MEDIACOM Marketing Digest 6 July 2004

MEDIACOM Marketing Digest 6 July 2004

Is TV Advertising past its Use By Date? Even as we wait nervously for our share of the September through December TV bookings to be processed by the TV channels, we continue to worry about the effectiveness of TV advertising. Audiences down, costs up, and whole chunks of demographics missing in action.

And now this: a new US report released last week by Deutsche Bank, which examined 23 major household, personal-care, food and beverage brands, found only 18% of the brands studied generated a positive return on investment (ROI) from TV advertising for periods of one year or less, and less than one-half, 45%, saw their ROI pay off in the long term.

Home and personal-care products, traditional big TV advertising spenders, displayed surprisingly negative correlations between TV ad spending and ROI. The growth of TV spending was up to 8% more than sales growth over the past three years.

The chart below, prepared by eMarketer.com, demonstrates the problem: in a worst-case example, Coors returned an investment of just 1 cent for every dollar spent on television. Colgate, the best of those shown, could only manage 32 cents ROI for every dollar spent.

As The Economist wrote last week, in an article entitled The Harder Hard Sell, "The advertising industry is passing through one of the most disorienting periods in its history. This is due to a combination of long-term changes, such as the growing diversity of media, and the arrival of new technologies, notably the Internet. Consumers have become better informed than ever before, with the result that some of the traditional methods of advertising and marketing simply no longer work."

That's the new reality, from Auckland to Amsterdam, from Zagreb to Zanzibar. We all live and work in an information-saturated world. As consumers, we have become highly skilled at filtering or simply ignoring irrelevant advertising messages. And our leisure time is fragmented across an ever-increasing range of media. We text, we surf, we xbox, we ipod, we catch snippets of Juice, BBC World, Prime NZ Idol, Jackass ... we consume our media in quick snacks from an expanding smorgasbord of choice.

It's not just about TARPS anymore (if it ever was) With consumers overdosing on advertising messages, effective media planning and buying isn't just about sticking 30 second commercials on the telly. It's about identifying consumers, appreciating their needs, attitudes and interests and delivering messages in a time, place and manner that will suit those consumers. And yes, those effective media touchpoints can be television, radio or print. But, more and more in this new millennium, that point of contact may be via cellphone, email, videogame, postcard or even chalkmarks on the pavement. We need to choose media channels that will reach - and resonate with - each market segment..

Nice to live in interesting times ...

Making Their Numbers (Up) Like hundreds of other media organizations that still use paper to deliver news in an increasingly electronic world, Newsday, The Chicago Sun-Times and the Spanish-language daily Hoy have been under pressure in recent years to maintain their readership and, ideally, increase it.

Yet few newspapers or magazines have acknowledged, as each of those newspapers did recently, that they falsely pumped up their circulation to convey the illusion of vitality to advertisers and investors.

Now analysts are wondering if newspaper and magazine publishers are policing their circulation practices aggressively enough and if the longstanding measures to monitor accuracy are still sufficient in an increasingly competitive climate. At stake are hundreds of millions of advertising dollars - the lifeblood of these companies.

Many advertisers and publishers said that while the revelations of inflated circulation were troubling, they believed that most publishers were honest and that the system worked.

Others are not so politic.

"It is a totally and preposterously antiquated system," said Kent Brownridge Sr., general manager of Wenner Media, which publishes Rolling Stone, Us Weekly and Men's Journal magazines. "We should be providing advertisers with real-time data. What you sold in January should be up on the Web in February."

Indeed, at a time when the television industry can provide overnight ratings, and Web publications are becoming increasingly adept at defining and measuring their audience in real time, buyers of print advertising may have to wait as long as 18 months to find out if they got what they paid for.

A small step in the right direction in New Zealand: Nielsen Media Research has increased its readership sample size to 15,000, and since the beginning of the year has been gathering data for a new six-monthly rolling research system for print media. Come August, we'll be able to confirm the readership habits of Kiwi consumers in the first half of 2004 - so the data will be no more than between two and eight months old. Think of it as a study of history - or perhaps, a limited form of time travel.

