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The Madness of Advertising on TV

Blowing $750,000 in 30 seconds

August 19, 2008 By Denny Hatch
23

IN THE NEWS

For Olympic Marketers, Emotions Pay
Most-Liked TV Ads Feature Soft Touch; Not the Super Bowl
For many Olympic swimmers in Beijing, Speedo LZRs have helped produce record times. For winning advertisers during the Games, the key ingredient is proving to be emotional ads. Companies have shelled out millions to advertise during NBC's Olympic broadcast. According to IAG, a Nielsen firm that uses an online panel to track the performance of advertising, the big winners so far include Coca-Cola, General Electric and Visa. Coca-Cola's whimsical ad dubbed "Bird's Nest" was one of the best-remembered and most-liked commercials during the first week of NBC's prime-time Olympic coverage, according to IAG. The spot features birds making a nest that is modeled after the Olympic stadium in Beijing. The animated creatures make their new home out of straws swiped from Coke bottles and containers.
-Suzanne Vranica, Wall Street Journal, Aug. 18, 2008

This is an era where marketers can be inundated with data, metrics and analytics, demographics, psychographics, and purchase behavior. Yet television advertisers have no concrete way to directly correlate return on investment-who bought what and how much as a result of the TV spot-let alone the key marketing metric: lifetime value of a customer.

All that can be said is that an ad was "best-remembered" and "most-liked."

The question: Does any way exist to prove that the $750,000 you spend on a 30-second spot prime-time Olympics coverage translates into $3 million in sales, which is breakeven on the ad? (That assumes a 100% markup on cost of goods sold and a 50% discount on merchandise sold to the retailers. Thus, retail stores need to sell $3 million of your goods, of which $1.5 million is paid to you. Of that $1.5 million, half-or $750,000-is the cost of goods sold, and the other $750,000 goes to NBC for the 30-second spot. Ergo, $3 million in sales is breakeven on a $750,000 TV ad.)

All of this is possible, except you have no idea if the $3 million in sales are the result of the TV spots, online viral marketing, skywriting by a local distributor, print, point-of-purchase or a combination of these.

The State of Figuring Out ROI on TV Commercials
Here are snippets from my article archive on the non-science of measuring the effectiveness of TV commercials:

* NEW YORK (AdAge.com) - NBC Universal displayed its first attempt to measure consumption of the Olympics across diverse media platforms today, suggesting that views of the Beijing Games via mobile devices and the web were gaining serious traction. "To some extent, these Olympics are starting to influence how people use new technology," said Alan Wurtzel, president-research and media development, NBC Universal. "About half of people who use mobile [to watch NBC Olympics content] are using it for the first time."
-Brian Steinberg, AdAge.com, Aug. 13, 2008

* MediaVest USA and TRA, Inc. today announced that MediaVest has become the first agency to be using the newly-released Media TRAnalytics 2.0, the industry's first solution for directly linking TV effectiveness to sales results. TRA brings precise measurement of advertising effectiveness by matching the advertising households actually receive with the products those same households actually buy. The TRA solution combines set-top-box viewership data with the deepest level of demographics, including age and gender; psychographics; and behavioral purchase information available. This enables MediaVest and its clients to gain an unprecedented understanding of who's viewing their advertising and establishing the first true link between television advertising exposure and sales. Advertisers now have a way to find out precisely what they are receiving for their advertising spend, and can shift to better-producing media to lift ROI.
-Anita McGorty, MediaVest USA Press Release, April 24, 2008

* NEW YORK (AdAge.com) - Whether traditional TV advertising has truly lost its power, marketers and advertisers are already eager to find alternatives. The Association of National Advertisers and Forrester Research's fourth biennial TV and Technology survey shows a dramatic loss of confidence in the medium as the industry gears up to explore new ad formats and forms of video commercials.
-Jonathan Lemmonier, AdAge.com, Feb. 20, 2008

* Fourth-ranked broadcaster NBC has quietly begun reimbursing advertisers an average of $500,000 each for failing to reach guaranteed ratings levels, the first time a network has taken such a step in years, media buyers said.
-Reuters, Dec. 11, 2007

* With the number of viewers for individual networks continuing to dwindle, other ways of measuring audiences have emerged, from age to wealth to gender. Now executives increasingly are talking about "attentiveness" - how engaged a person is in a particular program, and therefore how aware they are likely to be of the commercials and product placements that appear during one. The goal: to reach viewers who recall advertised products rather than those who are inattentive couch potatoes.
-Brian Steinberg, The Wall Street Journal, May 11, 2005

