Emotional TV commercials don’t need so much attention

For advertising to work consumers have to notice it.  And the more processing they do the better, though for an awful lot of advertising very little processing is needed – it’s only advertising after all, the message is very simple, and this is particularly true for emotion oriented advertising – whereas persuasive, information oriented advertising suffers from the requirement to gain a degree of processing including rational  conscious processing.

In the latest issue of the Journal of Advertising Research there is a characteristically interesting article by Robert Heath (with colleagues Agnes Nairn and Paul Bottomley).  It somewhat controversially shows that viewers pay slightly less, not more, ‘attention’ to emotion oriented (as opposed to rational persuasion oriented) TV commercials.  The authors speculate that perhaps emotion oriented ads work by inducing less rational thinking and hence stimulate fewer counter arguments – I think such an effect would be trivial, there is a much more simple plausible explanation of how emotion oriented ads work…read on.

What the study actually showed is that respondents (31 Uni students and staff) have slightly more eye “fixations per second” when watching rational more information rich TV commercials.  You see our eyes don’t tend to sit or move smoothly over stimulus, but rather pause (fixate) on things that we are processing – see here.  This laboratory experiment measured “fixations per second” using a lightweight eye-tracking camera worn on the head of each respondent while they watched a TV episode (Frasier) with ad breaks.  Put like this the results don’t sound too extraordinary, nor controversial.  Less information rich advertising needs less attention to process, and more information rich advertising is likely to get more attentive attention especially in such a laboratory.

As Heath et al discuss at the start of their paper, in the real world consumers ignore a good deal of advertising.  We summarised the literature some years ago and concluded that about one third of the time people pay active attention to TV commercials, one third of the time they pay some attention but are also paying attention to other things in the room (e.g. having conversations, reading, cuddling, surfing the web), and for the remaining third of the time they physically avoid the commercials through leaving the room or switching channels.  In Heath’s experiment respondents had very little ability, or motivation, to fully or partially avoid the commercials.  In the real world this is where much of the advantage of emotion oriented advertising – it’s more enjoyable and easier to watch, over and over. But the other real advantage is that emotion-oriented advertising is simply easier to process, so it can work with very little conscious processing.  Emotional appeals are easier on us viewers because they don’t require slow, resource intensive rational concious thinking.  Quite simply such advertising doesn’t need so much attention.

PS Requiring less, not more, processing is probably a mark of better more effective advertising. As is generating more attention and processing.
REFERENCES Heath, Nairn and Bottomley (2009) “How Effective is Creativity? Emotional content in TV advertising does not increase attention”, Journal of Advertising Research, Deember 2009, p.450-463. Paech, S., E. Riebe, and B. Sharp. 2003. “What Do People Do In Advertisement Breaks?” In Proceedings of the Australian & NZ Marketing Academy Conference, Adelaide, p.155 – 162. www.MarketingScience.info

How Brands Grow book now available for pre-order

Oxford University Press will be publishing my book early in 2010.  It’s available for pre-order in a number of countries – here is a list of online outlets where you can order it.

Science has revolutionized every discipline it has touched, now it is marketing’s turn!!  All marketers need to move beyond the psycho-babble and read this book… or be left hopelessly behind.
Joseph Tripodi,
Chief Marketing Officer,
The Coca-Cola Company

How Brands Grow by Dr Byron Sharp

Consumption Situations – some perspective

It’s important to know when consumers consume your brand.  Do they use it largely for a morning snack or for sharing with friends ?

However, some marketers over estimate the degree to which their brand is confined to a particular situation, used for a particular purpose.  Worse, they market in such a ways as to make it a ‘self-fulfilling prophecy’ hemming the brand into one situation through advertising nothing else.

In the same way that product categories can be too narrowly defined based on product features (e.g. the chocolate vs vanilla ice-cream categories), categories based on consumption situation can lull marketers into a false sense of limited competition.  e.g. nonsense like “Kit-Kat doesn’t compete with Snickers because Kit-Kat is for taking a break whereas Snickers is to satisfy a hunger craving”.

The reality is that few brands are exclusively bought for specific consumption situations, and which brands are bought for which situation varies between consumers and over time.

Yes the same person in the same situation can choose different brands on different buying times.

www.MarketingScience.info

What’s wrong with loyalty ladders ?

I’ve written before about how silly loyalty ladders are.  I’ve been asked, aren’t they harmless, just showing the heterogeneity within any brand’s customer base or market (from non buyers to highly loyals) ?

Here is what is wrong with loyalty (conversion) ladders:

The ratios of non-buyers, to light buyers, to medium, to heavy, are perfectly predictable (by the NBD-Dirichlet).  So they are set.  If a brand gains in share/sales, the ratios all move in a predictable way.

All loyalty ladders do is show these ratios – but they imply that you can change the ratios through particular strategies.  This is wrong, they will only change if you increase or decrease in market share.