Allow us to endorse Mr Brownridge's indignation. Data smoothed across six months, while a minor improvement on a twelve month sample, still tells us nothing about the real impact of a real advertisement in a specific issue of a specific newspaper or magazine. There is plenty of evidence (anecdotal to us, very real to publishers) to suggest that a princess or a local celeb has a very definite impact on magazine sales. Similarly, newspaper street sales soar when the content is hot and happening.

Circulation data should be available to the advertising industry at the same time as publishers - after all, we're footing most of the bill. Yes, we're aware that there are some difficulties getting reliable data from the distributors; this could be just the excuse the industry needs to drive for real-time results.

Immediacy and accountability would go a long way towards luring advertisers back to print.

ABOUT MEDIACOM MEDIACOM, with offices in 80 countries, is one of the world's largest and most respected media service companies.

We create media solutions that build business for a wide range of local, regional and worldwide clients.

With $13 billion in global billings, a commitment to strategic insight, total communications planning, tactical media brilliance and tough but creative media negotiating, MEDIACOM provides unsurpassed value in today's chaotic media marketplace.

InStore Radio Returns Progressive Enterprises have rebuilt and rebranded the in-store radio offerings previously offered by Woolworths, adding in digital technology and enhancing the appeal of the medium. Some key facts:

* Operates in all 149 Woolworths, Foodtown and Countdown stores nationally. * National coverage, with a claimed reach of over 2,000,000 customers every week. * Can market to individual stores or store groups. * Centralised programming and scheduling. * Advertising will be limited to seven minutes, or fourteen 30-second advertisements per hour.

The revamped medium is only about a month old. But research from in store radio in its earlier iteration, pre-2001 shows the following results:

* Anti bacterial wipes sales up 14%, brand message only * Light bulbs sales up 20%, brand message linked to television, no special price * Matches sales up 32%, linked to giveaway promotion, no special price * Fruit juice sales up 45%, brand message used in store but not co-ordinated with specials :

A new flava for Auckland radio The frequency previously known as Cool Blue now has a new flava.

Mere seconds after we transmitted last week's edition to our loyal subscribers, we received word that Auckland's 96.1FM frequency has a new tenant. Turns out that what the City of Sails most needs is not cool jazz, but hot Hip Hop and R'n'B - through Flava 96.1, "an urban radio station" powered by Stacey Daniels and Oscar Kightley.

More cynical souls than our good selves might see this new flavouring as an attempt by The Radio Network to kneecap Mai FM, whose performance in recent years has been successful enough to warrant a competitive response of this nature. We, however, choose to believe that TRN's ongoing research has highlighted a deficiency in the marketplace underserved by the regular diet of Top 40 fastfood, over-cooked classics, hard-chomping rock and relentlessly middle of the menu fare on which most of us non-downloaders are content to nibble.

Flava is now cookin' on 96.1, straight from the Sky Tower. If you've got what it takes, tune in and check it out.

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Fat's In The Fire Australian television ads aimed at children promoting inactive lifestyles and unhealthy eating will be banned under new guidelines announced by the Australian Broadcasting Authority earlier this week.

The new Commercial Television Industry Code of Practice introduces tighter measures for food and beverage advertising to children amid a hot political debate over childhood obesity. An estimated 1.5 million Australian children are overweight.

Under the new code approved by the Australian Broadcasting Authority, "advertisements directed at children should not encourage or promote inactive lifestyles or unhealthy eating or drinking habits".

Meanwhile, British doctors have reiterated calls for a ban on advertising all food to children under 12, as the British Medical Conference lays the blame for child obesity on kids being bombarded with ads.

Last month, the BMA said that junk food manufacturers should be banned from targeting unhealthy foods at children and called on the government to ban television advertising of junk foods during children's viewing hours.

