Saturday
Valuing View-Based Responses - A Case Study on the Branding Effect of Online Ads
By Underscore Marketing
When advertisers evaluate media spending, their main concern is the return on their investment. Online advertising is particularly measurable in this regard because immediate responses to an ad can be measured directly from the click to the purchase. However, online advertising is also responsible for driving additional purchases through the branding value of the ad impression itself, and this effect often goes unmeasured. Many online advertisers do not or cannot track the consumer who views an ad but does not immediately respond, and later purchases the product. This type of purchase, often referred to as a "view-based conversion" or "view-through," can now be quantified.
Whether or not there is a view-through effect is not the question. We know the effect exists. To what extent it drives sales is the question. In the absence of a definitive answer, marketers have concentrated on click-thru rates and click-based conversions when it comes to evaluating the return on their online advertising dollar. If the view-based conversions could be easily quantified, it could provide media companies with additional revenue opportunities and provide marketers an additional source of data to use for analyzing and justifying payout of possible advertising programs. However, marketers usually launch integrated campaigns using several different media vehicles, making accurate measurement of the view-based effect difficult.
Advertising in a Vacuum
But what if a marketer were to launch a new product offering by using only a single online ad vehicle? Clearly, it would allow the advertiser to understand the impact of both the creative and the ad vehicle on awareness and purchase intent. But more importantly, by isolating the ad vehicle, the advertiser could accurately quantify the view-based effect of an ad. In fact, it would even provide data to help understand the value of advertising over time.
That's exactly what Entersect Corp. did during the first quarter of 2003 with its new Locate America product. It advertised exclusively with The Gator Corporation's GAIN Network for the launch of the product. Since the product was brand new and had never been advertised before, all sales could be attributed directly to the GAIN ad campaign.
Background
Locate America is a new online background search product which was launched in January, 2003. At that time, with no advertising or promotion of any kind, it had no consumer awareness, no established price point and no advertising effectiveness track record. With the launch of Locate America, Entersect needed to have several questions answered, including whether or not online behavioral marketing can generate sales efficiently.
Entersect chose Gator as their first media partner because of its ability to target online users by behavior. Users of Gator products have granted permission for Gator to display targeted advertising to them based on their online surfing habits, so advertisers can reach users who display a specific behavior at any time. In Entersect's case, the target group was users who viewed other online background search sites.
The Test
Entersect ran a variety of creative executions through the GAIN Network, using both Browser Pop-unders (pop-unders which displayed the actual Locate America Web page), and GAIN Sliders (ads that "slide" out from the lower corner of a user's browser window). The ads offered users a preliminary search, which prompted them to search for a name in Locate America's vast databases. These preliminary searches would return the name of the person, their location and their age. If users wanted more information on the person, they could then purchase a more detailed report.
The GAIN campaigns recorded significant view-through numbers. More than half of the Locate America completed sales that came as the result of ads displayed during the test period were view-based sales.
Within a 45-day window from the day the campaign was first deployed, more sales resulted from view-through conversions than from those who initially clicked and responded to the ad:
Advertising in a Vacuum
But what if a marketer were to launch a new product offering by using only a single online ad vehicle? Clearly, it would allow the advertiser to understand the impact of both the creative and the ad vehicle on awareness and purchase intent. But more importantly, by isolating the ad vehicle, the advertiser could accurately quantify the view-based effect of an ad. In fact, it would even provide data to help understand the value of advertising over time.
That's exactly what Entersect Corp. did during the first quarter of 2003 with its new Locate America product. It advertised exclusively with The Gator Corporation's GAIN Network for the launch of the product. Since the product was brand new and had never been advertised before, all sales could be attributed directly to the GAIN ad campaign.
Background
Locate America is a new online background search product which was launched in January, 2003. At that time, with no advertising or promotion of any kind, it had no consumer awareness, no established price point and no advertising effectiveness track record. With the launch of Locate America, Entersect needed to have several questions answered, including whether or not online behavioral marketing can generate sales efficiently.
Entersect chose Gator as their first media partner because of its ability to target online users by behavior. Users of Gator products have granted permission for Gator to display targeted advertising to them based on their online surfing habits, so advertisers can reach users who display a specific behavior at any time. In Entersect's case, the target group was users who viewed other online background search sites.
The Test
Entersect ran a variety of creative executions through the GAIN Network, using both Browser Pop-unders (pop-unders which displayed the actual Locate America Web page), and GAIN Sliders (ads that "slide" out from the lower corner of a user's browser window). The ads offered users a preliminary search, which prompted them to search for a name in Locate America's vast databases. These preliminary searches would return the name of the person, their location and their age. If users wanted more information on the person, they could then purchase a more detailed report.
The GAIN campaigns recorded significant view-through numbers. More than half of the Locate America completed sales that came as the result of ads displayed during the test period were view-based sales.
Within a 45-day window from the day the campaign was first deployed, more sales resulted from view-through conversions than from those who initially clicked and responded to the ad:
| Preliminary Searches | Completed Sales | Conversion Rate | Conversion Lift | |
| Ad Clicks | 329,936 | 2,948 | 0.894% | - - |
| View-Through | 226,902 | 3,127 | 1.378% | +54% |
| Total | 556,838 | 6,075 | 1.091% | -- |
Furthermore, the view-through traffic was better qualified, as it was 54 percent more likely to result in a completed sale than traffic resulting from ad clicks. From Entersect's standpoint, tracking view-through data allowed them to see that their campaign generated more than twice the number of sales that they might have otherwise thought, had they tracked only sales resulting from ad clicks.
This test definitively shows that less than half the value of an online advertising campaign comes from ad clicks. Once prospects are exposed to the ad message, they may return at a later date, based on their awareness of the product offering.
"I was surprised at how clearly we were able to isolate the branding effect of the campaign," said Andy Aranyi, president and chief marketing officer at Entersect. "The Gator program has really helped us optimize our ad spending by helping us quantify the real return of our online advertising."
