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.

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 interactive media which is much more measurable than traditional media. It's a slow transition because the people who 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 it an encouraging message then for advertisers that technology is emerging that will enable them to better reach people?

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.

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 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.

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.

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Posted on March 21, 2007 02:37 PM | Permalink

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