It has always been difficult to assess TV campaign performance. Fragmenting audiences, declining average show ratings, and increasing rates for ad inventory have combined to form a harrowing landscape. To successfully navigate this environment, advertisers need a tool that helps them understand the actual performance of their ads on a real-time, show-by-show basis. IAG Ad is built to do this. It's a syndicated data service that measures how viewers respond to every commercial running on all broadcast and major cable networks during primetime.
-A.C. Nielsen pitch for its IAG system

In short, as of today, no way in hell exists to correlate TV advertising to your bottom line. None. Zip. Nada. Zero.

"Half my advertising is wasted," said the great 19th century retail merchant John Wanamaker. "I just don't know which half."

Advertise on television, and John Wanamaker's numbers are your numbers.

And the sweet-talking agency account managers who sell gullible clients on TV advertising with no way to measure ROI are the same ilk of con artists that caused the subprime mortgage and auction-rate securities catastrophes.

Can TV advertising be measurable?

In a word, yes. It's called Direct Response TV (DRTV)-two-minute spots on up to full-dress Infomercials.

But this is the subject for a future discussion.

Takeaway Points to Consider:

* According to Rick Kissell in Variety, the showbiz newspaper, 39 million viewers watched Michael Phelps collect his 10th Olympic medal on the first Tuesday evening of the Olympics. Impressive. The people who make money on the $750,000, 30-second TV spots running during the Olympics in prime time are NBC and the agencies that placed those ads.

* It is impossible to create a business plan or build a business on TV advertising other than DRTV.

* A zillion places exist to advertise where you can precisely measure ROI by making an offer that lets a prospect call a special 800-number, click on a hyperlink, mail or fax an order form, tear off a coupon and bring it into a retailer, etc.

* For example, check the story in this week's TIME that describes the new "point-and-shoot shopping" in Japan, which uses camera-phone technology. Dazzling! http://tinyurl.com/5m23xm

* If you want a response from a prospect, it's imperative that you make an offer. No offer, no response.

* "Your job is to sell, not entertain."
-Jack Maxson

* Before you actually go online, on the air or in the mail with an offer, have your fulfillment operation cranked up and absolutely ready to go. Otherwise, you're like the publisher that advertises books that won't be available on Amazon or stores until next month.

Web Sites Related to Today's Edition:

"Ad Skipping? Just Wait. It's Going to Get Worse" (Requires log in.)
http://adage.com/mediaworks/article?article_id=130252

MediaVest USA to Use TRA for ROI on Web Ads
http://www.mediavestww.com/news/download/MediaVest.TRA.4.24.08.pdf

Olympics Give NBC Universal First Crack at Cross-Media Metric
http://adage.com/mediaworks/article?article_id=130314

"Point-and-Shoot Shopping," TIME, August 18, 2008
http://tinyurl.com/5m23xm

Takeaway Points to Consider

* According to Rick Kissell in Variety, the showbiz newspaper, 39 million viewers watched Michael Phelps collect his 10th Olympic medal on the first Tuesday evening of the Olympics. Impressive. The people who make money on the $750,000, 30-second TV spots running during the Olympics in prime time are NBC and the agencies that placed those ads.

* It is impossible to create a business plan or build a business on TV advertising other than DRTV.

* A zillion places exist to advertise where you can precisely measure ROI by making an offer that lets a prospect call a special 800-number, click on a hyperlink, mail or fax an order form, tear off a coupon and bring it into a retailer, etc.

* For example, check the story in this week's TIME that describes the new "point-and-shoot shopping" in Japan, which uses camera-phone technology. Dazzling! http://tinyurl.com/5m23xm

* If you want a response from a prospect, it's imperative that you make an offer. No offer, no response.

* "Your job is to sell, not entertain."
-Jack Maxson

* Before you actually go online, on the air or in the mail with an offer, have your fulfillment operation cranked up and absolutely ready to go. Otherwise, you're like the publisher that advertises books that won't be available on Amazon or stores until next month.