The Verdict
Online advertising can have a significant branding effect, even when the ads aren't clicked. As evidenced by the overall view-through percentage of 1.38%, interested consumers do take notice of advertised brands and visit their websites later, at their own convenience. Sales based on clicks are only a fraction of the total picture of online advertising's effectiveness. The branding effect of properly targeted advertising can drive as many sales as the direct response attributes that prompt immediate action. It is important to complete the picture by tracking view-through data and pooling this information with click-through data. Advertisers who track view-through data often find that their highest-clicking ad isn't necessarily their best-converting ad. Click-through rate tells only a part of the story.
This test definitively shows that less than half the value of an online advertising campaign comes from ad clicks. Once prospects are exposed to the ad message, they may return at a later date, based on their awareness of the product offering.
"I was surprised at how clearly we were able to isolate the branding effect of the campaign," said Andy Aranyi, president and chief marketing officer at Entersect. "The Gator program has really helped us optimize our ad spending by helping us quantify the real return of our online advertising."
The Verdict
Online advertising can have a significant branding effect, even when the ads aren't clicked. As evidenced by the overall view-through percentage of 1.38%, interested consumers do take notice of advertised brands and visit their websites later, at their own convenience. Sales based on clicks are only a fraction of the total picture of online advertising's effectiveness. The branding effect of properly targeted advertising can drive as many sales as the direct response attributes that prompt immediate action. It is important to complete the picture by tracking view-through data and pooling this information with click-through data. Advertisers who track view-through data often find that their highest-clicking ad isn't necessarily their best-converting ad. Click-through rate tells only a part of the story.
E-COMMERCE CHANNEL GROWS BY LEAPS AND BOUNDS
Offline retailers are feeling the pinch of the down economy, but there's a glimmer of good news for online channels. Online retail will grow at a steady 19 percent annual rate from $95.7 billion in 2003 to $229.9 billion in 2008, says a new report from Forrester Research. Why such a jump? More users are going online, for one, but the biggest reason Forrester cites is the adoption of multi-channel strategies from traditional offline retailers.
According to the "US eCommerce Overview: 2003 To 2008
" food and beverages, sporting goods and home goods will grow the fastest in the next five years, outpacing more traditional online categories like books and travel. Forrester projects the most dramatic growth in the food and beverage category, with sales increasing from $3.7 billion to $17.4 billion over the next five years. Grocers like Safeway and Stop & Shop/Peapod are leading the charge by executing consistent, multi-channel strategies. To make the most of online revenue potential, multi-channel retailers need to keep the customer's needs in mind. Easily navigable sites, accessible user information across all channels and seamless transactions will help retailers shine through.
According to the "US eCommerce Overview: 2003 To 2008
" food and beverages, sporting goods and home goods will grow the fastest in the next five years, outpacing more traditional online categories like books and travel. Forrester projects the most dramatic growth in the food and beverage category, with sales increasing from $3.7 billion to $17.4 billion over the next five years. Grocers like Safeway and Stop & Shop/Peapod are leading the charge by executing consistent, multi-channel strategies. To make the most of online revenue potential, multi-channel retailers need to keep the customer's needs in mind. Easily navigable sites, accessible user information across all channels and seamless transactions will help retailers shine through.
Friday
WHAT'S THE POINT OF HAVING A VISION?
Whether you are a solopreneur or own a business that employs ten employees, small-business owners are always busy, as only a business owner can fully understand. There’s never a time when everything is done, when there’s nothing on the to-do list for the moment, or when you go fully "off the grid." A current vision helps us to know why we’re doing what we’re doing, regardless of what’s going on outside of our business or the challenges that it presents to us.
Because there are always things vying for your attention, it’s all too easy to get caught up in "I’m too busy to vision or plan" thinking. And that’s exactly what many business owners do.
If it’s not a recession that is making it difficult to find clients, it’s a problem employee, recruiting needs, a business growth spurt, marketing challenges, or some other issue that provide an excuse to say, "I’m much too busy to plan or take time for visioning." Owning a business means owning challenges; it's that simple (and, for most of us, a pretty awesome reality that keeps us fresh and growing, even when we complain about the never-ending challenges!).
Your guiding vision and plan, however uncomplicated they may be, provide the very point from which to prioritize, respond to challenges, engage in creativity, see the time for looking at the forest above the trees. A business owner who doesn’t make time to plan or vision isn’t just ignoring one element of skillful business ownership, but he’s also making things a whole lot more difficult for himself.
Some experts say that there are people, business owners included, who are literally addicted to the adrenaline of being in constant crisis, which means that these business owners find ways to ensure that there is always a drama underway. This insight often surprises these crisis-creators, who weren't aware of their addiction.
Conscious enterprise is about being aware of how our own old beliefs and habits help or hurt us in our journey towards peace of mind and meaningful, effective, successful business ownership, and making the changes necessary to cultivate new, healthier patterns that will lead us to a sense of satisfaction and rewarding livelihood instead of burnout and regret.
Taking the time to reflect and vision can yield a supply of clarity, inspiration and direction that eludes the entrepreneur who’s always battling the latest of her chronic crises or who keeps himself so mired in the details that the business owns him.
Because there are always things vying for your attention, it’s all too easy to get caught up in "I’m too busy to vision or plan" thinking. And that’s exactly what many business owners do.
If it’s not a recession that is making it difficult to find clients, it’s a problem employee, recruiting needs, a business growth spurt, marketing challenges, or some other issue that provide an excuse to say, "I’m much too busy to plan or take time for visioning." Owning a business means owning challenges; it's that simple (and, for most of us, a pretty awesome reality that keeps us fresh and growing, even when we complain about the never-ending challenges!).
Your guiding vision and plan, however uncomplicated they may be, provide the very point from which to prioritize, respond to challenges, engage in creativity, see the time for looking at the forest above the trees. A business owner who doesn’t make time to plan or vision isn’t just ignoring one element of skillful business ownership, but he’s also making things a whole lot more difficult for himself.
