What's Relevant? Do Advertisers Know?-Full Version

Does advertising still work? Are there better ways to engage and measure audiences? The Intersection asked these questions to Ed Malthouse, Associate Professor and Sector Head of Database and Data Mining at Medill, and Frank Mulhern, Integrated Marketing Communications professor and Associate Dean of Research.

Intersection Question(IQ): Advertisers have long challenged the measuring of audiences, and there are changes afoot. Nielsen Media Research has adopted a new way to measure time-shifted viewing. People meters are being deployed to track viewers' every electronic move. And many consumer products companies and broadcast networks are agreeing to performance-based ad deals. So what are the most effective tools emerging for multi-channel advertisers needing an answer to "what's working"?

Frank Mulhern: We're in the midst of a dramatic transformation in the way that media and advertising are done in this country. Much of it is driven by technology, and much of it is in addressable and interactive media which is much more measurable than traditional media. It's a slow transition because the people that run these businesses have a vested interest in the status quo. But it's coming because of the technology and the client companies want better metrics and want to know what parts of their advertising budgets are working. It's more of a direct-marketing model where you can measure the outcome of a communication and track it back to what was done in finely tuned and addressable advertising.

Ed Malthouse: An example of this is I was just over in Germany touring a store of the future for The Metra Group,a supermarket over there, and in terms of addressable technology, The Metra Group has shopping carts where you come into the store and scan your frequent shopper card and that identifies you as a customer. Then, as you go through the store, there's a wireless device attached to the shopping cart that talks to the point-of-sale advertising devices so the ads you see on flat-screen TVs vary depending on who is walking by. These shopping carts have my purchase history so they might feature a product that knows I've purchased in the past and have some interest in. Then my sales can be tracked to find out whether the point-of-sale advertising worked based on whether I purchased the product they featured.

IQ: Is there a perception that we can reach people more efficiently or has it been proven that it works?

Malthouse: One of the important lessons moving forward is to test your advertising. You want to determine whether it will work and you do that by designing a rigorous test. One group of people get a certain set of ads, and then you have a control group that doesn't get those ads and you can make a comparison of the two to see if it's working.

IQ: Is there a group of people out there, the 20-somethings, the "on demand" generation, that wants to see and do things on their schedule as opposed to a company's advertising schedule? Is that a harder group to reach and measure?

Mulhern: Certain groups, like young males between the ages of 20 and 40, are notoriously difficult to reach. Younger generations tend to not consume media like their parents did. So they don't read newspapers and they don't watch certain kinds of television. They are difficult to reach but they use a lot of interactive technology, and they are online a lot and there are ways to reach them but it's a different mindset from traditional advertising, which is to bombard people with messages. They new technologies are empowering the people who can filter and experience what types of brand communication they experience. But they still experience quite a lot.

Malthouse: I think the emphasis in the future is going to be on relevance so creating relevant messages will be important. We see all these technologies that have been wildly successful for blocking advertising ranging from TIVO to my Spam filter to the do not call list. So the only way to get through is if the consumer trusts you and you produce a relevant advertisement for that consumer.

IQ: So what are some ways to reach this 20-to-40-something male who is elusive and hard to reach?

Mulhern: Non traditional or alternative channels such as video games. From brand placements in video games to more dramatic things like web sites that are fun for these people to go to and participate in online. BMW films are carted out as a great example because it's an engaging brand experience.

Malthouse: Another way is search. If I want to find something, and companies come back to me with a relevant and compelling offer, then you've cut through the advertising clutter.

IQ: Is it an encouraging message then for advertisers that there is technology emerging that will enable them to better reach people? Maybe five years from now when many consumers are carrying a device that will hold all their important information and help them to do real-time research before they buy something?

Mulhern: It'll be a boon to consumers because they'll get information the way they want it. Advertisers will have to change the way they approach consumers. These types of technologies empower consumers and then they can be selective about what brands and experiences they want to have and so the brands have to become more interesting and relevant so consumers will want to seek them out.

