marketing

Advertisers and Audiences: How Their Views on Advertising Effectiveness Differ

Advertisers and marketers spend a great deal of time crafting ads that they think are effective. Consumers who view these ads at times have different ideas.

“The Harris Poll has a long history of providing unique insights describing how and why consumers and business executives can think differently about the same issue,” said George Terhanian, President, Global Solutions, Harris Interactive. “We see LinkedIn and its critical mass of senior business executives across all industries, company sizes and geographical locations as an ideal partner for these kinds of polls,” Terhanian concluded.

Effectiveness of Advertising Types

When it comes to types of ads, advertisers and consumers agree on the effectiveness of some, but disagree on others.

• While over half of advertisers believe ads that make people stop and think (53%) and ads that give people new information (51%) are very effective, just three in ten consumers (30% and 29% respectively) feel the same;
• One-quarter of advertisers (26%) think ads that are integrated into the feel of the program, that is has the same tone as the program it is based in, are very effective compared to just 7% of consumers;
• When it comes to ads that show before/after, 24% of advertisers say they are very effective while 13% of consumers say they are very effective;
• One in five advertisers (21%) say ads that reinforce a message already known are very effective compared to 10% of consumers;
• Consumers and advertisers both like ads that amuse – 34% of consumers and 41% of advertisers say entertaining ads are very effective and one-third of both consumers (33%) and advertisers (32%) say funny ads are very effective. But there is a fine line in amusement as just one in ten consumers (11%) and 14% of advertisers say ads that don’t take themselves seriously are very effective. In fact, almost one in five consumers (18%) say these ads are not at all effective; and,
• Looking at advertisements that might not work two in five consumers (41%) and one-third of advertisers (32%) believe that scary ads are not at all effective. Also, over one-quarter of consumers (27%) and 18% of advertisers say ads about a serious topic that make people feel slightly guilty are not at all effective.

Addressing the Economic Crisis

Advertisers are using certain types of strategies for addressing the economic crisis, but is it working with consumers?

• Three in five advertisers (61%) say they are using a “value proposition” strategy, promoting sales, coupons and discounts and almost three in five consumers (57%) say that this strategy is working very well or well to help them sell their products or services;
• Two in five advertisers (39%) are using “empathy”, that is the companies understand what consumers are going through. But only one-quarter of consumers (24%) say empathy works very or somewhat well and one-third (33%) say it does not work at all;
• One-quarter of advertisers (25%) say they are using cheerleading – we’ve made it through tough times before, we’ll do it again, and we can help you do it. Almost two in five (38%) of consumers, however, say that these types of ads do not work at all;
• There is one type of ad addressing the economic crisis advertisers may want to use more – “luxuries for less”. Less than one in five advertisers (18%) say they are using it while one-third of consumers (34%) say these types of ads work very well or well in selling products or services; and,
• Among consumers, there is a generational divide as the younger age groups (18-34) are more likely to say each of these four strategies works very well or well. In fact, over half of 18-34 year olds (51%) say they think empathy works very well or well compared to just 19% of those 55 and older.

So What?

“Advertisers and those to whom they are advertising tend to see the world somewhat differently. For a particular television ad, for example, advertisers are often thinking sales while consumers are more likely to think of the ad as something they liked watching,” according to Marianne Foley, Senior Vice President, Strategic Initiatives at Harris Interactive.

“The LinkedIn/Harris Poll suggests somewhat otherwise—we see more of a convergence. While the order of magnitude differs, advertisers and their audiences tend to agree on what is most effective and what is least effective.

“This isn’t the most important story though. The research indicates that in this current economic environment, messages that talk money are of paramount interest to consumers,” according to Foley. “Ads that emphasize value propositions or ‘luxuries for less’ appeal to consumers more so than empathy and cheerleading. On the other hand, advertisers rate empathy and cheerleading above ‘luxuries for less’ on the list of themes they are using. This is an incredibly valuable piece of information for advertisers to know right now.”

marketing

Online Ad Pricing Has Significantly Increased In 2009

PubMatic revealed that industry ad pricing levels have increased 35% since the start of 2009. Pricing for ad inventory sold through indirect channels such as ad networks and ad exchanges has steadily increased every month, gaining 47% since the end of January . The sustained growth is explained in a research brief which shows that online ad pricing may be on the path to recovery.

While 2008 experienced record lows in online ad pricing, 2009 has shown consecutive ad price growth for every month since the start of the year. PubMatic found that each month has had steady percentage growth over the previous month, ranging from 3% to as much as 15%. PubMatic will be publishing a more comprehensive report on this data at its Second Annual Ad Revenue 2009 Conference on October 8th in New York.