At the conference, delegates were told that the food industry spent £300m promoting what it dubbed unhealthy food in 1999, and that 99% of food advertising during children's TV was for fatty and sugary foods.

New Zealand data indicates that one third of Kiwi children are overweight, and nine per cent of those are obese. And, inevitably, pressure for action is increasing. Groups like the Child Obesity Action Group want to limit the number of fast-food outlets near schools.

The NZ Government is reportedly mulling whether to prohibit food advertising aimed at children, but action thus far has been limited to initiatives such as the Healthy Eating Healthy Action programme, which includes

* promoting nutrition, physical activity and obesity issues in preschools and schools; * developing activities for promoting nutrition and physical activity in primary health care settings; * developing and expanding community action programmes for high need groups; and * developing and implementing a range of social marketing strategies

We won't debate the merits or otherwise of blaming advertisers for society's woes; but we do note that moderation by regulation is catching on and - if not for political considerations - New Zealand would probably have succumbed already. Perhaps a little self-regulation would go a long way ... .

Direct Marketing Response Rates A landmark study conducted last year by the US Direct Marketing Association (DMA) found that nonprofit fundraisers, retail stores, and establishments rendering services to businesses achieved the top average response rates.

According to The DMA 2003 Response Rate Study, for the 1,122 industry-specific campaigns the DMA studied, the average response rate was 2.61 percent.

The study found the industries that utilize direct and interactive marketing to achieve above average response rates were:

* Nonprofit Fundraisers (5.35 percent) * Retail Stores (3.36 percent) * Establishments Rendering Services to Businesses (3.34 percent) * Manufacturing (3.17 percent) * Personal and Repair Services (3.07 percent) * Travel (2.98 percent) * Computer & Electronic Products (2.86 percent) * Packaged Goods (2.79 percent)

Direct Mail The overall average response rate for direct mail was 2.54 percent, including mailings to both house and prospect files. Direct mail produced the highest response rates for:

* Packaged Goods (5.36 percent), * Store Retailers (4.35 percent), * Nonprofit Fundraisers (3.93 percent), * Travel Services (3.61 percent), * Personal Repair Services (3.02 percent).

Catalogue The overall catalogue "media" average of 2.41 percent is just below the catalogue "industry" average of 2.52 percent. Industries that utilize catalogues to achieve above average response rates included:

* Membership Organizations (3.20 percent), which generally used catalogues to generate sales or leads for higher-ticket items, * Retail Stores (3.17 percent), which utilized catalogues primarily for direct order and traffic building, * Manufacturing (3.17 percent).

E-Mail All industries that were surveyed, except real estate, are now using e-mail in their direct marketing mix. More than nine out of 10 Web marketers surveyed reported that they allocated their media dollars for e-mail marketing to their house files. At this still early stage in the evolution of e-mail marketing, the average overall response rate for e-mail campaigns was 1.88 percent. Significant leaders in e-mail response rates include:

* Wholesale Trade (3.83 percent), * Manufacturing (3.39 percent), * Retail Stores (2.71 percent), * Communications (2.65 percent), * Health Services (2.29 percent).

Notably, these five industries had particularly high results in their lead generation efforts, many of which were also for high-ticket items. With the exception of retail stores, these industries are also more focused toward the business-to-business market where spam issues are not as sensitive as they are in consumer marketing.

Telephone The average response rates for telephone marketing were the highest of all media, yet the average promotion costs were also relatively higher. According to the study, the average response rate for telephone marketing campaigns is 7.44 percent. Industries that utilize telephone marketing to achieve above average response rates were:

* Nonprofit fundraisers, which led all industries by far (19.42 percent), most likely due to the fact that donors tend to be loyal repeat contributors, * Education (12.46 percent), * Insurance Carriers/Agents (8.78 percent), * Manufacturers (8.56 percent), * Travel Services (8.0 percent).

Source: US Direct Marketing Association.

ENDS

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