Malthouse: People question whether privacy will be a concern. If you have this device that knows everything about me and advertisers are using this knowledge, will this cause the consumer to become distrustful? The answer is you have to test it. Is using all this information to create highly targeted messages positive or negative with consumers?

IQ: Should advertising budgets be adjusted so that there's less emphasis put on the end result of the ad and more emphasis put on experience and relevance?

Mulhern: There will be fundamental changes in the way that advertising budgets are done. Right now most of it still goes into traditional media. There are still capacity issues and not everybody has broadband so it will take some time for the technology to provide more opportunities. But the shift is underway.

IQ: Will measurement focus more on purchase behavior?

Mulhern: A lot of it is much more measurable because these technologies throw off data. With network technologies any time someone does anything it kicks off a data point and they go into databases and can be measured.

IQ: Are these interactions meaningful and worth measuring or is there something else that a marketing person should know?

Malthouse: You have to test it. You can send messages to cell phones and wireless devices, and hold off those messages to another group, and then determine whether these cell phone messages are effective.

IQ: What about the measurement of whether something is recommended to a friend?

Mulhern: That calls for a model that's more like public relations, not advertising. You're not completely controlling the communications. In advertising everything is controlled by the media companies and the advertising agencies. But in word of mouth and the press it's not completely controlled. It's influenced the way publicity people try to influence reporters. That's more of the model we are going to see more of. The advertisers are trying to propagate conversations and contribute to them and influence what people are saying about their companies and their brands, but not really controlling the content of all those communications.

Malthouse: There are now agencies that specialize in word-of-mouth marketing. For example, a rock star trying to promote one of his albums, or a movie I've made, the agency would identify a group of "taste makers," people that you and I know who give advice and we listen to them. These taste makers are out there and these agencies have identified them and what they'll do is send a copy of the CD or the movie early to that person, or invite them to a screening, and then they will expose them to the product and hope that that person goes off and says favorable things to his or her friends.

IQ: So what will Nielson and Arbitron and those companies look like five years from now? Who will be measuring?

Mulhern: I don't know if it will be those companies because they want to protect their existing revenue streams so they are wary about cannibalizing their own products but still they are moving into this space where these alternatives types of metrics are done. I think those types of companies are in bed with the advertisers and the media companies and they really don't want to measurements to be too good because then the clients aren't going to keep on spending their money. The quality of measurement in advertising is horrendous when you consider how much money is spent on advertising. But that's because these companies have a vested interest in these metrics not being too good because then the corporations would spend less. That being said, I think they are going to move into this space of doing this interactive metrics because if they don't, somebody else is going to do it and really what's behind it is corporations like Proctor & Gamble and some of the other big advertisers who want better metrics and want to hold the agencies and the media companies accountable. That and the technology are really what are going to drive the changes.

Malthouse: There's a new view of media emerging. In the past they way we've thought about advertising and its effectively depended on the quality of the ad and other characteristics such as its size [and placement]. The new view of media is the advertising still depends on the quality of the product and the creative, but it also depends on the engagement with the media vehicle. So how much is the reader engaged with the newspaper or the magazine or the television show that they are viewing at that time. For example if you have a magazine that is highly trusted by its consumers, we have found that trust carries over to the advertisements. If you have a magazine that is not so trusted, that distrust also carries over to the advertisements. So back to the metrics measures, in addition to straight usage measures of a product, we are also going to see the syndicated market research firms measuring the consumer engagement with various media vehicles. We are already seeing that with Simmons, which has it own set of engagement measures that we helped develop, applying to television, magazines, and Web sites.

IQ: Do you think prospects are good for Google to become this one-size-fits-all shop for ad placements?

Mulhern: Google wouldn't create the ads they'd just place them. They're trying to create a way to match ads to content and that's a different model from the way companies have sold ads. In some ways it might be more effective but it's more difficult to do.

IQ: Will Google come up with better and different ways to measure customer interactions with brands? Are they in a better position to figure that out than the traditional media and research firms?

Mulhern: Yes, and I think it's because they are operated by technological people who are savvy at building systems and research methodology to track and utilize all this data that's created in ways that can help the advertisers, and the advertising agencies aren't run by people who think that way.