– Loyalty ladders imply that you should target particular levels of the ladder.  This is wrong.

– Loyalty ladders imply that some brands are stronger or weaker – when really they are reporting brand size.

– Loyalty ladders are a waste of money spent on market research and reporting.  Most of the tiny changes and differences they report are sampling (and other) error.

– Loyalty ladders imply that awareness is a “once off battle”, that once someone is aware they always notice, recognise, recall your brand – this is nonsense.

– Loyalty ladders imply that 100% loyals are a brand’s most valuable customers, whereas far more volume comes from heavy category buyers who buy a number of brands.

– AND REALLY IMPORTANTLY…..Loyalty ladders distract marketers from the real issue which is how to grow penetration (reach all sorts of category buyers).

US Brands lost half their customers last year – more misleading metrics

Yesterday, Ad Age reported a study showing that US packaged goods brands typically lost more than half of their loyal users last year.  Oh no!  The sky is falling…next year we’ll have no loyal customers left at all!

“I think what’s surprising is the magnitude of some of the effects,” said Eric Anderson, associate professor of marketing at the Kellogg School of Management at Northwestern, who reviewed the study.

Hmm yes surprising.  Let’s put our brains into gear here, are we to accept that all these brands, which are essentially stable in market-share, lost half of their most loyal customers? There may be a recession on but this is still nonsense.

The truth is that the analysts misunderstood their own results, because of ignorance of the law-like patterns in brand buying.

The brands haven’t lost most of their loyal customers, the results are simply due to normal random fluctuations in buying, i.e. sampling (in time) variation – something any analyst should be aware of.  Nothing real or unusual is going on here.

Read on if you’d like to know why…

 

The marketing consultants who did the study used their loyalty program ‘panel’ data.  They classified a consumer as a ‘brand loyalist’ if the brand represented 70% or more of their 2007 repertoire.  If that consumer did not also devote 70%+ of their category buying to that brand in 2008 they  classed them as lost (typically about one third were ‘lost’ completely, while the other 20% still bought the brand but it wasn’t 70% of their repertoire in 2008).

But from one time period to another the brand’s weight in a consumer’s repertoire fluctuates.  And this normal fluctuation is what this study mistook for customer defection.  These loyals aren’t gone, they’ll be back again next year or the next.

Effectively their analysis excluded most heavy category buyers because these households will have larger repertoires, and so it’s much more difficult for one brand to represent 70% of their buying.  Most buyers are light category buyers and these light buyers are more likely to appear 70%+ loyal.  In other words their analysis largely is a report on lots of buyers who bought the brand once out of 1 category purchase, or twice out of 2, or three out of 4 – purchases in the loyalty program stores.

Now, all buyers are subject to random fluctuations in their on-going, steady, purchase patterns.  Sometimes you buy 3 times a year, sometimes 4.  Even if you buy two brands equally it’s seldom ABAB, it’s patterns like ABBABBBAABABAAB.  This stochastic variation is normal and follows predictable patterns.  This variation means that lots of people who were classed as “loyals” in 2007 fall out of this classification in 2008 – when nothing real has changed in their buying behaviour, and nothing has happened to the brand’s market share.

 

PS The study was by Catalina Marketing and the CMO Council.  The CMO Council should have known better.  Catalina Marketing sell targeted marketing services based on using this loyalty program data – which is a bit odd because this fluctuation seriously undermines the capacity to target consumers based on their loyalty level.

PPS I’ll leave the last word on the Ad Age article to Professor Gerald Goodhardt (co-discoverer of the Dirichlet model):

“After ‘Some brands lost more than a third…… while others held on to more than 60%……’ I stopped reading!”

Brand value quackery

Ad Age today reports:

Despite the pounding global business is taking, the $2 trillion value of the top 100 brands has held steady, according to Millward Brown’s annual BrandZ report. “Consumers are blaming companies and leaders for the current troubles, not the brands,” said Joanna Seddon, exec VP at Millward Brown, the WPP-owned research company.

Wow, wouldn’t we marketers like to believe that, our assets are still fine, aren’t we good.  But to believe this we have to close our eyes and pretend we are in wonderland.

An asset class that has remained immune to the global recession that has wiped trillions of dollars off the value of companies (the same companies that are made up of these brand assets).  Hmm.  So will WPP stand behind their valuations and be prepared to buy any of these brands at their recession-proof price?!  Ah, no, Sir Martin Sorrell isn’t stupid.