Some experts say that there are people, business owners included, who are literally addicted to the adrenaline of being in constant crisis, which means that these business owners find ways to ensure that there is always a drama underway. This insight often surprises these crisis-creators, who weren't aware of their addiction.
Conscious enterprise is about being aware of how our own old beliefs and habits help or hurt us in our journey towards peace of mind and meaningful, effective, successful business ownership, and making the changes necessary to cultivate new, healthier patterns that will lead us to a sense of satisfaction and rewarding livelihood instead of burnout and regret.
Taking the time to reflect and vision can yield a supply of clarity, inspiration and direction that eludes the entrepreneur who’s always battling the latest of her chronic crises or who keeps himself so mired in the details that the business owns him.
Wednesday
Virtual Delivery Seen as Death to Discs
Washington Times
LOS ANGELES (Hollywood Reporter) - Hollywood will win the war against illegal downloading but the battlefield will be littered with casualties, including the DVD and CD formats as physical means of distributing video and audio, according to a Forrester Research study released Tuesday.
The study predicts that in five years, CDs and DVDs will start to go the way of the vinyl LP as 33% of music sales and 19% of home video revenue shifts to streaming and downloading.
Part of that stems from the continued proliferation of illegal file trading, which has caused an estimated $700 million of lost CD sales since 1999. But it will be due more so to efforts by the studios, cable companies and telcos to finally deliver legitimate alternatives like video-on-demand, Forrester researcher Josh Bernoff said.
"The idea that anyone who has video-on-demand access to any movie they are interested in would get up and go to Blockbuster just doesn't make any sense," Bernoff said. "(The decline) begins with rentals, but eventually I think sales of these pieces of plastic are going to start going away because people will have access to whatever they want right there at their television set."
While consumers with VOD capabilities should grow within five years from 10 million to 35 million, or about a third of all U.S. television households, the association that represents disc makers does not believe that output will slow.
In fact, the Princeton, N.J.-based International Recording Media Assn. estimates that the number of DVDs replicated each year in North America will increase from a current 1.4 billion to 2.6 billion by 2008.
CD replications, though, are forecast by IRMA to fall by 15%-18% in the next five years, about half the rate of decline estimated by Forrester.
"The consensus in the manufacturing business is that there will be a decline, but we don't see as drastic a decline," IRMA president Charles Van Horn said. "We see growth (in video and DVD), and I don't think it will be because there are more pipelines to feed. It will be consumers buying discs."
Analysts also caution that the shift from hard copy to virtual distribution could be more gradual.
"People like walking into the store and seeing the product. It's part of the entertainment," Barrington Research Associates analyst James Goss said. "The studios would be just as happy to sell something in a streamed form or a hard disc form. But once you download it to your computer, you're probably going to burn it onto a CD or DVD, so you'd end up with the same optical storage issues."
The Forrester report lists a number of winners and losers from the expected changes.
Among the beneficiaries are Internet portals that enable on-demand media services, broadband suppliers such as cable and telcos and the creative community, which would profit from the removal of manufacturing and distribution costs and constraints. AOL Time Warner's decision to sell off its disc manufacturing plants was said to be proof of this trend.
Media conglomerates could be among the losers if they do not have control of emerging means of distribution like VOD, Forrester said. Such retailers as Tower Records and Blockbuster will certainly feel the pain as sales and rentals shrink, though they may be able to sustain business by associating themselves with newer on-demand services. Major retailers including Wal-Mart and Best Buy are expected to survive by shifting CD and DVD floor space to sales of media devices.
The shift could also present several opportunities for companies if they move quickly.
Television companies have about three more years to release shows on DVD. By 2006, it is estimated that negotiations will start to focus on making content available on cable and Internet "basic VOD" tiers.
Movies studios are also urged to press the development of Internet-based alternatives to cable VOD for movies-on-demand.
"On-demand media services have the potential to turn pirate losses into gains even as they break the disc-based shackles that now hold back entertainment," the report concludes.
LOS ANGELES (Hollywood Reporter) - Hollywood will win the war against illegal downloading but the battlefield will be littered with casualties, including the DVD and CD formats as physical means of distributing video and audio, according to a Forrester Research study released Tuesday.
The study predicts that in five years, CDs and DVDs will start to go the way of the vinyl LP as 33% of music sales and 19% of home video revenue shifts to streaming and downloading.
Part of that stems from the continued proliferation of illegal file trading, which has caused an estimated $700 million of lost CD sales since 1999. But it will be due more so to efforts by the studios, cable companies and telcos to finally deliver legitimate alternatives like video-on-demand, Forrester researcher Josh Bernoff said.
"The idea that anyone who has video-on-demand access to any movie they are interested in would get up and go to Blockbuster just doesn't make any sense," Bernoff said. "(The decline) begins with rentals, but eventually I think sales of these pieces of plastic are going to start going away because people will have access to whatever they want right there at their television set."
While consumers with VOD capabilities should grow within five years from 10 million to 35 million, or about a third of all U.S. television households, the association that represents disc makers does not believe that output will slow.
In fact, the Princeton, N.J.-based International Recording Media Assn. estimates that the number of DVDs replicated each year in North America will increase from a current 1.4 billion to 2.6 billion by 2008.
CD replications, though, are forecast by IRMA to fall by 15%-18% in the next five years, about half the rate of decline estimated by Forrester.
"The consensus in the manufacturing business is that there will be a decline, but we don't see as drastic a decline," IRMA president Charles Van Horn said. "We see growth (in video and DVD), and I don't think it will be because there are more pipelines to feed. It will be consumers buying discs."
Analysts also caution that the shift from hard copy to virtual distribution could be more gradual.
