently wrote an interesting piece on Economic Forecasting and the long running debate about why economists bother when their forecasting is so often inaccurate (see http://timharford.com/2008/05/why-economic-forecasts-are-so-hard-to-get-right/). The conclusion which is reached by Prof David Hendry is that we fail to forecast accurately because in part we fail to quickly realise when a "structural break" has taken place in the environment being investigated.

This issue is one that applies tenfold in the field of marketing because there are so many potential things which can lead to a structural change in the market. For example, a competitor launches a revolutionary new product; your advertising is run in a recently vandalised environment; a factory burns down. None of these things in inherently predictable but as a brand manager each can be catastrophic to the performance of your portfolio. Does this mean that it's not worth forecasting because the likelihood that the forecast will be "accurate" is low?

Predictably I'm going to say "no". There are many reasons that forecasting is a useful discipline in itself. In the marketing area, these would be something like:

1. It forces you to consider a wide range of outcomes from each strategy
2. It's a discipline which helps ensure consistency across the business and gives credibility to your operations
3. Getting all your forecasting ideas and assumptions down on paper will help you evaluate and learn from past mistakes. Finding out that an idea was a success is great - being able to repeat the logical process that led to the idea is fantastic and will take your marketing to a new level

Will the forecasts be accurate? In the marketing world, the answer is they might be in the short term but in the long terms, it's anybodies guess. Will advanced analytics solve this? Again better analytics may give a small improvement in accuracy over the long term but it has yet to be proved. In the short term, practical quick analysis is more powerful than advanced time consuming analysis.

Forecasting is necessary in all businesses (although many still fail to add any discipline to this process). How accurate these forecasts are does indeed depend on the effort put into them and the predictability of the market in question. Whether the incremental effort that goes into advanced analytics is worth it depends on whether you can find the correct balance between speed of analysis and the degree of "forecastability" in the market.

Econ 101 reading

Again I've been slow to blog so in place of a real post (interesting news coming soon), I'll give a couple of tips on reading for anyone off to study Economics or Management in the coming years:

1) The Age of Turbulence: Adventures in a New World by Alan Greenspan
This is a fascinating book which is surprisingly well written considering an economist had a big part in the creation of it! If you want an overview of how the modern world economy works at a high level and the implications on the major economies of various govermental polices, this would be a great place to start.
The Age of Turbulence: Adventures in a New World
2) Economics in One Lesson by Henry Hazlitt - only just picked this up but it seems a great read from page one and comes with a strong recommendation from someone I respect a great deal.
Economics in One Lesson: 50th Anniversary Edition

Publicis wonder if we're all idiots

Apparently we don't know if TV advertising works. That is apparently the "hold grail" (see http://adage.com/mediaworks/article?article_id=126611). Hmm for me, this one is in the bag. TV advertising does work - or at least some times. Maybe someone at Adage isn't so sure.

Do we manage brands on past performance?

People often question using techniques such as marketing mix analysis to help manage brands. They accuse it of being a blunt backward looking tool which fails to take into account the changing dynamics in a market. This is the "driving using the rear view mirror" critique.

My response is always the same - you need a three point plan in order to mitigate against this potential issue:

1. Acknowledge that analysis is indeed backward looking but it's only one piece of the insight jigsaw and nobody has an Oracle with which to look into the future
2. Ask yourself some tough structured questions about how and why the future might be different from the past. Construct some kind of process around this questioning (Delphi workshops work well here)
3. Invest some effort in activities designed to answer new questions - if you haven't got a clue whether sponsorship and events are a great way to communicate with your core customers, try it on a small scale

Not doing the above and relying blindly on historical analysis will leave you looking a bit like this guy when things to shift.

Information Visualisation Workshops in London this September

Just a quick post to let you know that we (marketingQED) are hosting three workshops on Information Visualisation this September.

Very briefly, the workshops are as follows:

1. Table and Graph Design for Effective Communication - Sep 17thThis full-day course will teach you how to effectively communicate quantitative business data using tables and graphs. You will learn how to select the appropriate medium of communication (table vs. graph, and which type) and how to visually design each component to express your message clearly and compellingly.


2. Dashboard Design for at-a-Glance Monitoring - Sep 18thDashboards offer an exciting new way to provide people at a glance with the critical information they must monitor to do their jobs. This full-day course reaches past the hype to give you the unique design skills required to build dashboards that really work.


3. Visual Data Analysis for Discovery and Understanding - Sep 19thMost business data analysis requires skills and practices involving the use of graphs that can be easily learned, but resources that teach them are almost impossible to find. Almost all books and courses on data analysis teach sophisticated statistical and financial analysis techniques, but only about 10% of business data analysis requires them. This full-day course is for those responsible for the remaining 90%.

More details here -> http://www.marketingqed.com/Services.html

All workshops will be run by Stephen Few of Perceptual Edge.

