Monthly Archives: June 2014

Rep. Cantor’s Primary Loss: Takeaways for Marketers and Business Leaders

Culture, Purpose

Let us look at some of the stark statistics of the primary challenge.   Rep. Cantor had a campaign fund of more than $5 million while his challenger Dave Brat raised just $300,000.

  1. Customers vote with their wallets:   The key takeaway is from Dave Brat, who said, “The reason we won this campaign, there is just one reason, and that’s because dollars do not vote — you do.”  The product or service you are offering matters much more than the communication about the product or service.
  2. Message relevance:   With a differentiated message relevant to the audience, you don’t need a lot of investment to amplify the message.
  3. Unwavering core principles:  Cantor constantly changed his positions on immigration, bailouts, etc.   Brands to be relevant over long periods need to morph the message as consumers interests and priorities change.   But the core essence of a brand should be non-negotiable.
  4. Don’t go head to head when you are ahead:  Cantor’s aggressive ad spending boosted Brat’s name identification at a time when he didn’t have the wherewithal.
  5. Never underestimate your competition:  Brat’s campaign was run by a relatively inexperienced 23-year old campaign manager armed with a Walmart flip-phone.
  6. Consumer sentiments can change quickly:  As per a poll in late May, Cantor was leading 62%-28%.  Two weeks hence, and Cantor loses by a margin of 10%.
  7. Perils of leadership:  As an executive you may be few layers away from the customer, and consequently, out-of-touch with reality.   Cantor was busy setting the Republican agenda in the Congress, while Brat was working closely with the locals and listening to the likely voters.

Marketing Effectiveness: Long-term versus short-term effect

Evidence-based Decision, Marketing mix, ROI

In recent years, there has been a growing sentiment (supported by anecdotal evidence) that the long-term effects of advertising is diminishing.    Hypothesized causes include:

  1. Growing impact of digital and information availability in consumer shopping and search processes.
  2. Decreasing (product) brand loyalty.
  3. Consumer culture of “here and now” and fleeting consumer interests across product and shopping categories.
  4. Growing plethora of consumer choices in almost any product category.

A recent study conducted by Nielsen Catalina, Kellogg, and CBS concludes that the long-term effect – defined as total sales lift – range from 1.8 to 4.5 times the short-term sales lift.  Such estimates of long-term effects are even higher than similar assessments almost three decades back, further questioning anecdotal evidence.   The wide variation in long-term effects across brands and categories, further highlights the importance of precisely estimating and incorporating the effects in marketing investment optimization.

In order to tease out the long-term effects of advertising investments, we need more granular data on marketing investments within each media and marketing channel, and sales.

  1. Higher temporal resolution:  Hourly and daily marketing stimuli and investment data instead of typical weekly and monthly data.
  2. Improved spatial resolution:   Investments tracked across markets  – DMAs, states, etc.
  3. More precise targeting resolution:  Who is exposed to the advertising? visitors versus prospects versus customers?
  4. Disaggregate customer and sales data:  Sales from existing customers versus new customers? Conversions rates – prospect to new customer to repeat customer? Frequency of purchases by customer type?  Order value by customer type? Customer-level sales data?
  5. Test and control:   Often,  there is the need to design and execute structured experiments to generate the granular data for estimating long-term effects.
  6. Go beyond sales and profit:  To evaluate lasting effects of advertising, we need to marry brand tracking data with marketing effectiveness analysis.

Collating data spanning the upper and lower paths of the customer decision journey and statistically analyzing the interrelationships provides a stronger foundation for marketing investment decisions.

 

Buying Digital Ads Programmatically: Buyers Beware

Programmatic Buys, ROI

Marketers need to be wary of ad tech peddlers claiming to buy ads one impression at a time through a real-time auction.    An interesting quote from Bill Lederer, CEO of MediaCrossing, a programmatic trader, highlights the state of programmatic buying.

“Some of this inventory being showcased as programmatic is being bought with a whole lot of phone calls and emails,” he said. “There’s a certain amount of phoniness in the discussion.”

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Both direct and brand marketers will and must move dollars to programmatic ad buys for many reasons within digital media, and in the future as programmatic buying opens up for “traditional media” such as TV, but weigh the pros and cons carefully.  Reality is lagging well behind the hype.