Web Sites Related to Today's Edition

"Ad Skipping? Just Wait. It's Going to Get Worse" (Requires log in.)
http://adage.com/mediaworks/article?article_id=130252

MediaVest USA to Use TRA for ROI on Web Ads
http://www.mediavestww.com/news/download/MediaVest.TRA.4.24.08.pdf

Olympics Give NBC Universal First Crack at Cross-Media Metric
http://adage.com/mediaworks/article?article_id=130314

"Point-and-Shoot Shopping," TIME, August 18, 2008
http://tinyurl.com/5m23xm
 

Companies Mentioned:
23

COMMENTS

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Most Recent Comments:
Al McCree - Posted on August 21, 2008
The recent Apple TV ads are entertaining and sales for Apple computers are way up. Since we don't know the cost it is hard to determine ROI but it does suggest that if commercials are entertaining enough, people will watch them.
Art Boulton III - Posted on August 21, 2008
A little entertainment in a TV ad is OK, but best remembered doesn't do them any good if you don't remember what the product was for. There was a great commercial a couple of years ago, I think during a Super Bowl, with cowboys herding cats, but I don't remember what they were selling. Another good column. Thanks.
Joe Barcia - Posted on August 20, 2008
Denny, everything you said about TV ROI is 100% correct. But most national consumer brands aren't buying TV as a pure investment that seeks a direct profit. What I believe they are buying is an "insurance policy"--indemnifying their brand from being forgotten in the marketplace. That $750,000 for an Olympic 30-second TV spot is in reality an insurance premium--an overhead expense, not a marketing investment. Inject a truth serum into a GM, Pepsi or Coke brand manager, and that's pretty much what they'll tell you.
Shel Horowitz, Ethical Marketing Expert - Posted on August 20, 2008
Spot on once again, Denny. In some 30 years as a marketing consultant, I have yet to advise a client to use TV advertising over expensive general-interest media--even with a response mechanism. In the rare cases where I recommend TV, it's typically highly-targeted low-cost cable programming directly related to their industry. --Shel Horowitz, author of five marketing books including ?Grassroots Marketing: Getting Noticed in a Noisy World,? FrugalMarketing.com
Martyn R Whittaker - Posted on August 19, 2008
I agree with you entirely, except for my favorite ad showing the girl with the beautiful smile, roller skating. So if I ever were to buy a carbonated cola beverage it would definitely be Pepsi...or was it be Coca Cola??
Lawrence Hansen - Posted on August 19, 2008
TV advertising can just work against you. Earlier this year I was in the market for a new car and was interested in the usual suspects for middle-aged drivers, all models that compete heavily against each other: Ford Fusion, Honda Accord, Toyota Camry, Pontiac G6, Mazda6, and Acura TSX. I happened to catch a Ford commercial on TV trumpeting the Fusion's quality "as good as Toyota and Honda now," which basically told me their product was a catch-up, also-ran, wanna-be copy of the established quality leaders in the industry. The commercial put the whole "as good as" issue at the front of my mind when I test drove a Fusion, which ultimately led me to conclude that, nope, it ain't as good as the leaders. So I bought a Camry. As a bonus, it was assembled in the U.S., unlike the assembled-in-Mexico Ford. So TV advertising can work--just not always for the company paying for it. BTW, the DVR IS the greatest invention thus far in the 21st century! It allows me to watch an entire 60 minute TV show in ca. 42 minutes, and I've gotten so used to backing up to catch a bit of dialogue again that I find myself reaching for the button reflexively during those rare occasions when I watch "live" TV.
James Shood - Posted on August 19, 2008
Me again. Nice everyone... the OIL commercial was actually a FRAM filter commercial, the Masterlock commercial is an all time greatest hit... but did you know that the commercial only airs one time a YEAR ... SUPER BOWL .. and that it is their entire TV ad budget... and whoever mentioned the elephant on the car... what company is that? You are right on target. Keep-em coming Mr. Hatch! One of these days we'll all have this ad thing all figured out!
Ann Wilson - Posted on August 19, 2008
I watch one brand of ad and enjoy them each time - repeatedly. I watch them online. I watch Apple. I own 5 Macs, and original iPod and an iPod Shuffle; I convert people to the dark-side all the time. I'm the best type of advertisement a company could every ask for. I love Apple
Wash Phillips - Posted on August 19, 2008
