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August 1, 2019

Putting a Value on Reaching the Right Consumer at the Right Time

We recently were involved in a lively discussion on MediaPost that sprang from Dave Morgan’s column, “We Need More Expensive Advertising” (7/18/19). In the article, Morgan, CEO of Simulmedia, argues in support of Rishad Tobaccowala’s recent assertion at the CDX Form that “It is better to reach the right person in the right context once, even if [it’s] expensive, than to reach that person 25 times in cheap, wrong places.”

While we agree with the idea that effectively targeted advertising has more value, it all depends on the specific situation and the trade-offs. For example, let's say that the "right" place to reach a consumer generates a superior degree of attentiveness, message recall, and intent-to-buy lift. For the sake of this discussion, let's say that these are 65%, 35% and 15%, respectively for an exposure in the "right" venue. In contrast, the likely result for a placement in a "poor" venue  might be well below the norm, say 40% for attentiveness, 15% for message recall and 5% for intent-to-buy lift. If the CPM difference between the two options was two-to-one, with the "right" venue being the higher, then we would be comparing the value of one intent-to-buy lift at +15% with two at 5% each. Clearly the first, higher priced, option is better. But would this still apply if there was a 25-to-1 CPM differential? Not at all. It would make sense to make the cheaper, "bad" venue buy with a 5% intent-to-buy lift 25 times, compared to getting it only once at 15%.

Of course, in the real world, CPM differences of the magnitude of 25-to-1 within the same medium just about never happen. The classic example is cable vs. broadcast TV where the latter usually gets about 75-100% more per viewer, or roughly double the CPM. It’s also rare for the identical commercial to vary in communications performance by more than 25% depending on which channel or program it appears in. This is because once a message gets the attention of the audience it functions more or less on its own merits. A great environment is not going to cause a viewer to believe a claim made in an ad if it doesn't ring true.

We’re firm believers in placing each ad on the "right" place at the "right" time to reach the "right" consumer. Nobody can be against that. However, the trade-offs can't simply be dismissed. Often, the cheaper option can deliver more cumulative value, even if its per-exposure performance is lower. And often a combination of the two, like using the premium, high CPM "right" platforms at the outset of a new campaign, then following up, later, with cheaply attained reminder ad impressions---is a better way to go.

The Human Factor in a Data-Driven Industry

We in the advertising and media industries spend a great deal of our time talking about data. What’s new and cutting edge. What will give us the elusive insights on consumer habits and experiences that will give our ads an edge in a crowded market with so many competing platforms. But also crucial is human judgement born of experience that is brought to bear on the data.

Sadly, many don't seem to draw the distinction between "data" and "interpretation." What they want is a simplistic formula that is widely accepted and doesn't require much thought. For example, about 25 years ago there was a major thrust in the TV commercial testing field to find a single, easy-to-measure metric as a way to evaluate the effectiveness of each commercial. Instead of the tedious process of establishing what was recalled, whether it was motivating, etc., the industry would rely simply on whether the viewer "liked" the commercial. Now, it must be said that "liking" did correlate well with other more specific metrics—verified recall, brand ID, sales motivation, etc.—so there was some merit to the idea. But "liking" didn't explain why the ad was liked (hence effective) and offered little guidance regarding how to create future ads.

We see much the same thing today in the constant chant of "data, data, data" with no discussion of what data how to use it in a meaningful manner. Indeed, some are suggesting that tomorrow's CMOs must learn how to manipulate and process "data" or they will be left behind. Which is absurd. What CMOs need is people who understand "data" from a practical marketing perspective, not a theoretical one, and can draw conclusions from it that support the development of sensible strategies.


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