“Although ad pricing has not returned to year-ago levels, the industry has gone up consistently every month since January 2009. The worst may be behind us,” said Rajeev Goel, PubMatic Co-Founder and CEO. “There is more hope that Fall online ad spending may reach near-normal levels. This brings more urgency for our Ad Revenue 2009 Conference, where publishers can learn how to take advantage of new technology and a growing ecosystem to secure more share of ad spending.”

Ad Revenue 2009 will help large publishers capitalize on this upward ad price trend, outlining the concept of the 2^nd ad sales channel, a major contributor to the improving ad pricing now and in the coming years. With online advertising experiencing rejuvenation, PubMatic is hosting this event to bring together industry thought leaders that represent many segments of the ecosystem to discuss how publishers can better monetize their ad space. Topics for the conference will include:

• The Evolution of Media Buying and What That Means for Publishers
• The New Economics And Revenue Opportunities of Data
• How New Ad Units Are Impacting Publishers
• Leveraging Measurement and Analytics to Increase Ad Revenue
• The Blurring Lines of Ad Exchanges, Ad Marketplaces, and Ad Networks

marketing

Over 100 Million Consumers Worldwide are Word of Mouth Advocates

More than 100 million consumers worldwide are Word of Mouth Advocates, a massive, highly influential, yet under-leveraged sales and marketing force, according to research by Zuberance.

Advocates are people who frequently recommend brands and products. Empowered by Social Media, millions of Advocates are:

• Evangelizing their favorite brands and products on Facebook, Twitter, MySpace, Bebo, LinkedIn, and on other social networks, online communities, and forums
• Writing positive reviews on sites like Amazon.com, ePinions, and Angie’s List plus on e-tailers’ and manufacturer websites. (TripAdvisor boasts more than 20 million reviews while Yelp has 5 million user reviews with positive reviews outnumbering negative by 6:1.)
• Posting positive comments about brands and products on YouTube, on blogs like Engadget and Gizmodo or even creating advocate blogs like “Slave to Target”

In addition, millions of Advocates are spreading positive Word of Mouth about brands and products in face to face settings, such as offices, restaurants, golf courses, trade shows, and more.

“Army of Advocates”

“An army of Advocates is evangelizing companies, brands, and products online and offline, and these recommendations lead directly to purchases,” said Rob Fuggetta, Founder & CEO of Zuberance. “Yet many companies are missing a major opportunity to increase sales because they are not identifying and mobilizing these influential Advocates,” Fuggetta added.

In the U.S. alone, about 30 million U.S. adult Internet users are “Word of Mouth Influencers” – adults who are opinion leaders and whose advice is sought, trusted, and acted upon by other consumers, according to eMarketer.

Advocacy is a global phenomenon. According to GfK Roper, 80% of consumers surveyed in 25 countries across five continents frequently recommend brands and products to their friends and colleagues with the average consumer recommending 3.7 brands. The total adult population in the 25 countries included in the Roper study is more than one billion people.

Advocates are Brand’s Most Effective Salespeople

Advocates’ recommendations drive sales. Numerous surveys by independent market research firms have shown that Word of Mouth is up to five times more influential than advertising, email, and search engine marketing. According to a study by Forrester Research, Inc., 84% of business buyers said peers’ Word of Mouth recommendations influenced their purchase decisions while only 24% said blogs impacted their choices. In a global Neilsen survey, 78% of consumers said they trust Word of Mouth recommendations from other consumers while only 26% trust banner ads.

Key Findings of Zuberance Research

The Zuberance study found that:

• Approximately 40% of a company’s customers — a surprisingly high percentage — are highly likely to recommend the company and its products or services to friends or colleagues. Among the companies included in the Zuberance study, the percentage of company’s customers who are highly likely to recommend ranged from 25% for a business products company to 76% for a consumer electronics manufacturer.
• About 25% of a company’s customers are Advocates. This percentage can vary, depending on several factors including the type of company or product and how easy a company makes it for highly-satisfied customers to spread positive Word of Mouth.
• Depending on the size of its customer base, a company may have hundreds of thousands to millions of Advocates. For example, a consumer electronics company with 10 million customers may have approximately one to two million Advocates.

marketing

Marketing ROI

Considering the impact from the auto industry meltdown, I thought it would be interesting to look at how current dealerships around the country are moving forward.  A new survey conducted by Foresight Research quantifies the automotive sales impact of print articles and print advertising. Then it compares print articles and print advertising influence to other forms of marketing communications used by auto buyers.

The study shows that the majority of vehicle buyers are influenced to some degree by print articles, and 45% are influenced to some degree by print advertising. 19% said print articles were a primary or secondary purchase influence, and 8% reported that print advertising was a primary or secondary influence.