Right on, Denny, about the ease of determining ROI on direct mail. But Wanamaker still counts. i.e., a 2% conversion still leaves 98% that doesn?t make the grade. Efficiency ain?t the issue, per se. Why my mailbox is stuffed with advertising I never look at, and the US Postal Service depends on it to keep the doors open. For infomercials?other than QVC devotees, widows and insomniacs?who actually watches? I do?if they?re recycled music CDs. And I?ve stayed put for a certain (unbelievable) male enhancement product, just for the female testimonials. (Never bought either). My wife?s take on infomercials: go to the As Seen On TV counter in her favorite store, but that purchase escapes the vaunted ROI metric. At the movies (Indiana Jones), I was stuck, pre-previews, with even denser clustering of crummy ads on-screen. No way to TIVO those, somebody realized. Viral marketing, with its planning complexity/incomprehensibility, seems magical. But that?s ?organic,? a main way most products sold at one time or other. Somebody tells or shows or uses a product/service, and somebody follows. The Fed TARP Study years ago said it in different words. Have TV viewers bought products advertised in profitable numbers? Ask the pharma folks. Their older audience doesn?t turn away and does quiz the doc. Getting your message to a buyer?s heart always has been complicated . A quick ROI fix is a good means for staying in business, as far as it goes.
Jon Pietz - Posted on August 19, 2008
Denny, an advertiser's job may be to sell and not entertain, but television is an entertainment medium. In prime time television such as Olympic coverage, you had better create a commercial that has at least some entertainment value, such as humor, education or drama, or you can forget about being remembered in a positive light. I believe it's the proliferation (and the sheer numbers) of "hard selling" commercials which has poisoned the medium for the advertisers. Your formula for measuring Direct Marketing ROI transposed upon a whimsical Coke commercial is missing a very important point: Over the years Coke has gained a place in the hearts of the public through the emotional connection created by their advertising. Although it's hard to measure with your standard DM matrices, it's created a brand worth billions of dollars. And it creates profits for that brand that no amount of 800-number direct response or online marketing could ever make up for. There's a right time, place and medium for each kind of marketing, but you can't possibly tell me that the car you drive, the beer you drink or the razor you use is a result of anything other than emotional brand advertising as seen on TV.
Rob - Posted on August 19, 2008
I don't think a lot of TV ads even have the intention of selling products. They are about branding and bolstering their stock. GM is practically bankrupt but spending millions on Olympic ads advertising the Volt, plug-in hybrid that won't be available for sale for 2 years and will never be a volume seller. The ads are about changing the company's image from rust belt to 21st century player so that people will feel good about buying a Chevy Malibu. I'm sure they hope their innovative image will help them secure loans and possibly a future gov't bailout. Remember, if a Wall Street analyst believes that these ads work, it becomes self-fulfilling.
Peter Rosenwald - Posted on August 19, 2008
Bob Whitworth - Posted on August 19, 2008
Ad Nauseam. (Readers please be advised that the following has been rated ?R? for Rant.) It?s hard to argue with your statements, Denny. If you want to know the measure of your product, TV is not the yardstick to use. Even if you focus grouped them to death in New Jersey (The Focus Group State), advertisers wouldn?t get an accurate response. The ?boob tube? (and I don?t mean the Playboy channel) has become the toilet bowl ? with a few exceptions. You really don?t need to measure that. The quality of TV programming is stinking up the air ? and you could cut it with a knife. It?s hardly a wonder that people with at least a modicum of taste and intelligence have left the room in droves. What ever happened to the good old rules of TV standards and practices? Now, there are so many alternative ways to get information, entertainment, news, etc.; which, as you pointed out, have all kinds of metric formulas to measure them. There?s also another factor at play here, besides the insipid, artsy-fartsy and uninspiring TV commercials (most with USP?s that are as visible as a black cow on a moonless night). It?s called ?saturation point.? With the current volume of TV Advertising I can ingest one or two at a time; perhaps three minutes worth in 30 minutes. But now it?s reached a state of ?Ad Nauseam.? Each programming hour or half hour has turned into a commercial extravaganza, with a few minutes of program inserted to placate the viewers: ?It?s the Budweiser, Dulco-Lax, Depends, Anacin, Viagra, Pepsi Hour?, brought to you by the ?West Wing?. I hit the remote, the mute button, or head to the refrigerator in an instant. Wouldn?t it be great if there were an electronic device built into each TV, that would give you the option of viewing commercials or not ? by pressing a button on the remote menu?
Tom Cannon - Posted on August 19, 2008
