Four Times Zero Is Still Zero

I recently moderated a panel at OMMA Global San Francisco titled "Will Online Advertising Ever Deliver on the Promise of Precision?" The panel discussion focused on the growing use of data in identifying and buying targeted audiences. The session was prompted by a post on Metrics Insider authored by Michael Andrew, Director of Search and Analytics at Mediasmith. In his article, Michael opined that:

Recently there has been buzz around the rise of advertising exchanges, which bring media inventory into a liquid, dynamic environment driven by automation and technology. The exchanges come in many flavors, but they all move in the direction of allowing wide swaths of media impressions to be bought in a computerized manner.

 Beneath the surface of this move is a far greater shift that will shake up and unsettle marketing as we know it. It is about data -- data in ways we have never before fathomed. The future of advertising is not about social, not about viral videos, not about mobile, not about any new medium or any new ad unit -- but about data. Those who know what to do with this will be the new kingmakers, the new rulers of Madison Avenue -- or the creators of a new Avenue of media.

In the OMMA panel -- which featured Jeff Hirsch, CEO of Audience Sciences; David Zinman, VP and General Manager of Yahoo Display Advertising; and Jim Larrison, Chief Revenue Officer for Adify -- we explored many aspects of the "data in advertising" topic. We covered the growing use of ad exchanges, the role of ad agencies, the potential disintermediation of ad networks, the risk that the original owner of a "cookied" Web site audience will see that audience bought by competitors on the exchanges, and the role of branded sites in the exchanges, among others.

We also touched on the importance of the creative in targeted advertising campaigns, but because of time constraints weren't able to do the topic justice. So I thought I'd add a few personal observations here.

Let me say upfront that I'm all for targeted advertising. It has benefits for publishers and advertisers alike. It increases the efficiency of a media buy by delivering more impressions against the desired target segment. But I cringe when I hear it suggested that the future of advertising will begin and end with the use of targeting data. Excuse me, but isn't the creative message every bit as important as who we say it to? Doesn't the efficacy of any ad campaign depend to a large degree on the copy being used?  If we put such importance on targeting data that we forget we are fundamentally communicating with, and are trying to influence the behavior of, human beings, I worry that we'll fail to realize the full potential of the online channel.

It's been shown that online advertising has captured 30% of all direct-response ad dollars spent across all media, but only 5% of the branding dollars. If we're to increase that 5% share, I believe we must think in ways that are consistent with the needs of branding campaigns. And that means focusing much more on the creative.

Research into the impact of TV copy conducted by comScore's ARS Group has shown that the creative is four times more important in determining sales outcomes than the media spend. That's one of the reasons U.S. marketers spend about $300 million each year researching their TV copy to make sure it's communicating in the desired manner before it's actually used. That dwarfs the pittance that's currently invested in the pre-researching of online creative.

It's no wonder the Internet doesn't get the nod more often for branding campaigns.  No longer can we slap a few alternative banners together, run them in a real-world campaign and measure click rates to gauge the branding impact. The click has been shown to be irrelevant in that regard. No, we need to do our homework before the online campaign runs and make sure we have a persuasive branding message. And, as the use of rich media and video increases, we can expect online commercial production costs to increase markedly, making the need for online creative pre-testing even more important.

The importance of creative was vividly brought home to me more than 30 years ago when, as a young researcher, I was analyzing a TV weight test for a leading beverage company. The company wanted to measure what would happen if it increased TV spending behind one of its major brands by a factor of four.

We used the AdTel split cable ad testing system to deliver the higher weight level to one group of panelists, while keeping the weight steady among a balanced control group. We then compared the brand buying behavior of panelists exposed to the higher TV weight with the behavior of the control group of panelists exposed to the normal weight level. To my surprise, after six months and later after a year of testing, we could see no increase in buying of the advertised brand among those panelists exposed to the heavy weight level.

How could that be, I wondered? Four times the normal TV weight level meant that the company was spending huge amounts of ad money behind the brand - well north of $100 million in today's dollars.

The answer came when we looked at the results of copy tests of the particular TV commercials being used. The research showed that the TV ads were doing a particularly poor job of persuasively communicating a value that would succeed in attracting new buyers or even creating a compelling reason for existing brand buyers to buy more. I'll never forget what the client's wise research manager said to me: "Gian, you need to remember that four times zero is still zero!"