“We also noted the influence by vehicle brand purchased and found that BMW, Cadillac, Acura, Lexus, Infiniti, Hyundai and Mazda lead the brands in terms of impact from print articles. Then we looked at the print advertising side and many of the same brands appear. The reason is that buyers are paying attention to both the articles and the ads,” says Steve Bruyn, CEO of Foresight Research.

So, what are the most influential publications? Consumer Reports and newspapers are widely influential but so are some of the automotive publications like – Car and Driver, Motor Trend, Automobile Magazine, Road and Track and Autoweek. “This study proves that print publications still play a role in this electronic era,” stated Bruyn.

The Foresight study also examines the messages delivered to buyers across all forms of communications to determine which channels are most effective at communicating each message. When communicating quality, commentary and reviews, pricing and value, safety ratings, fuel economy and customer satisfaction ratings – print articles and advertising score at or near the top.

marketing

Consumers Willing to Pay More for Innovation Despite Hard Times

Contrary to expected buying behavior, Retrevo® Pulse, a live report that tracks pricing and demand data for consumer electronics, indicates consumers are willing to pay higher prices for new and innovative products. Trends suggest companies that innovate and develop customer-centric products attract more buyers than companies that simply lower prices and maintain the status quo.

“We’ve seen prices successfully rise for leading edge products that meet customer’s needs,” says Retrevo CEO Vipin Jain. “Despite a 15% year-over-year decline in the overall demand for consumer electronics, there are companies that are innovating and succeeding in driving demand up while raising prices.”

The Retrevo Pulse shows higher Average Selling Prices (ASP) and demand for digital cameras and DVD/Blu-ray players driven primarily by new and innovative features. As standard definition DVD players have become a low-priced commodity, consumers purchase the newer Blu-ray technology with a corresponding higher price tag, raising the overall ASP for video disc players by more than 20%. More than a third of video disc players now shipping are Blu-ray players. Similarly, more than 50% of digital cameras shipping now have optical image stabilization and face recognition technology enabling a higher price, driving up ASPs for digital cameras by more than 10%.

The Retrevo Pulse also indicates that one of the hot categories last holiday season, Home Theater Systems, is seeing a decline in both demand and price. Even though the category has gone through a product refresh cycle, there have been no significant product developments, dissuading consumers from making a purchase, and less than 5% of home theater system products ship with integrated Blu-ray players.

“Today’s shoppers aren’t just looking for the lowest price,” says Vipin Jain, President & CEO of Retrevo. “They’re looking for long-lasting technology and they’re willing to spend more to acquire innovative products. To compete, manufacturers need to deliver new and improved versions of products that meet their customer’s needs, not just their pocketbooks.”

marketing

Just 42% of Companies Calculate Return on Investment of Applications They Develop

A survey of 300 software application developers at Fortune 1000 and other leading companies reveals that just 42% of companies calculate return on investment of the applications they develop. In addition, just 7% of respondents say they measure the return against a well-defined set of metrics and success criteria.

According to a 2008 report by the U.S. Census Bureau, computer software expenditures totaled $54 billion in 2006, the last year of complete statistics.

Commenting on the survey, Gabriel Torok, CEO of PreEmptive Solutions, said, “Before companies commit to spending billions on machinery, real estate or other hard assets, they calculate the expected return on investment, yet few companies do this with software. It adds up to a huge expenditure that is rarely measured as a genuine asset or balance sheet line item. As the economy tightens, companies will want to know how to measure the business impact and the return on their investments in applications – but few know how to begin.”

Torok suggests the following steps in creating an effective system for measuring application ROI:

a. Invest in developing meaningful and consistent usage and impact metrics

b. Tie these metrics to development, support and maintenance investment. strategies. Usage and impact metrics must translate into smarter application portfolio management decision making and development resource utilization

c. Incorporate application ROI management into broader business performance management practices. Success can only be assured when application asset management is fully integrated into operational and business performance management.

According to Gartner, Inc. in “Application Strategies Need Hard Data on Business Use” (20 May 2008, Andy Kyte), “CIOs and IT management teams should start to demand and expect each application to have some key use indicators defined that enable business activity to be monitored and regularly reported to support management prioritization initiatives.”

Additional survey results follow:

Does your company calculate a return-on-investment on the applications that you develop?
Yes – 42%
No/Unsure – 58%

The industry group with the highest positive response was Independent Software Vendors with 48% and the lowest was Government with 0%.

If yes, how does your company calculate return on investment of applications?
Apply a well-defined set of metrics and success criteria to ensure a consistent approach – 16% (7% of total respondents)
Treat each situation as unique or have multiple approaches – 84% (38% of total respondents)

The industry group with the highest percent using a consistent approach was Telecommunications with 25% and the lowest was Financial Services with 0%.

If no, would your company benefit from adopting a consistent system for measuring application return on investment?
Yes – 41%
No – 19%
Unsure – 40%