Denny, I enjoyed the column, and I think that much of the TV ad "industry" is in for a profound shakeup in the next few years. But on a better topic: sometimes an ad can hit on a profound truth that directly connects with the American character and can extend far beyond the product that was being immediately pushed. To me, the all time greatest TV ad was the one for (I believe) a motor oil in which the greasy dirty mechanic is holding a piston with a smoking car behind him and saying, "pay me now or pay me later." What a powerful personal or government management philosophy in just seven words! But the visual context made the words resonate and the words underlined the pictures, but BOTH touched on character rather than just idle curiosity or consumption. More later, Tom Cannon
Barbara - Posted on August 19, 2008
The most powerful television commercial I ever saw was the Masterlock one -- a slow-motion view of a Masterlock padlock being pierced by a bullet, swinging in place and falling back, still locked. It unites a strong visual, almost complete silence, and a clear product. I have no idea what Masterlock's ROI on that was -- but I hope they still show it. It's quite possibly the perfect television commercial.
William Morgenstein - Posted on August 19, 2008
Most ads are obnoxious and aimed toward the juvenile mind, showing great disrespect for the public. It may be cumbersome but you might try sending a copy of the receipt from a competitor along with a note stating that you won?t buy their product.
Mike McCormick - Posted on August 19, 2008
Hi Denny, Thanks for another nice column. Wasn't it David Ogilvy who discovered that some TV commercials actually unsell the product? (I suspect that BP's recent man-in-the-street campaign did that.) Some force you to change the channel even when you normally wouldn't bother. Anything with Billy Mays's voice does it for me. As for memorable, cute and/or emotional, try asking people 2 minutes after one of those commercials if they remember who paid for the spot. They'll remember the elephant sitting on the hood of the family's car and that's it. I think Budweiser, GE, Hallmark and Geico may be doing it right. All the best, Mike McC. P.S. Have you heard what's on radio these days?
John Jay Daly - Posted on August 19, 2008
Dear Denny: Another winnah in that it's both spot-on but also timely. Sure, direct mail is denigrated in myriad ways but try telling that to those of us in the industry who know -- and can prove -- that it works provided the basic rules are followed. Keep up sharing your wise insights. JOHN
James Shood - Posted on August 19, 2008
Try being a little merchant in a world like this. Where $750,000 a year might be your total sales volume! Or your entire years ad budget. Local small businesses have completely lost out when it comes to the ability to advertise and reach a "wanting to buy" public. I'd be interested in Mr. Hatch's opinion on a new web site where businesses can advertise 365/24/7 and be able to change the offer made in an unlimited fashion. The web site exists it just hasn't been discovered by retailers yet. See SALESinAMERICA.COM--a warehouse or clearing house for special offers or sales events. No reason to scan past a commercial you aren't interested in, just log on... looking for a new mattress, a pair of shoes and don't want to pay full price, but you want to do business locally instead of buying from a DOTCOMer ... this new web site looks like the place. Full page ads a business can change everyday all for less than a cup of coffee each day. Mr. Hatch, what do you think of that?
Jeff Veesenmeyer - Posted on August 19, 2008
Denny - Good article. But let me bring to your attenteion another form of "repeated over and over ad nauseeam." I'm speaking of the flashing ads that border the whole right column of your newsletter. They are so annoying that I always click on your "Printer-Friendly" format to read this newsletter. Just another method of ad avoidance in a different medium. Jeff Veesenmeyer, A.M. Mailing Services, LLC
Judy Smath - Posted on August 19, 2008
I guess the argument in favor of TV commercials is that if viewers actually watch them, they may not run out and buy the product being sold, but it will generate awareness that will result in future sales. That's a pretty weak argument for spending hundreds of thousands of dollars when your marketing budget could be spent on other mediums that actually produce results and are measurable. While I don't have DVR, I am guilty of channel surfing during commercials and I watch PBS and TCM because there are no commercials. Actually, I get kind of annoyed at PBS when they slip in a Subaru or insurance company commercial that isn't supposed to be a commercial, during programming. Who do they think they're fooling? I guess those long, boring membership drives haven't worked out so well. If DRTV and infomercials are to gain acceptance as a cost-effective way to sell, they have to lose their sleazy image. Unless this happens, advertising agencies are going to shy away from this as a legitimate form of advertising. Judy Smath, judy.smath@nielsen.com (yes, THAT Nielsen)
Jim - Posted on August 19, 2008