"People like walking into the store and seeing the product. It's part of the entertainment," Barrington Research Associates analyst James Goss said. "The studios would be just as happy to sell something in a streamed form or a hard disc form. But once you download it to your computer, you're probably going to burn it onto a CD or DVD, so you'd end up with the same optical storage issues."
The Forrester report lists a number of winners and losers from the expected changes.
Among the beneficiaries are Internet portals that enable on-demand media services, broadband suppliers such as cable and telcos and the creative community, which would profit from the removal of manufacturing and distribution costs and constraints. AOL Time Warner's decision to sell off its disc manufacturing plants was said to be proof of this trend.
Media conglomerates could be among the losers if they do not have control of emerging means of distribution like VOD, Forrester said. Such retailers as Tower Records and Blockbuster will certainly feel the pain as sales and rentals shrink, though they may be able to sustain business by associating themselves with newer on-demand services. Major retailers including Wal-Mart and Best Buy are expected to survive by shifting CD and DVD floor space to sales of media devices.
The shift could also present several opportunities for companies if they move quickly.
Television companies have about three more years to release shows on DVD. By 2006, it is estimated that negotiations will start to focus on making content available on cable and Internet "basic VOD" tiers.
Movies studios are also urged to press the development of Internet-based alternatives to cable VOD for movies-on-demand.
"On-demand media services have the potential to turn pirate losses into gains even as they break the disc-based shackles that now hold back entertainment," the report concludes.
McDonald’s launches ‘I’m lovin’ it’ global campaign
Fast-food chain hires Timberlake for ads
McDonald’s Corp. Tuesday said its latest advertising will feature a partnership with pop star Justin Timberlake, a move designed to connect with youthful customers.
THE PARTNERSHIP COMES as the world’s largest fast-food company launches the first global ad campaign in its 50-year history, dubbed “I’m lovin’ it”, at a time when it faces stiff competition and needs its ad investments to pay off.
McDonald’s, based in Oak Brook, Illinois, hired German advertising agency Heye and Partners to lead the creative work. The agency, part of Omnicom Group Inc.’s DDB unit, kicks off the campaign Tuesday in Munich.
The “I’m lovin’ it” theme has five common television spots that will air this month in many of the 118 countries where McDonald’s operates. Each local market will customize the commercials with its own language and local shots of customers.
“I’m lovin’ it” follows McDonald’s U.S. “Smile” campaign, which experts said had lukewarm market impact. Recent menu additions like premium salads featuring Newman’s Own dressing linked to actor Paul Newman and McGriddles breakfast sandwiches have done more to boost sales, helping the company post significant U.S. second-quarter sales improvement.
Timberlake, a former member of the popular U.S. band ’N Sync who launched a solo career late last year, will record the vocals for several of McDonald’s “I’m lovin’ it” commercials, the company said in a statement.
He will also appear in cameo roles throughout the new campaign. McDonald’s plans to sponsor the 35-city Justin Timberlake 2003 European tour, which begins in Germany in November.
Company officials have not disclosed how much McDonald’s is spending on the new campaign. In 2002, McDonald’s spent about $548.2 million worth of television, print and outdoor advertising, according to trade publication Advertising Age.
McDonald’s Corp. Tuesday said its latest advertising will feature a partnership with pop star Justin Timberlake, a move designed to connect with youthful customers.
THE PARTNERSHIP COMES as the world’s largest fast-food company launches the first global ad campaign in its 50-year history, dubbed “I’m lovin’ it”, at a time when it faces stiff competition and needs its ad investments to pay off.
McDonald’s, based in Oak Brook, Illinois, hired German advertising agency Heye and Partners to lead the creative work. The agency, part of Omnicom Group Inc.’s DDB unit, kicks off the campaign Tuesday in Munich.
The “I’m lovin’ it” theme has five common television spots that will air this month in many of the 118 countries where McDonald’s operates. Each local market will customize the commercials with its own language and local shots of customers.
“I’m lovin’ it” follows McDonald’s U.S. “Smile” campaign, which experts said had lukewarm market impact. Recent menu additions like premium salads featuring Newman’s Own dressing linked to actor Paul Newman and McGriddles breakfast sandwiches have done more to boost sales, helping the company post significant U.S. second-quarter sales improvement.
Timberlake, a former member of the popular U.S. band ’N Sync who launched a solo career late last year, will record the vocals for several of McDonald’s “I’m lovin’ it” commercials, the company said in a statement.
He will also appear in cameo roles throughout the new campaign. McDonald’s plans to sponsor the 35-city Justin Timberlake 2003 European tour, which begins in Germany in November.
Company officials have not disclosed how much McDonald’s is spending on the new campaign. In 2002, McDonald’s spent about $548.2 million worth of television, print and outdoor advertising, according to trade publication Advertising Age.
As online advertising grows, rich media will grow even faster, study says
Despite lingering concerns regarding the demands usage of rich media places on bandwidth, rich media–-particularly Macromedia Inc.’s Flash technology-–will account for a sharply increasing share of online advertising over the next several years, Jupiter Research reports. While expenditures on online advertising are expected to more than double by 2008, to $14.8 billion from $6.3 billion today, the use of rich media in online ads will more than triple, says Jupiter analyst Nate Elliott. “Flash is by far the predominant rich media technology,” he says.
Following are Jupiter’s projections for online advertising expenditures/rich media expenditures/rich media as % of online ads, through 2008:
-- 2003................. $6.3 billion/$693 million/11%
-- 2004................. $7.6 billion/$1.14 billion/15%
-- 2005................. $9.5 billion/$$1.995 billion/21%
-- 2006................. $11.3 billion/$2.938 billion/32%
-- 2007................. $13.1 billion/$4.192 billion/32%
-- 2008................. $39 billion/$5.772 billion/39%
Elliot notes that Flash and other forms of rich media, including streaming video and audio, should not lead to computer performance problems for consumers unless someone is accessing the web on an unusually old computer. Still, he says web site developers should use rich media only where they can improve a consumer’s shopping experience, such as by illustrating a product, but avoid overpowering consumers with too many rich media distractions. “Web site operators should keep their sites nimble and use rich media tools only where they can add value to the shopping experience,” he says. “I wouldn’t advise a site to stay away from using Flash, but to have a good reason for using it.”