Malthouse: An example of using data to track these experience in work that we've done through the Media Management Center, we've found that an important experience with newspapers and magazines is sharing what you read with others. There's a social experience. With a Web site you can actually track that so if I'm reading an article and I forward it to a friend, that can be tracked. My behavior can be measured as a consumer experience.

IQ: Five years from now will we have more insight into consumer behavior and better measurement?

Malthouse: Yes, and that's why we need people who are comfortable with both the technology and what can be learned from it about consumers.

IQ: If I'm a marketer, what do I make of all this?

Mulhern: Marketers should think about their consumers and their brands, and realize that those things remain constant, and they have to understand the consumer insight and understand what their brand means, and try to continue to develop ways to engage and interest with their consumers. But all that's changing because of these technologies and business models for media and everything else.

Malthouse: Marketers who understand all the information that's available will have a great advantage in the future because the technology people don't understand the consumers and the brands, so the winning combination is someone who understands brands and consumers and all the information that's available. You don't have to do it all but you have to understand it all. You won't ask for the right strategy if you don't understand all these elements. That's what we teach, to use both sides of the brain.

Posted at 03:54 PM
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What's Relevant? Do Advertisers Know?

Does advertising still work? Are there better ways to engage and measure audiences? The Intersection asked these questions to Ed Malthouse, Associate Professor and Sector Head of Database and Data Mining at Medill, and Frank Mulhern, Integrated Marketing Communications professor and Associate Dean of Research.

Continue reading "What's Relevant? Do Advertisers Know?" »

Posted at 02:37 PM
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Fact Check -- The Internet Market Will Weed Out the News Pretenders

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Professor George Harmon teaches a broad array of topics at Medill, from editing and reporting to business communications strategy and tactics. The Intersection asked Harmon about the changing way that many people are getting "the news."

Intersection Question(IQ): Many people are getting the bulk of their "news" from web sites and blogs that have no connection to news organizations. Does this create audience confusion about what's fact and what's fiction, what's news and what's nonsense?

Harmon: I think a lot of people have always been confused about the difference between news and commentary, and since we have more sources of information we probably do get more confusion.

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Measuring Media Usage >> Counting Combinations - Full Version

The Intersection interviewed Don Schultz, professor emeritus in service of Integrated Marketing Communications at Medill, and president of Agora, a global marketing consultancy in Evanston. His teaching has focused on communication integration, branding and the financial measures of marketing and communication. He has been looking at the way people process media, especially the simultaneous use of media.

Intersection Question (IQ): You've determined that people process information sequentially and in parallel form. Can you tell us what that means exactly?

Schultz: There are two kinds of people. People who process things sequentially and most of us who are over the age of say, 25, all grew up processing things sequentially. We learned to read, word after word after word. We turn the page read another word and so on so it's all sequential. What's happened in the last 15-20 years, is that we have surrounded people with communication. And as a result, they've learned to process things in parallel. If you look at younger people they think of nothing of looking at multiple things at the same time. So they process media in multiple ways, simultaneously.

If you have a teenage child and you go into their room, you find them sitting at their computer, with the radio and television both on, they're flipping through a magazine and talking on a cell phone. Ask what they're doing, they will tell you they are studying. But they really are. They are processing all of this information simultaneously and in multiple forms. This is called polychronic processing. All I've done is apply it this to the new media systems.

IQ:Does this apply to short and long form content?

Schultz: It doesn't seem to matter. Actually, I would suggest that by and large, young people, under the age of 25, don't process information in long form. Sounds good, but that's not what they do. Essentially they work off of sound bites. They take little bits of information and they string them together. So what you find, for example in a classroom, is students who have knowledge which is a 1000 miles wide and a quarter of an inch deep.

But they don't need long form or long explanations because we've given them techniques and approaches and methodologies so that they don't need that. All I need to know is the topic and, I know what to do, I go to my laptop and I type in G-O-O-G-L-E and in two-tenths of a second everything I need to know is right there in front of me.

So this idea of long form and short form, and involvement and non-involvement, were all developed for when we had different forms of media.