So true, as always Denny. The consistent, year-after-year straightforward predictability of Billboard Advertising seems to be the only remaining constant in the world of advertising ROI. Lotsa Views = Positive Sales. Still hard to track, but no Tivo.
Justin Seibert - Posted on August 19, 2008
Amen, Denny!
Click here to view archived comments...
Archived Comments:
Al McCree - Posted on August 21, 2008
The recent Apple TV ads are entertaining and sales for Apple computers are way up. Since we don't know the cost it is hard to determine ROI but it does suggest that if commercials are entertaining enough, people will watch them.
Art Boulton III - Posted on August 21, 2008
A little entertainment in a TV ad is OK, but best remembered doesn't do them any good if you don't remember what the product was for. There was a great commercial a couple of years ago, I think during a Super Bowl, with cowboys herding cats, but I don't remember what they were selling. Another good column. Thanks.
Joe Barcia - Posted on August 20, 2008
Denny, everything you said about TV ROI is 100% correct. But most national consumer brands aren't buying TV as a pure investment that seeks a direct profit. What I believe they are buying is an "insurance policy"--indemnifying their brand from being forgotten in the marketplace. That $750,000 for an Olympic 30-second TV spot is in reality an insurance premium--an overhead expense, not a marketing investment. Inject a truth serum into a GM, Pepsi or Coke brand manager, and that's pretty much what they'll tell you.
Shel Horowitz, Ethical Marketing Expert - Posted on August 20, 2008
Spot on once again, Denny. In some 30 years as a marketing consultant, I have yet to advise a client to use TV advertising over expensive general-interest media--even with a response mechanism. In the rare cases where I recommend TV, it's typically highly-targeted low-cost cable programming directly related to their industry. --Shel Horowitz, author of five marketing books including ?Grassroots Marketing: Getting Noticed in a Noisy World,? FrugalMarketing.com
Martyn R Whittaker - Posted on August 19, 2008
I agree with you entirely, except for my favorite ad showing the girl with the beautiful smile, roller skating. So if I ever were to buy a carbonated cola beverage it would definitely be Pepsi...or was it be Coca Cola??
Lawrence Hansen - Posted on August 19, 2008
TV advertising can just work against you. Earlier this year I was in the market for a new car and was interested in the usual suspects for middle-aged drivers, all models that compete heavily against each other: Ford Fusion, Honda Accord, Toyota Camry, Pontiac G6, Mazda6, and Acura TSX. I happened to catch a Ford commercial on TV trumpeting the Fusion's quality "as good as Toyota and Honda now," which basically told me their product was a catch-up, also-ran, wanna-be copy of the established quality leaders in the industry. The commercial put the whole "as good as" issue at the front of my mind when I test drove a Fusion, which ultimately led me to conclude that, nope, it ain't as good as the leaders. So I bought a Camry. As a bonus, it was assembled in the U.S., unlike the assembled-in-Mexico Ford. So TV advertising can work--just not always for the company paying for it. BTW, the DVR IS the greatest invention thus far in the 21st century! It allows me to watch an entire 60 minute TV show in ca. 42 minutes, and I've gotten so used to backing up to catch a bit of dialogue again that I find myself reaching for the button reflexively during those rare occasions when I watch "live" TV.
James Shood - Posted on August 19, 2008
Me again. Nice everyone... the OIL commercial was actually a FRAM filter commercial, the Masterlock commercial is an all time greatest hit... but did you know that the commercial only airs one time a YEAR ... SUPER BOWL .. and that it is their entire TV ad budget... and whoever mentioned the elephant on the car... what company is that? You are right on target. Keep-em coming Mr. Hatch! One of these days we'll all have this ad thing all figured out!
Ann Wilson - Posted on August 19, 2008
I watch one brand of ad and enjoy them each time - repeatedly. I watch them online. I watch Apple. I own 5 Macs, and original iPod and an iPod Shuffle; I convert people to the dark-side all the time. I'm the best type of advertisement a company could every ask for. I love Apple
Wash Phillips - Posted on August 19, 2008