Following are Jupiter’s projections for online advertising expenditures/rich media expenditures/rich media as % of online ads, through 2008:
-- 2003................. $6.3 billion/$693 million/11%
-- 2004................. $7.6 billion/$1.14 billion/15%
-- 2005................. $9.5 billion/$$1.995 billion/21%
-- 2006................. $11.3 billion/$2.938 billion/32%
-- 2007................. $13.1 billion/$4.192 billion/32%
-- 2008................. $39 billion/$5.772 billion/39%
Elliot notes that Flash and other forms of rich media, including streaming video and audio, should not lead to computer performance problems for consumers unless someone is accessing the web on an unusually old computer. Still, he says web site developers should use rich media only where they can improve a consumer’s shopping experience, such as by illustrating a product, but avoid overpowering consumers with too many rich media distractions. “Web site operators should keep their sites nimble and use rich media tools only where they can add value to the shopping experience,” he says. “I wouldn’t advise a site to stay away from using Flash, but to have a good reason for using it.”
Tuesday
MCDONALD'S SHIFTING ADS AWAY FROM TV TO DIGITAL
Marketing Chief Cites Increasing Emphasis on Internet
McDonald Corp.'s senior vice president of U.S. marketing, Bill Lamar Jr., drove another nail in the coffin of the 30-second commercial today when he said the fast-food giant would be doing less TV and shifting more of its advertising into digital media.
Not TV driven
Speaking at the 85th annual American Association of Advertising Agencies management conference here, Mr. Lamar said: "The days of spending hundreds of millions of dollars on TV advertising is over. Reaching consumers is no longer TV driven."
"We must have insight-driven ideas that connect us to individual consumers at the right time and in a place where that customer is most receptive to our message," he said. "For McDonald's that means less TV advertising is in our future."
Internet emphasis
Mr. Lamar underscored the firm's new focus of attention -- digital marketing -- saying that no other company is doing more to reach customers on the Internet than McDonald's. He cited the fast-food marketer's product-placement deal with online game The Sims, coupled with its agreement with Intel to offer wireless Internet access, as evidence of this change in focus.
"While today, most of what you'll see is TV advertising, if I stand in front of you six months from now, what you'll see will be materially different," he said.
Media fragmentation
Mr. Lamar's comments echo those of Coca-Cola Co.'s president and chief operating officer, Steven Heyer, who at length has argued against marketers' reliance on TV advertising and for more dollar-shifting between media. "And as media fragmentation continues ... and as new choices continue to emerge and technology leaps out ahead of consumers' wishes to change the way they behave ... it's incumbent upon us all ... to think differently about how we'll connect with consumers in the future," Mr. Heyer said in February.
Mr. Lamar opened his speech saying that perhaps the burger chain had not paid enough attention to the effectiveness of its advertising during the boom years. "We lost some of our focus. Loyalty for our brands has suffered. We haven't grown profits enough. We haven't been motivating our customers to visit us more often."
The marketing executive stressed that those days are over and that other marketing disciplines such as promotions would take greater prominence. He mentioned the company's promotional activities with the National Basketball Association and Nascar racing series as a way to connect with young males -- its major demographic target alongside women with children.
New agency mandate
Mr. Lamar said he has handed agencies a new mandate, to come up with new promotional and marketing ideas that would win awards, so long as they were delighting the customer.
Responding to a question about which competitor's marketing efforts he admired, Mr. Lamar responded, "Wendy's and Sonic Fast Food are doing a good job." He added that McDonald's now considers its competition the casual-dining industry at large, as opposed to simply the fast-food category.
McDonald Corp.'s senior vice president of U.S. marketing, Bill Lamar Jr., drove another nail in the coffin of the 30-second commercial today when he said the fast-food giant would be doing less TV and shifting more of its advertising into digital media.
Not TV driven
Speaking at the 85th annual American Association of Advertising Agencies management conference here, Mr. Lamar said: "The days of spending hundreds of millions of dollars on TV advertising is over. Reaching consumers is no longer TV driven."
"We must have insight-driven ideas that connect us to individual consumers at the right time and in a place where that customer is most receptive to our message," he said. "For McDonald's that means less TV advertising is in our future."
Internet emphasis
Mr. Lamar underscored the firm's new focus of attention -- digital marketing -- saying that no other company is doing more to reach customers on the Internet than McDonald's. He cited the fast-food marketer's product-placement deal with online game The Sims, coupled with its agreement with Intel to offer wireless Internet access, as evidence of this change in focus.
"While today, most of what you'll see is TV advertising, if I stand in front of you six months from now, what you'll see will be materially different," he said.
Media fragmentation
Mr. Lamar's comments echo those of Coca-Cola Co.'s president and chief operating officer, Steven Heyer, who at length has argued against marketers' reliance on TV advertising and for more dollar-shifting between media. "And as media fragmentation continues ... and as new choices continue to emerge and technology leaps out ahead of consumers' wishes to change the way they behave ... it's incumbent upon us all ... to think differently about how we'll connect with consumers in the future," Mr. Heyer said in February.
Mr. Lamar opened his speech saying that perhaps the burger chain had not paid enough attention to the effectiveness of its advertising during the boom years. "We lost some of our focus. Loyalty for our brands has suffered. We haven't grown profits enough. We haven't been motivating our customers to visit us more often."
The marketing executive stressed that those days are over and that other marketing disciplines such as promotions would take greater prominence. He mentioned the company's promotional activities with the National Basketball Association and Nascar racing series as a way to connect with young males -- its major demographic target alongside women with children.
New agency mandate
Mr. Lamar said he has handed agencies a new mandate, to come up with new promotional and marketing ideas that would win awards, so long as they were delighting the customer.