This to me is the 13th stroke of the clock (that makes one wonder about all that came before).  If anyone previously had any faith in the financial quackery that produces Brandz valuations then this should bring you back to reality.  Perhaps I shouldn’t be so mean to single out Millward Brown’s Brandz when there are plenty of other equally fanciful brand equity valuators, it’s just the sort of financial silliness that was practiced by so many (mind you, including some crooks) prior to the bubble bursting.  But what annoys me is that it sheds a poor light on marketers, it makes us look arrogant and stupid.  We don’t know enough about marketing but we think we can take on finance as well.

www.MarketingScience.info

How to join as a Corporate Sponsor of the Ehrenberg-Bass Institute

Readers of this blog have reminded me that I’ve never mentioned how to join as a member.

Sponsors pay an annual contribution which is pooled into a serious R&D budget.  For this sponsorship you gain immediate access to all the Institute’s reports and in-house briefings (plus gain direct access to the researchers).  We normally provide one live in-house briefing per year, but more can be arranged.

This web page has more details.

Here is a list of the Ehrenberg-Bass Institute’s sponsors from around the world.

www.MarketingScience.info

Net Promoter Score (NPS) Does Not Predict Growth – it’s fake science

“Managers have adopted the Net Promoter Score on the basis that solid science underpins the technique and that it is superior to other metrics.

We find no support that for the claim that Net Promoter is the “single most reliable indicator of a company’s ability to grow.”

The above quote is from a Journal of Marketing article and winner of the Marketing Science Institute /H.Paul Root Award “A Longitudinal Examination of Net Promoter and Firm Revenue Growth”, Journal of Marketing (2007), Vol.71, by Tim Keiningham et al.

The Net Promoter Score was developed by Frederick Reichheld a consultant now well known for making headline grabbing conclusions based on sloppy research and thinking.

I previously pointed out what was wrong with his claim that small reductions in customer defection cause massive profit increases.

Then in 2004 he is said to have had an epiphany describing his prevous work on loyalty as “powerful but useless”. Keeping customers didn’t matter so much, having customers who would recommend you was everything.

So the latest myth he peddles is that asking customers their likelihood of recommending the company predicts company growth. He claims it does so much better than traditional metrics such as customer satisfaction.

Actually, if you read Reichheld’s Harvard Business Review article carefully you can see he employs the same sort of sleight of hand he did in his customer defection work. Pay careful attention to the dates, Reichheld in 2003 writes that starting in the first quarter of 2001 consultancy firm Satmetrix began collecting customer likelihood-to-recommend responses via email survey. Each quarter collected 10-15,000 responses gradually building a small dataset covering 400 companies in a dozen industries. Reichheld then calculated a Net Promoter score for each company and compared this to the company’s growth rate over 3 years (1999 to 2002). Yes, that’s the previous 3 years.

Yes, so the correlation he reports says that firms that score higher now have previously been growing.

Reicheld admits on his website that the statistical analysis in his book was sloppy but says that since then the consultany company he worked for (Bain & co) has done more extensive analysis showing no correlations between satisfaction scores and company growth, but excellent correlation for the NPS. However, Keiningham et al’s Journal of Marketing article perfectly repeated Reicheld’s analysis and they found the same or better correlation between old-fashion satisfaction and growth (hence the quote above).

Such correlations say little about causality (especially when they are backwards in time), as Reichheld tries to use in his defence, but then why on earth did he select these cases to ‘prove’ his case ? He even admitted he’d selected amongst the very best examples!

In sum, this is snake oil, fake science. It’s scary how many CEOs fell for this.  But then lots of people fell for the (completely wrong) zero defection idea too.

www.MarketingScience.info

Loyalty Program Misleading Effects

The Journal of Marketing last year (2007) published an article titled “The Long-Term Impact of Loyalty Programs on Consumer Purchase Behavior and Loyalty” by Yuping Liu. It purports to show the impact of a loyalty program on the buying rates and loyalty of those who join the program. The key finding is that very large changes are observed for the lighter and moderate buyers in the loyalty program while the heaviest buyers exhibited no change.

However, this finding, and the consequently very large sales effects that the program seemed to generate, are actually artifacts of the analysis method. Continue reading

Portfolio Management – do you need to worry about brands treading on each others’ toes ?

Should you worry if you have several brands that are rather similar ? Should you collapse them together, sell some, or strive to position them differently ?

In general, the answer is don’t worry.

Companies often find themselves with similar brands, that sell to similar, or the same, populations. Mars have Milky Way (Mars Bar) and Snickers. P&G has Tampax and Always. General Motors has Saturn Astra and Chevy Aveo. Coke has Diet Coke and Coke Zero (and Regular Coke for that matter).

This in itself isn’t something to worry about. It’s normal for brands in a category to compete against one another and sell to near identical customer bases. Even brands that are obviously quite different (e.g. KFC and McDonalds, Visa and AmEX) still compete pretty much head on.

McDonalds doesn’t worry that it sells coffee as well as burgers, Heinz doesn’t worry that it offers Tomato soup as well as Vegetable. Similarly you shouldn’t worry about having similar brands. If a fantasy soft-drink company were started up and it could choose to own/market any two brands should it choose Coke and something like Fanta ? No it should choose Coke and Pepsi, these are the biggest brands globally.