Highlight of the morning from the BBC

Director: Rilap Loof according to Scamp....

Viewing the previous post - YouTube clip now removed

FYI - The youtube link I posted yesterday for the "do the test" campaign has been pulled because for copyright reasons - click on the vid.

Much to my joy, this commercial is also getting a lot of comment on Scamp so I must be onto something - see http://scampblog.blogspot.com/

You can still find the video here: http://www.dothetest.co.uk/

Update - new YouTube clip now added - It would appear that you can't keep a good thing down.

Great new commercial focusing on Awareness

I often find myself telling people that running a commercial JUST to generate awareness is a waste of time - the commercial needs to alter behaviour as well. I'll make an exception for the great new commercial from Transport for London. This is the first commercial I remember seeing which was designed for the time-shifting generation. Viewing it on a broadcast system without the ability to rewind the broadcast just wouldn't have been the same.

Enjoy

Going through the bins

I'm currently reading a brilliant book called "The Black Swan" by Nassim Taleb where he exposes just how poor humans can be at forecasting. Taleb was a quant on Wall Street so he should be well aware of the power or otherwise of forecasting.

One interesting observation I took from the book was just how poorly we forecast because we limit the set of information we consider before drawing conclusions. So how do the guys in the city make their money?

One explanation came my way the other day. The "top" guys look for the big unexpected (by others) events. How do they do this? Well according to my source, one method is to hire private detectives to go through the rubbish of directors from the firms and industries that they track. Why bother trying to forecast share prices with dubious assumptions on productivity gains etc when you can just go through the rubbish and find out whether the company has a massive law suit creeping up on them. Genius forecasting if you ask me!

Is "on demand" a new concept?

There is nothing new in media.

What is a Brand Painting?

One of the key lessons that any analyst needs to learn is the ability to turn numbers into insight which can be “read” by almost any client. While analysts deal in numbers all day long, many of the audience for their research see numbers as an impediment to their understanding of a subject. Therefore every analyst needs a good set of charts, visualisations and other associated images to help them tell the story of their analysis to a wider audience.

For Marketing Mix Analysis (an analytical technique which seeks to estimate the incremental impact of each core marketing activity on total sales performance), one such key chart is the “Brand Painting”. A Brand Painting is a visual decomposition of the sales performance over time showing how much each driver is contributing at each point in time.

Here’s an example of a brand painting taken directly from our modelQED™ application:

In this picture, we can see a “base” level of activity which contains a range of inputs including seasonality, longer term market trends, special events and in the case of output from modelQED™, the impact of competitor marketing*.

We can then see the incremental impacts of TV, Press, Radio and Outdoor advertising as well as some short term promotions plus the detrimental impact of price rises on total sales.

What makes this a useful graphic? Well I think the following:

• The Brand Painting gives you a great view of sales performance across time – something often ignored
• Brand Paintings are a great way of assessing the overall impacts of drivers – whilst the ROI on an online campaign may look fantastic, has it actually moved the needle? Being able to see the relative sales increase from each channel is important
• Trends can become more obvious – the impact of all those small price rises can soon add up to a lot of units for an elastic brand but an elasticity value of -3.2 often fails to convey the magnitude of this change
• They can give a great insight into the medium term impact of marketing – the period over which the short term impact decays

Any pitfalls?

• Brand Paintings don’t show the ROI of investments – a large impact may or may not have a large investment behind it
• You can’t easily get any sense of whether there are diminishing returns present in the drivers
• You can only plot Brand Paintings if a model uses an additive mathematical structure – or at least if only makes sense to in these circumstances

So the upshot is this: I love Brand Paintings and almost every client I’ve ever worked for instinctively found them valuable when I presented my analytical results. If you don’t have the right applications then they can take a little bit of effort to construct in Excel or SAS but ultimately they’re worth it.

*note that modelQED™ does estimate the impact of competitor marketing but it is not charted on Brand Paintings by default.

The 30 second spot is alive and well

Interesting little presentation on the "death" of the 30 second spot. It appears that it's another top media myth. Having said that, I've never had access to the IPA databank and I'm also sceptical that the databank is all that useful since it contains only campaigns percieved to be success stories. Nonetheless it's an interesting starting place and I completly agree with the conclusion that TV advertising is still the best medium if you need.

Whatever anyone says big campaigns need TV for reach and impact - nothing else can match it!

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Nod to Scamp for the link (http://scampblog.blogspot.com/2008/02/heresy-of-month.html)

the true value of research...

As posted by Seth Godin via Gabe

Honda vs. Ford via Scamp

Nod to Scamp - (see http://scampblog.blogspot.com/2008/02/battle-of-epic-car-ads.html)

This post vividly shows the difference between a great commercial and a reasonable one. My guess is that Ford are a little too "safe" when defining a brief whereas Honda have built and been true to a brand philiosophy.