Responding to a question about which competitor's marketing efforts he admired, Mr. Lamar responded, "Wendy's and Sonic Fast Food are doing a good job." He added that McDonald's now considers its competition the casual-dining industry at large, as opposed to simply the fast-food category.
TEENS NOW SPEND MORE TIME ONLINE THAN WATCHING TV
New Study Details Media Usage Patterns of First Internet Generation
Teens and young adults ages 13 to 24 now spend more time every day on the Internet than they do watching TV, according to a new study conducted by Harris Interactive and Teenage Research Unlimited.
Media habits
Commissioned by Yahoo! and Carat North America's Carat Interactive, the project polled more than 2,500 individuals in June using online and offline methods. The findings exhaustively detail the age group's media consumption habits.
The study, "Born to Be Wired: Understanding the First Wired Generation," confirms other recent reports and widespread assumptions that there has been a profound shift in the way teens and young adults treat and engage with media.
$149 billion
The 47 million people who make up the 13 to 24 age group spend an estimated $149 billion, 15% of which is spent online, and their influence on other people extends by as much as five times their spending, according to the findings.
During an average week, according to the report, 13- to 24-year-olds spend 16.7 hours online (excluding e-mail); 13.6 hours watching TV; 12 hours listening to the radio; 7.7 hours talking on the phone (including landlines and cell phones); and six hours reading books and magazines to keep up on personal interests.
Teens and young adults almost universally engage in other media-related activities while they're online: Some 68% listen to CDs or MP3s; 50% watch TV; 45% talk on the phone; 45% listen to the radio; 45% do homework; 21% read. Only 5% of those surveyed said they do nothing else while they're online.
Reveling in fragmentation
Today's media fragmentation, a headache for marketers and a frustration for adults looking to simplify their media options, presents an energizing challenge rather than a problem for most teens and young adults. They thrive on the sheer variety of choices and enjoy managing, controlling and personalizing them.
That 13- to 24-year-olds, dubbed "Milliennials," are extremely comfortable with such media multitasking was the single most striking study finding for Sarah Fay, president of Carat Interactive.
"We know they are juggling more media, making their attention spans shorter and more challenging to capture," she said.
'Millennials'The term "Millennials" is taken from the book Millennials Rising, by Neil Howe and William Strauss (Vintage Books, 2000). According to the book, "Millennials are unlike any other youth generation in living memory. They are more numerous, more affluent, better educated, and more ethnically diverse. More important, they are beginning to manifest a wide array of positive social habits that older Americans no longer associate with youth, including a new focus on teamwork, achievement, modesty, and good conduct."
Wenda Millard, Yahoo!'s ad sales chief, thought Millennials would have used the Internet more for entertainment instead of information purposes. The findings indicate that they approach the Web with an agenda, making search engines their first stop. For example, reports about new fashion trends in print magazines routinely inspire an online search for more information and shopping opportunities
Teens and young adults ages 13 to 24 now spend more time every day on the Internet than they do watching TV, according to a new study conducted by Harris Interactive and Teenage Research Unlimited.
Media habits
Commissioned by Yahoo! and Carat North America's Carat Interactive, the project polled more than 2,500 individuals in June using online and offline methods. The findings exhaustively detail the age group's media consumption habits.
The study, "Born to Be Wired: Understanding the First Wired Generation," confirms other recent reports and widespread assumptions that there has been a profound shift in the way teens and young adults treat and engage with media.
$149 billion
The 47 million people who make up the 13 to 24 age group spend an estimated $149 billion, 15% of which is spent online, and their influence on other people extends by as much as five times their spending, according to the findings.
During an average week, according to the report, 13- to 24-year-olds spend 16.7 hours online (excluding e-mail); 13.6 hours watching TV; 12 hours listening to the radio; 7.7 hours talking on the phone (including landlines and cell phones); and six hours reading books and magazines to keep up on personal interests.
Teens and young adults almost universally engage in other media-related activities while they're online: Some 68% listen to CDs or MP3s; 50% watch TV; 45% talk on the phone; 45% listen to the radio; 45% do homework; 21% read. Only 5% of those surveyed said they do nothing else while they're online.
Reveling in fragmentation
Today's media fragmentation, a headache for marketers and a frustration for adults looking to simplify their media options, presents an energizing challenge rather than a problem for most teens and young adults. They thrive on the sheer variety of choices and enjoy managing, controlling and personalizing them.
That 13- to 24-year-olds, dubbed "Milliennials," are extremely comfortable with such media multitasking was the single most striking study finding for Sarah Fay, president of Carat Interactive.
"We know they are juggling more media, making their attention spans shorter and more challenging to capture," she said.
'Millennials'The term "Millennials" is taken from the book Millennials Rising, by Neil Howe and William Strauss (Vintage Books, 2000). According to the book, "Millennials are unlike any other youth generation in living memory. They are more numerous, more affluent, better educated, and more ethnically diverse. More important, they are beginning to manifest a wide array of positive social habits that older Americans no longer associate with youth, including a new focus on teamwork, achievement, modesty, and good conduct."
Wenda Millard, Yahoo!'s ad sales chief, thought Millennials would have used the Internet more for entertainment instead of information purposes. The findings indicate that they approach the Web with an agenda, making search engines their first stop. For example, reports about new fashion trends in print magazines routinely inspire an online search for more information and shopping opportunities
MORE MOVIE ADVERTISING MOVES FROM NEWSPAPERS TO INTERNET
Hollywood's Print Spending Slows; Online Ad Buys Skyrocket in First Half
For years, some movie media executives have yearned to cut back on newspaper ad spending, believing it inefficient in reaching the prime movie consumers:
young males and females who increasingly get movie information, including local schedules, online.