What you should worry about is whether or not your brands are distinctive.  Are they easy to recognise and distinguish from others ? Without this your advertising can’t work for your brand. And consumers won’t see you on shelf. So your brands should look different (this is what branding is about) even if they don’t really compete as differentiated brands.

And you should be aware of (and calculate) the total portfolio effects of price promotions. When you put one of your brands on special you aren’t only giving away some full priced sales that would have happened anyway, you are also stealing full-priced sales from your other brands.

If brands grow they will always steal from all the other brands in the same product category. The exact amount of cannibalisation you should get between your own brands can be predicted by the Duplication of Purchase law. What you need to watch out for is excessive cannibalisation, firms tend to be good at stealing sales from themselves because their brands go through the same sales force, same distributors etc. You need to acknowledge and accept this, but then be on the look-out for excessive cannibalisation.

Finally, the decision to drop, phase out or sell brands should be largely made on viability, cost and operating issues. Not on how similar you think the brand is to another of your brands.

Professor Byron Sharp, 2008.

Does advertising only work via driving intentions and preference ? No!

Apart from a very small amount of direct response advertising, advertising works (to generate sales) through memories.  This is an uncontroversial statement, yet it’s common for marketers and academics to forget the essential role of memory and instead think advertising works largely through persuasive, rational or emotional, arguments that shift brand evaluations.

The dominant way that advertising works is by refreshing, and occasionally building, memory structures that improve the chance of the brand being recalled and/or noticed in buying situations and hence bought.  Memory structures such as what the brand does, what it looks like, where it’s available, when it’s consumed, where it is consumed, by who, with whom and so on.  Associations with cues that can bring the brand to mind.

Some advertising creates a purchase intention, gaining a reaction like “I should buy that” or “that’s interesting, I must check that out”.  It’s commonly assumed that such advertising must be more sales effective, but this does not follow.  Continue reading

Do TV commercials need a USP ?

The answer would appear to be no, given that much advertising does not even make the slightest attempt at saying the brand is better than others.  But a fair amount of advertising does – so is this particularly good advertising ?  Does it work better ?

David Stewart, a Professor at University of Southern California, has published several important large content analyses of TV advertising.  The 1980s US TV ads (more than 2000)  were analysed Continue reading

Do different awareness measures measure the same thing ?

There is a history of discussion amongst marketers about the relative merits and meaning of different awareness measures. Then in 1995 an article was published that appeared to lay all this debate to rest:

Laurent, Gilles, Jean-Noel Kapferer, and Francoise Roussel (1995), “The Underlying Structure of Brand Awareness Scores,” Marketing Science, 14 (No. 3, Part 2), G170-G79.

Gilles Laurent and colleagues appeared to show that different brand awareness measures were systematically related, simply reflecting different levels of difficulty for respondents (i.e. brand prompted being easier than unprompted). So the different measures all tapped one construct, and a score on one measure could be used to accurately predict a score on another measure. We thought that was an incredibly important and practical finding. However, not was all that it seemed.

Nearly a decade later we replicated this research, and extended it to ad awareness. We achieved the same empirical results, but in doing so we were able to more clearly see what the previous research had, and had not, found. The measures tend to vary together, brand to brand, because some brands are much larger and more salient than others, so all their awareness metrics are higher too. However, we also examined the relationships between the loyalty metrics for each brand over time. Contrary to Laurent’s conclusion we empirically found that it isn’t possible to use their model to predict a brand’s score on one metric from its score on another.

So while all these brand awareness measures share something in common they do not perfectly tap one underlying construct. That’s as important a finding as Laurent’s might have been (if it had turned out to be true). Different awareness measures measure (somewhat) different things, even if they are all loosely related to the brand’s overall salience (and market share).

Romaniuk, Jenni, Byron Sharp, Samantha Paech, and Carl Driesener (2004) “Brand and advertising awareness: A replication and extension of a known empirical generalisation” Australasian Marketing Journal, 12 (3), 70-80.

www.MarketingScience.info

The power of familiarity

I few years ago Emma Macdonald and I published this work showing the power of familiarity. When we did this in the late 1990s there wasn’t a great deal of interest in heuristics, snap judgements, and gut feeling. But today psychologists and behavioural economists are gaining a great deal of attention for their work showing how reluctant consumers are undertake a lot of cognitive effort when buying.

I’ve often said it is wrong to call much buying “consumer decision making”, it’s more buying (doing) than decision making (thinking).

Macdonald, Emma and Byron Sharp (2000) “Brand Awareness Effects on Consumer Decision Making for a Common, Repeat Purchase Product: A Replication” Journal of Business Research, 48 (Number 1, April), 5-15.

www.MarketingScience.info