IQ: Your research has identified eight consumer media consumption types. What are they?

Schultz: We're conducting an on-going research study that has been going on for about four years. We've asked people to come in and give us information online. We have about 100,000 respondents in the database at this point. We ask them how they use media and in what form. How much time do they spend with it. And we've taken this data and made combinations with it in terms of different kinds of people and in terms of their media consumption. What we have are people who use only what we call "speedy media" which would be things such as the internet, text messaging, email and the like. And we have people who have who use what we call "slow media" which are essentially newspapers and magazines and that sort of thing. We've classified them based on the way they use the media and the media forms and we have created media clusters based on their media consumption. How they consume the media. We've used cluster and factor analysis to create groups of people and how they use the media, the form that they use and the type of media they use and the amount of time they spend with it and how much time is spent simultaneously.

IQ: So you believe that it is possible to truly measure media consumption accurately?

Schultz: Remember, everything is an estimate. We've asked people to estimate the amount of time that they spend with the various media. We've also asked them to put it into time frames so we can look at in parts, which is the way advertisers look at it. For example in the morning what do you do and in the evening what do you do? And when do you consume this and how much time do you spend with that? What we have in essence is a sort of rolling estimate of how much time people spend with various media forms.

IQ: And we can assume that people self-report this activity accurately?

Schultz: They can't tell you minute by minute, but they can say how they allocate their time. I spend this much on television, I spend this much on newspapers, magazines and so on. I think we can count on them to give us a much better estimate than we can get by simply having a machine hooked to a television set which doesn't know whether or not there's anybody out there in front of the set at all.

Measurement is a complex subject. It's particularly difficult when you start looking at all the different forms of media. But, we believe people can tell you pretty accurately. We've just formalized and expanded the amount of media that's included research studies. We now cover 31 different media forms.

IQ: So your findings tell us what about absorption?

Schultz: What it tells us from a marketing and advertising standpoint that by and large almost everything we have ever done historically has been on media distribution. How many magazines did I send out? How many newspapers did I publish? How many messages did I send out on television? We've practically never looked at media consumption. It's not important how much information you send out, the real challenge is how much the consumer received, that is, how much they consumed or how much was taken in and absorbed. We are simply relating the amount of time they spend and saying the more time you spend with that media form denotes the more important that media form is to you.

IQ: It has been estimated that as much as two-thirds of traditional advertising missed the mark. Is this percentage even greater in relation to multi-media usage?

Schultz: I think part of that is because what we are talking about is mass media. For a mass consumption product - a brand of cookies everyone knows for example - if you look at who purchases these in a supermarket it's 1.2 percent of the shoppers. If I am broadcasting television commercials to the entire audience to reach 1.2 percent of the people who are likely to buy there's' a great deal more waste than we'd like to admit.

IQ: How might these media consumption insights affect the way companies produce advertising and journalism in the future?

Schultz: One of the things it does it gives us a whole different view of the whole concept of media and media usage. Historically, we've gone out and asked people questions in the past -- Have you seen this magazine? Did you read this newspaper? That sort of thing. We don't really know how much time they spent with it. We don't know what they took out of it. We don't really know how they used it and in what combination with what other media forms. Remember, all of our media measurement up until this point have been measured separately. Television, magazines, newspapers and radio. But we never looked at them in combination. Everything today is still measured individually by medium so I can tell you that people spent this much time with Channel 7 and this much time with Channel 2 but I can't tell you that these people who watch television also read magazines. I don't have that kind of information.

IQ: This is useful for what end of what businesses?

Schultz: For people who are developing communication, advertising and marketing. The real issue in all of this is how these things work in combination. It's not how one individual media form works. It's how they work in combination. How do television and newspapers interact? How do Ipods and magazines interact? How do people use these things in creating combinations of media forms. This is important not only to the person developing the form and writing the story but also for the advertiser in terms of how the combinations are put together. From a journalistic side, if I want to understand the people who are watching television, I need to know that they are probably doing something else and it forces me to think about what's happening when I am not particularly engaging them and they are going off and doing something else at the same time.