Movie-studio research has shown movie newspaper ads don't encourage people to see a specific wide-release film, and that by the time a consumer reads an ad in a newspaper, consumers already have made up their minds what to see. Despite this, about 10% to 25% of the average $25 million marketing budget for a wide-release movie is earmarked for newspaper ads.
71% spending spike
But the ad model may be shifting. While newspaper spending growth for movie studios slowed in the first half (up 6.5% from nearly 20% in 2002), Internet outlays skyrocketed 71.2% in the first half, according to TNS Media Intelligence/CMR.
Yahoo!'s Yahoo! Entertainment, which claims to command 50% of all Internet movie-ad dollars, maintains the movie the category is surging -- much of it siphoned from newspapers.
"Some studios have doubled their online media budgets," said Jim Moloshok, senior vice president of media, entertainment, information and finance for Yahoo! and Yahoo! Entertainment. Though he wouldn't name specific studios, he said "they are moving money from print into online."
Some evidence
There is evidence newspapers have taken some hits recently in this area. Two of the largest newspaper companies, Gannett and Tribune Co., indicated a weakness in the movies and entertainment category in July. A Gannett spokeswoman declined to comment. A New York Times spokesman said the paper was in "preliminary talks" with the studios and their agencies regarding 2004 plans.
"The category has been weak for newspapers this summer," said Merrill Lynch analyst Lauren Fine, but she quickly added that she had no way of determining whether online competitors were to blame.
Dave Murphy, president of Tribune Co.'s Media Net, which orchestrates cross-market and cross-platform deals for the company, said any implications that online was drawing share away from newspapers in this arena was "very difficult" to measure.
Ego and competition
Additionally, studios can't move the bulk of their budget out of newspapers for two reasons: ego and competition.
Big-name producers, directors and stars in major markets such as New York and Los Angeles want to see print ads of their movies in the newspapers they read. Additionally, studios still compete heavily with each other.
"Everyone would like to not have to run so much newspaper -- but you can't," said Kristy Frudenfeld, senior vice president of media for Walt Disney Co.'s Buena Vista Pictures Marketing, "because you know Sony [for example] is going to run a double-truck ad.
A game of chicken
"Nobody wants to be the first one to blink," she said. "We started this three different times [to cut back on newspapers]. But then you get into the reality of what is going on competitively, and you have to backpedal."
Some major-market newspapers are well aware of movie companies' need to accommodate talent. Two years ago, the Los Angeles Times raised movie studio ad rates 9%. The move surprised marketing executives, who said readership levels at the Times, owned by Tribune Co., have been declining or held steady in recent years.
Fandango.com
Movie theater owners have also been looking for alternatives to newspaper ads. For instance, 10 of the largest U.S. movie exhibitors are partners in Fandango.com, a movie ticketing and information site that represents more than 13,000 movie screens -- more than 46% of the U.S. theater market.
But newspaper companies aren't sitting idle. For instance, Fandango.com recently struck a joint venture with Tribune Media Services where Tribune's online readers can link to Fandango to buy movie tickets.
Nonetheless, Tribune's Mr. Murphy took pains to not underestimate any competition. "It's a customer-by-customer battle today," he said. "Advertisers are doing their best to evaluate the return on investment of all media. And we're up to our neck in it. ... Welcome to the media world."
For years, some movie media executives have yearned to cut back on newspaper ad spending, believing it inefficient in reaching the prime movie consumers:
young males and females who increasingly get movie information, including local schedules, online.
Movie-studio research has shown movie newspaper ads don't encourage people to see a specific wide-release film, and that by the time a consumer reads an ad in a newspaper, consumers already have made up their minds what to see. Despite this, about 10% to 25% of the average $25 million marketing budget for a wide-release movie is earmarked for newspaper ads.
71% spending spike
But the ad model may be shifting. While newspaper spending growth for movie studios slowed in the first half (up 6.5% from nearly 20% in 2002), Internet outlays skyrocketed 71.2% in the first half, according to TNS Media Intelligence/CMR.
Yahoo!'s Yahoo! Entertainment, which claims to command 50% of all Internet movie-ad dollars, maintains the movie the category is surging -- much of it siphoned from newspapers.
"Some studios have doubled their online media budgets," said Jim Moloshok, senior vice president of media, entertainment, information and finance for Yahoo! and Yahoo! Entertainment. Though he wouldn't name specific studios, he said "they are moving money from print into online."
Some evidence
There is evidence newspapers have taken some hits recently in this area. Two of the largest newspaper companies, Gannett and Tribune Co., indicated a weakness in the movies and entertainment category in July. A Gannett spokeswoman declined to comment. A New York Times spokesman said the paper was in "preliminary talks" with the studios and their agencies regarding 2004 plans.
"The category has been weak for newspapers this summer," said Merrill Lynch analyst Lauren Fine, but she quickly added that she had no way of determining whether online competitors were to blame.
Dave Murphy, president of Tribune Co.'s Media Net, which orchestrates cross-market and cross-platform deals for the company, said any implications that online was drawing share away from newspapers in this arena was "very difficult" to measure.
Ego and competition
Additionally, studios can't move the bulk of their budget out of newspapers for two reasons: ego and competition.
Big-name producers, directors and stars in major markets such as New York and Los Angeles want to see print ads of their movies in the newspapers they read. Additionally, studios still compete heavily with each other.
"Everyone would like to not have to run so much newspaper -- but you can't," said Kristy Frudenfeld, senior vice president of media for Walt Disney Co.'s Buena Vista Pictures Marketing, "because you know Sony [for example] is going to run a double-truck ad.
A game of chicken
"Nobody wants to be the first one to blink," she said. "We started this three different times [to cut back on newspapers]. But then you get into the reality of what is going on competitively, and you have to backpedal."
Some major-market newspapers are well aware of movie companies' need to accommodate talent. Two years ago, the Los Angeles Times raised movie studio ad rates 9%. The move surprised marketing executives, who said readership levels at the Times, owned by Tribune Co., have been declining or held steady in recent years.