So, as we embrace the future of digital advertising amidst an abundance of targeting data, I hope it doesn't blind us to the need to also make sure that we have our message and communication optimized.  Because, without a persuasive branding message, all the targeting precision in the world won't increase sales. Mathematical laws aren't about to change on our behalf: four times zero will always be zero.

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5 comments about "Four Times Zero Is Still Zero".
  1. Nancy Shaver from experian , April 9, 2010 at 1:52 p.m.

    Well--let's not muddy advertising that is about brand building and advertising that is seeking a direct response. History--and a lot of it--tells us that targeting is responsible for driving well over 50% of direct response results--the offer another 25-30% and creative 20% or less.

    Of course, if the measure is recall or awareness, creative is powerful--but in this fragmented media environment how sustained is recall--and what does it mean for the bottom line? How many of us recall an engaging commercial and forget what the product or company was? Perhaps it's time to rethink the value of an impression. When the consumer is receiving so many more every hour than the consumer a decade ago did in a day, how effective can any creative be in engaging a consumer? And how much should we invest in branding anyway?

  2. Gian Fulgoni from comScore , April 9, 2010 at 7:17 p.m.

    Thanks for your comment Nancy. Actually, I was specifically trying to focus on the opportunities to grow branding advertising online. Here's why. About 70% of all traditional ad spending is branding, so if the Internet is only capturing 5% of it, there's huge upside. In contrast the Internet is already capturing 30% of the 30% of traditional ad spend that can be classified as direct response. So the upside in direct response is far smaller than that in branding. As to whether branding advertising still works in today’s cluttered ad environment, the answer is a compelling “yes”. We at comScore along with other research companies have done a ton of research into the impact of branding ads online and have gotten great results. Even in TV, research published in the June 2009 issue of the Journal of Advertising Research showed that there has been no decline in the sales impact of TV advertising over the past 15 years. There's no doubt that branding still works – whether online or offline – if it’s supported by strong creative. The Internet’s more precise targeting makes the online advertising more efficient. But it’s strong creative that gives it its efficacy. To suggest that branding advertising doesn’t work implies the death of brands -- and that’s just not in the cards.

  3. David Shor from Prove , April 10, 2010 at 7:16 a.m.

    I like Nancy's answer above. We are seeing an evolution in which great creative, view-based (rather than click-based) tracking and online media attribution engines become the powerhouse-3. Although we are seeing an increase in email response rates (in large part because of consumer training, good spam filtering, and the effectiveness of CAN-SPAM), we are seeing a decrease in clicks in lots of places. So great creative that drives increased view-thrus (or clicks of course) is the other side of the coin from data/targeting.

    What I think is happening is that digital marketers even within big brands have now had enough time convincing their old school marketing executives that test-test-test is how it needs to be done for digital (which drives our creative teams crazy but they get it).

    As I spoke about at OMMA Performance in January 2010, it's about the data and creative, period.

  4. Kyle Lake from Done In Sixty Seconds, LLC , April 11, 2010 at 4:26 p.m.

    Very informative perception. Enjoyed this read. I agree as well that targeted marketing is good for publishers and advertisers but ALSO for consumers...which I think you come back to when talking about creative content/branding. There must be some accountability on the advertiser to ensure that the consumer actually "knows' their being targeted. How many times do we completely miss the message even though it's a product/service we need or want. Definitely goes hand in hand. So will the advantages of the more tangible metrics associated with the internet put the TV folks (in their current evolution) out of business?

    http://www.donein60.com "An Online Video Creation Tool"

  5. Michael Andrew from Mediasmith , September 9, 2010 at 1:35 a.m.

    A much belated response -- I agree that the message is vitally important and that strong creative is critical to a successful campaign whether online or offline.

    That said in many ways creative is just another axis in the data environment whose effect varies depending on the context and audience being reached. In the traditional world you can plan on demographic skews but you also need a message that can resonate with as large an audience as possible. The more that targeting technologies improve it becomes about the message to that exact user or segment and not just 1 concept which sells across the board.

    This enables brands to engage their audience in new and unique ways -- see the individualized videos from the Old Spice Guy or the over optimized retargeting ads from Zappos. Google has already shown this with their huge numbers of advertisers serving very niche needs and segments.

    Brands coming online will now have both the ability to get scale through exchanges with the ability to customize and tailor their message to all of the flavors of their customers -- perhaps creating many new innovations and niche sub brands to address the needs of a consumer increasingly in control of their media habits and purchase decisions.