IQ: The fact that they are being used together has something to do with the impact?

It has a great deal to do with the impact. It's called synergy and it's how those things work together. And what we keep finding more and more is if they are used in combination, one and one doesn't end up being three it ends up being 12. So it's the combination of the impact of all these multiple media forms that really has an impact in the marketplace. We've never looked at those before.

IQ: How does this research help us understand how consumers behave?

Schultz: One of the questions that comes up with this research is what media influences you? What has the most impact on you? We also ask where people shop. We ask them what are they going to buy in the next 30, 60, or 90 days and what they bought in the last 30, 60, and 90 days. And then we ask them what else they are going to do and what impact will media have on them doing this. So in essence what we have is people's reported behavior. The interesting thing coming out of this is that, and this is what drives media people crazy, when I ask people what media form has the greatest influence on you, the first thing that always comes back is word of mouth. When I'm getting ready to go purchase a product, I go ask someone. I ask a friend, a neighbor. The first thing they say is that word of mouth influences them. This is really interesting given what's happening now to electronic word of mouth in terms of blogging and those kinds of things. The second thing they say is they go to the internet. They gather information from all different sources. I'm working on a little model and I call it the OCR model People really determine what they are going to purchase based on Observations - what they see other people doing. If they begin to see a lot of Lexus automobiles on the street and in the parking lots, they suddenly decide Lexus is a neat car and I really need one. Conversations are the second element. You are standing on an elevator with people you don't even know. They start talking about a neat new restaurant the visited the night before. What happens? You run home to your spouse and said we should go to this restaurant based on this recommendation. You've listened to two people whom you don't know who have said it was a neat place. So, the conversations can be with others at the water cooler or conversations you overhear. The third element is Recommendations. Recommendations are interesting because recommendations have changed. It used to be based on what we watched and read. Today, its blogs and RSS and YouTube and all the other individually developed recommendations. The other major change is rather than getting you to predict what you are going to do, instead I am observing your behavior and asking how did you do that? Tell me why you did it but you can't tell me why you are going to do it in the future? I'm trying to explain behavior rather than trying to predict behavior. The one thing I do know that people are creatures of habit. And by knowing their habits, that is, what they have done in the past, we can fairly accurately predict what they will do in the future.

IQ: What people are absorbing is changing today because of blogs, and word of mouth. How is this changing what people in the advertising and marketing industry are thinking about the content that they are putting out there?

Schultz: Unfortunately, not much. Because one of the problems is we are creatures of habit. We've been doing this advertising thing forever. That can't be right. Marketers, Advertisers and communicators are still struggling with it. So as a consumer I think nothing of going to the Internet and doing this and pulling that. When you go in and start talking to media and marketing people we still think it has to go straight. And that's not what people are. They are not linear.

Posted at 04:26 PM
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Measuring Media Usage >> Counting Combinations

The Intersection interviewed Don Schultz, professor emeritus in service of Integrated Marketing Communications at Medill, and president of Agora, a global marketing consultancy in Evanston.

His teaching has focused on communication integration, branding and the financial measures of marketing and communication. He has been looking at the way people process media, especially the simultaneous use of media.

Intersection Question (IQ): You've determined that people process information sequentially and in parallel form. Can you tell us what that means exactly?

Schultz: There are two kinds of people. People who process things sequentially and most of us who are over the age of say, 25, all grew up processing things sequentially. We learned to read, word after word after word.
We turn the page read another word and so on so it's all sequential. What's happened in the last 15-20 years, is that we have surrounded people with communication. And as a result, they've learned to process things in parallel. If you look at younger people they think of nothing of looking at multiple things at the same time. So they process media in multiple ways, simultaneously.

If you have a teenage child and you go into their room, you find them sitting at their computer, with the radio and television both on, they're flipping through a magazine and talking on a cell phone. Ask what they're doing, they will tell you they are studying. But they really are. They are processing all of this information simultaneously and in multiple forms. This is called polychronic processing. All I've done is apply it this to the new media systems.

Continue reading "Measuring Media Usage >> Counting Combinations" »

Posted at 04:25 PM
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