Right on, Denny, about the ease of determining ROI on direct mail. But Wanamaker still counts. i.e., a 2% conversion still leaves 98% that doesn?t make the grade. Efficiency ain?t the issue, per se. Why my mailbox is stuffed with advertising I never look at, and the US Postal Service depends on it to keep the doors open. For infomercials?other than QVC devotees, widows and insomniacs?who actually watches? I do?if they?re recycled music CDs. And I?ve stayed put for a certain (unbelievable) male enhancement product, just for the female testimonials. (Never bought either). My wife?s take on infomercials: go to the As Seen On TV counter in her favorite store, but that purchase escapes the vaunted ROI metric. At the movies (Indiana Jones), I was stuck, pre-previews, with even denser clustering of crummy ads on-screen. No way to TIVO those, somebody realized. Viral marketing, with its planning complexity/incomprehensibility, seems magical. But that?s ?organic,? a main way most products sold at one time or other. Somebody tells or shows or uses a product/service, and somebody follows. The Fed TARP Study years ago said it in different words. Have TV viewers bought products advertised in profitable numbers? Ask the pharma folks. Their older audience doesn?t turn away and does quiz the doc. Getting your message to a buyer?s heart always has been complicated . A quick ROI fix is a good means for staying in business, as far as it goes.
Jon Pietz - Posted on August 19, 2008
Denny, an advertiser's job may be to sell and not entertain, but television is an entertainment medium. In prime time television such as Olympic coverage, you had better create a commercial that has at least some entertainment value, such as humor, education or drama, or you can forget about being remembered in a positive light. I believe it's the proliferation (and the sheer numbers) of "hard selling" commercials which has poisoned the medium for the advertisers. Your formula for measuring Direct Marketing ROI transposed upon a whimsical Coke commercial is missing a very important point: Over the years Coke has gained a place in the hearts of the public through the emotional connection created by their advertising. Although it's hard to measure with your standard DM matrices, it's created a brand worth billions of dollars. And it creates profits for that brand that no amount of 800-number direct response or online marketing could ever make up for. There's a right time, place and medium for each kind of marketing, but you can't possibly tell me that the car you drive, the beer you drink or the razor you use is a result of anything other than emotional brand advertising as seen on TV.
Rob - Posted on August 19, 2008
I don't think a lot of TV ads even have the intention of selling products. They are about branding and bolstering their stock. GM is practically bankrupt but spending millions on Olympic ads advertising the Volt, plug-in hybrid that won't be available for sale for 2 years and will never be a volume seller. The ads are about changing the company's image from rust belt to 21st century player so that people will feel good about buying a Chevy Malibu. I'm sure they hope their innovative image will help them secure loans and possibly a future gov't bailout. Remember, if a Wall Street analyst believes that these ads work, it becomes self-fulfilling.
Peter Rosenwald - Posted on August 19, 2008
Bob Whitworth - Posted on August 19, 2008
Ad Nauseam. (Readers please be advised that the following has been rated ?R? for Rant.) It?s hard to argue with your statements, Denny. If you want to know the measure of your product, TV is not the yardstick to use. Even if you focus grouped them to death in New Jersey (The Focus Group State), advertisers wouldn?t get an accurate response. The ?boob tube? (and I don?t mean the Playboy channel) has become the toilet bowl ? with a few exceptions. You really don?t need to measure that. The quality of TV programming is stinking up the air ? and you could cut it with a knife. It?s hardly a wonder that people with at least a modicum of taste and intelligence have left the room in droves. What ever happened to the good old rules of TV standards and practices? Now, there are so many alternative ways to get information, entertainment, news, etc.; which, as you pointed out, have all kinds of metric formulas to measure them. There?s also another factor at play here, besides the insipid, artsy-fartsy and uninspiring TV commercials (most with USP?s that are as visible as a black cow on a moonless night). It?s called ?saturation point.? With the current volume of TV Advertising I can ingest one or two at a time; perhaps three minutes worth in 30 minutes. But now it?s reached a state of ?Ad Nauseam.? Each programming hour or half hour has turned into a commercial extravaganza, with a few minutes of program inserted to placate the viewers: ?It?s the Budweiser, Dulco-Lax, Depends, Anacin, Viagra, Pepsi Hour?, brought to you by the ?West Wing?. I hit the remote, the mute button, or head to the refrigerator in an instant. Wouldn?t it be great if there were an electronic device built into each TV, that would give you the option of viewing commercials or not ? by pressing a button on the remote menu?
Tom Cannon - Posted on August 19, 2008
Denny, I enjoyed the column, and I think that much of the TV ad "industry" is in for a profound shakeup in the next few years. But on a better topic: sometimes an ad can hit on a profound truth that directly connects with the American character and can extend far beyond the product that was being immediately pushed. To me, the all time greatest TV ad was the one for (I believe) a motor oil in which the greasy dirty mechanic is holding a piston with a smoking car behind him and saying, "pay me now or pay me later." What a powerful personal or government management philosophy in just seven words! But the visual context made the words resonate and the words underlined the pictures, but BOTH touched on character rather than just idle curiosity or consumption. More later, Tom Cannon