Fandango.com
Movie theater owners have also been looking for alternatives to newspaper ads. For instance, 10 of the largest U.S. movie exhibitors are partners in Fandango.com, a movie ticketing and information site that represents more than 13,000 movie screens -- more than 46% of the U.S. theater market.
But newspaper companies aren't sitting idle. For instance, Fandango.com recently struck a joint venture with Tribune Media Services where Tribune's online readers can link to Fandango to buy movie tickets.
Nonetheless, Tribune's Mr. Murphy took pains to not underestimate any competition. "It's a customer-by-customer battle today," he said. "Advertisers are doing their best to evaluate the return on investment of all media. And we're up to our neck in it. ... Welcome to the media world."
The Demise of Long-Term Planning
Martin Lindstrom
Remember when planning a marketing strategy would take two, even three years? How drawn-out research and development (R&D) procedures monopolized a product for four years prior to release? All that's about to change. Marketing strategy has entered the realm of immediacy.
We don't have any idea what marketing practices will be in the future -- not even a year from now. Outcome uncertainty is countered only by the certainty of constant change. We're forced to consider alternate means to develop and execute cogent marketing plans for an assumed future scenario, without losing touch with present market realities.
When former U.S. President Bill Clinton toured the country, he secured his reelection. He also managed to inspire ideas for the future of effective marketing planning and execution. What was unique about Clinton's tour was that his team established dialogue with citizens of every state in the country. In so doing, they could map each community's view on the incumbent president's record of achievement and understand his strengths, weaknesses, and potential.
The advance team was rumored to have visited thousands of local streets to interview local inhabitants in their own environment, then feed the information back to the Clinton campaign bus. With information in the hands of the president's advisers, Clinton's speeches and briefings were adjusted and rewritten to relevantly address disparate communities' needs. The campaign tour's contact with the country's voters steadily increased the pro-Clinton vote.
Whether every detail in this story is accurate or the whole concept a fabrication isn't the point. What's critical is the process: research through close dialogue to detect and act on shifts in market preferences. That's how a product launch should happen.
A product launch should establish milestones throughout a campaign, just as Clinton achieved them on his journey. A launch mustn't be corralled in a predetermined direction, but instead respond to market feedback. It should be aware of competitor reactions, consumer trends, audience reception, and opinion. All these factors are difficult to predict prior to a campaign actually beginning. They're impossible to predict two or three years in advance of a product's release.
Planning an interactive strategy? Planners need to be among their intended audience, absorbing and responding to feedback from the streets, the Internet, chat rooms, text messages... you name it. Interactive planning strategy demands you take the temperature of the real world and reflect it in a flexible marketing plan that undergoes constant revision. The resulting brand message will communicate substantially more relevance than any long-term, predictive marketing plan ever could.
For marketers, long-term planning is facing an inevitable demise. It's being replaced with more flexible planning processes that force companies to listen to their customers. Consumers see through the hype. They know companies can no more predict the future than they themselves can. And they know marketers depend on having a receptive finger on the consumer community pulse to achieve and retain market share.
Your planning horizon must be shortened. You'll need to be among your target population, conducting intensive, incisive research. And you'll need to react to feedback, not lock your brand into a strategy that's been years in the planning.
This won't be easy. But consumer-aware branding that's flexible and market responsive is the objective. Consumers are moving faster than ever. Your brand has to keep up.
Remember when planning a marketing strategy would take two, even three years? How drawn-out research and development (R&D) procedures monopolized a product for four years prior to release? All that's about to change. Marketing strategy has entered the realm of immediacy.
We don't have any idea what marketing practices will be in the future -- not even a year from now. Outcome uncertainty is countered only by the certainty of constant change. We're forced to consider alternate means to develop and execute cogent marketing plans for an assumed future scenario, without losing touch with present market realities.
When former U.S. President Bill Clinton toured the country, he secured his reelection. He also managed to inspire ideas for the future of effective marketing planning and execution. What was unique about Clinton's tour was that his team established dialogue with citizens of every state in the country. In so doing, they could map each community's view on the incumbent president's record of achievement and understand his strengths, weaknesses, and potential.
The advance team was rumored to have visited thousands of local streets to interview local inhabitants in their own environment, then feed the information back to the Clinton campaign bus. With information in the hands of the president's advisers, Clinton's speeches and briefings were adjusted and rewritten to relevantly address disparate communities' needs. The campaign tour's contact with the country's voters steadily increased the pro-Clinton vote.
Whether every detail in this story is accurate or the whole concept a fabrication isn't the point. What's critical is the process: research through close dialogue to detect and act on shifts in market preferences. That's how a product launch should happen.
A product launch should establish milestones throughout a campaign, just as Clinton achieved them on his journey. A launch mustn't be corralled in a predetermined direction, but instead respond to market feedback. It should be aware of competitor reactions, consumer trends, audience reception, and opinion. All these factors are difficult to predict prior to a campaign actually beginning. They're impossible to predict two or three years in advance of a product's release.
Planning an interactive strategy? Planners need to be among their intended audience, absorbing and responding to feedback from the streets, the Internet, chat rooms, text messages... you name it. Interactive planning strategy demands you take the temperature of the real world and reflect it in a flexible marketing plan that undergoes constant revision. The resulting brand message will communicate substantially more relevance than any long-term, predictive marketing plan ever could.
For marketers, long-term planning is facing an inevitable demise. It's being replaced with more flexible planning processes that force companies to listen to their customers. Consumers see through the hype. They know companies can no more predict the future than they themselves can. And they know marketers depend on having a receptive finger on the consumer community pulse to achieve and retain market share.
Your planning horizon must be shortened. You'll need to be among your target population, conducting intensive, incisive research. And you'll need to react to feedback, not lock your brand into a strategy that's been years in the planning.
This won't be easy. But consumer-aware branding that's flexible and market responsive is the objective. Consumers are moving faster than ever. Your brand has to keep up.