Wieden & Kennedy must be the best around at the moment!

It's not 50% but even more that's wasted!

An interesting little piece appeared on Jaffe Juice today with the headline "94% of my advertising is wasted, the only problem is that I keep on investing in it".

Apparently BIGresearch have discovered that only a few people pay absolute attention to TV commercials to which they are exposed. So more bad news for beleaguered TV execs - people aren't paying attention any more & your medium is dying.

Actually I think this isn't such a bad stat when the dust settles. There are precious few campaigns where consumers engage to the degree that more than 5% of those exposed will take in the message fully. If an " UK GRP costs in the region of £1,500 and the potential audience is 20m people, this still makes TV an effective way of engaging with a broad range of people effectively.

Precision Marketing

Three times this week, Precision Marketing magazine has sent me an identical piece of Direct Mail offering me a reduced rate subscription package. Three identical mailings.

As my wife rightly pointed out that this lacks Precision!

Google and Publicis in Love

According to Adage, Publicis and Google are launching an exchange programme (see http://adage.com/digital/article?article_id=123263).

The article states that:
"Publicis Chairman-CEO Maurice Levy invited a small group of journalists to lunch today at his Paris headquarters on the Champs-Elysees and surprised them with the appearance of Google CEO Eric Schmidt. He and Mr. Schmidt also sent an e-mail to the staffs of both companies today that describes plans for joint 'initiatives related to accelerating the ability of technology to make advertising more effective.'"

This is interesting because it's not WPP or Omnicom that Google are teaming with. The fact that Google need more advertising savy knowledge is not news but the fact that they teamed with Publicis is coup for the Paris based organisation.

Getting into bed with Google is a double edged sword but one agency group had to do it and it's publicis. Let's see what happens next.

New Year Predictions

Now that we're all well into 2008, it's probably time to reassess goals and targets for 2008. With a predicted downturn in the major Western economies and a proliferation of new ways to interact with customers, the chase for "hearts, minds and wallets" is going to be harder and faster than ever before.

Given everyone else is making predictions, here are mine - I'm not sure why we all feel the need to predict the future but nonetheless I thought I'd also have a go!

My Three Predictions for 2008

1. Economic downturn adds pressure to marketing budgets again – no new news here but once again, get ready to justify each £,$,€ of investment like never before. If you need help, the first question to ask is whether each element of the marketing mix washes it's own face. What would happen if you dropped each part of the plan? Would you really loose money? If so how much. If you're justifying budgets on "soft" metrics, do you really understand how those metrics translate into meaningful business?
2. Google to overstretch into traditional media – for a long time, I've been stressing how interesting it will be to see Google get out there any play an important part in the placement of traditional media. From what I've heard and seen, their offline offering doesn't offer the same level of immediate impact and the online one. Since Google haven't pre-brought the real estate from media owners, it's more difficult for them to prove the ROI case, Advertisers in traditional media need to know when an ad will run and where – the Google system doesn't currently guarantee this. Unless Google figure out how to make this work, they risk becoming another trading house and the incumbents will fight long and hard to maintain their existing businesses.
3. Customer Focus is key – I don't mean any of this "we're going to focus on customer satisfaction" stuff – what I mean by this is a year when customers have more power than ever before to rate and reward good products and services. The focus is on marketers to be seen as advertising and marketing truthfully and with reason. Best not to lie because you'll get found out.

My prediction for marketing analytics is that it will play an increasing role in helping organisations make decisions about which product and customer opportunities to pursue in the coming years. With the prospective downturn in the economy, marketing budgets will come under increasing focus and short term ROI will become a more important metric than longer term branding objectives. This presents a danger for brand builders as highlighted by people such as Len Lodish – the temptation to run a business for short term ROI comes at a potential cost to longer term profits. However try telling this to a Finance Director or MD desperate for some good news for the stock markets.

And finally - for marketingQED, we will be launching some great new products, updating existing products and generally offering exciting new opportunities for marketers to get more value from their marketing investments.

A Nod to Gaping Void

OK - I've been really bad in updating the blog over the past month. I wish I could say that my new years resolution was to update the blog more frequently but let's be honest, I'll get it done when time permits.

I wanted to draw your attention to an article over on Gaping Void called "why the "social object" is the future of marketing". I suggest you read it if you're in any doubt as to why the face of media is changing. As always, Hugh is on the ball with his comments - i love the quote "The bad news is, most products are boring. The good news is, most word-of-mouth is boring".

The one thing that I think Hugh has missed is the economics of advertising - in other words, one thread of the argument is that media became too expensive to execute whereas the opposite should be (and probably is) happening. Media costs are falling - especially in real terms. Furthermore production costs (the real barrier to entry) can be almost negligible. With Google on the horizon for mass media, the barriers to entry are falling further and further so that "mom and pop" shops aren't that far away from being able to advertise on TV or in National Press titles (but only the local edition).