Barbara - Posted on August 19, 2008
The most powerful television commercial I ever saw was the Masterlock one -- a slow-motion view of a Masterlock padlock being pierced by a bullet, swinging in place and falling back, still locked. It unites a strong visual, almost complete silence, and a clear product. I have no idea what Masterlock's ROI on that was -- but I hope they still show it. It's quite possibly the perfect television commercial.
William Morgenstein - Posted on August 19, 2008
Most ads are obnoxious and aimed toward the juvenile mind, showing great disrespect for the public. It may be cumbersome but you might try sending a copy of the receipt from a competitor along with a note stating that you won?t buy their product.
Mike McCormick - Posted on August 19, 2008
Hi Denny, Thanks for another nice column. Wasn't it David Ogilvy who discovered that some TV commercials actually unsell the product? (I suspect that BP's recent man-in-the-street campaign did that.) Some force you to change the channel even when you normally wouldn't bother. Anything with Billy Mays's voice does it for me. As for memorable, cute and/or emotional, try asking people 2 minutes after one of those commercials if they remember who paid for the spot. They'll remember the elephant sitting on the hood of the family's car and that's it. I think Budweiser, GE, Hallmark and Geico may be doing it right. All the best, Mike McC. P.S. Have you heard what's on radio these days?
John Jay Daly - Posted on August 19, 2008
Dear Denny: Another winnah in that it's both spot-on but also timely. Sure, direct mail is denigrated in myriad ways but try telling that to those of us in the industry who know -- and can prove -- that it works provided the basic rules are followed. Keep up sharing your wise insights. JOHN
James Shood - Posted on August 19, 2008
Try being a little merchant in a world like this. Where $750,000 a year might be your total sales volume! Or your entire years ad budget. Local small businesses have completely lost out when it comes to the ability to advertise and reach a "wanting to buy" public. I'd be interested in Mr. Hatch's opinion on a new web site where businesses can advertise 365/24/7 and be able to change the offer made in an unlimited fashion. The web site exists it just hasn't been discovered by retailers yet. See SALESinAMERICA.COM--a warehouse or clearing house for special offers or sales events. No reason to scan past a commercial you aren't interested in, just log on... looking for a new mattress, a pair of shoes and don't want to pay full price, but you want to do business locally instead of buying from a DOTCOMer ... this new web site looks like the place. Full page ads a business can change everyday all for less than a cup of coffee each day. Mr. Hatch, what do you think of that?
Jeff Veesenmeyer - Posted on August 19, 2008
Denny - Good article. But let me bring to your attenteion another form of "repeated over and over ad nauseeam." I'm speaking of the flashing ads that border the whole right column of your newsletter. They are so annoying that I always click on your "Printer-Friendly" format to read this newsletter. Just another method of ad avoidance in a different medium. Jeff Veesenmeyer, A.M. Mailing Services, LLC
Judy Smath - Posted on August 19, 2008
I guess the argument in favor of TV commercials is that if viewers actually watch them, they may not run out and buy the product being sold, but it will generate awareness that will result in future sales. That's a pretty weak argument for spending hundreds of thousands of dollars when your marketing budget could be spent on other mediums that actually produce results and are measurable. While I don't have DVR, I am guilty of channel surfing during commercials and I watch PBS and TCM because there are no commercials. Actually, I get kind of annoyed at PBS when they slip in a Subaru or insurance company commercial that isn't supposed to be a commercial, during programming. Who do they think they're fooling? I guess those long, boring membership drives haven't worked out so well. If DRTV and infomercials are to gain acceptance as a cost-effective way to sell, they have to lose their sleazy image. Unless this happens, advertising agencies are going to shy away from this as a legitimate form of advertising. Judy Smath, judy.smath@nielsen.com (yes, THAT Nielsen)
Jim - Posted on August 19, 2008
So true, as always Denny. The consistent, year-after-year straightforward predictability of Billboard Advertising seems to be the only remaining constant in the world of advertising ROI. Lotsa Views = Positive Sales. Still hard to track, but no Tivo.
Justin Seibert - Posted on August 19, 2008
Amen, Denny!