Marketing Tactegy

ROI of Social Media: Can’t live with it, can’t live without it – Part 2

In my last blog post on ‘ROI of Social Media – can’t live with it, can’t live without it’ I spoke about how many marketers hold social media to higher ROI standard.  If you’re not measuring traditional media, why do we need to measure the ROI of social media before we’ll invest in it?

In this post I’ll talk about the fact that in order to measure the incremental impact of social media we need to measure across the entire marketing mix.  (If you would like more information on all these topics, please check out our book at http://www.ROIofSocialMedia.com, or follow the topic on twitter at #ROISM.)

1)    Measuring across the marketing media mix - As you probably noticed from my first post I speak about ‘marketing ROI’ when the article claims to be about social media ROI.

As a marketing measurement expert (and I think I can call myself that, even though I am always learning new tricks), I have been measuring the effectiveness of social media right from the start.  We have measured a number of social media activities around the globe going back a number of years and all of them have been exceptionally strong - much stronger than traditional media activities.

When embarking on marketing measurement and now social media marketing measurement, we have to go back to basics.  We can’t measure the effect of social media as a stand-alone media (of course, unless this is the only thing you and your competitors are using.)  Social media has a unique impact on consumer behavior but we need to realize that it also affects the impact of traditional media and traditional media impacts the effect of social media. 

In order to ‘get it right’ we need to have a measurement framework that is specific to social media, but also takes into account the entire marketing environment.  We need to look across all 4 Ps (Product, price, place and promotion).  To this end, my coauthors and I developed the Media Engagement Framework (page 84 in the book, which can be found at http://www.ROIofSocialMedia.com – a blatant plug).  It looks at how to gather the right information and data to properly measure the impact of all the actors in social media.  It talks about individuals, that may or may not become consumers, but nevertheless engage with your brand, influencers and how we would like to work towards winning and improving their endorsement of our brands, and of course consumers, that we want to move down the purchase funnel from brand awareness, to purchase, loyalty and advocacy.  If we follow this measurement framework, we can now be assured that we are measuring the right things so we can use those measurements to make better strategic and tactical marketing decisions in the future.

The Point:  Social media must be measured and it must be measured in context of all marketing activities and we must measure the right things in order to make better strategic and tactical marketing decisions.

If you’d like to learn more about this topic, come join us at MeasureUp The conference on the art and science of integrating traditional and social media marketing (http://www.IIRUSA.com/MeasureUp).  Otherwise, stay tuned for my next two blog posts.  I hope you’ll find them interesting.  Please let me know if you have any questions or comments.

Author’s Bio:  Over the last 20 years Guy R. Powell, based in Atlanta and Singapore has been helping thousands of marketers across the globe prove and improve their marketing performance through training, analytics and organizational transformation.  His experience cuts across just about every industry, every media channel – including social - and every region – from Asia to North America.  You can reach him on Linked in or at http://www.ROIofSocialMedia.com.  His other books include Marketing Calculator:  Measuring and managing your return on marketing investment (http://www.Marketing-Calculator.com) and Return on Marketing Investment:  Demand more from your sales and marketing investments. (http://www.ReturnonMarketingInvestment.net)

 

Revenue Performance Management - a new term in the Marketing ROI space

I was asked a few weeks ago to think about the term revenue performance management and determine whether it’s different from other terms in the marketing ROI space.  Initially I was thinking that it was more about revenue management, which uses CRM, loyalty and other tools to optimize utilization of a fixed capacity offering.  Typically used in hotels, cruise lines and airlines.  There are only so many seats or beds and developing demand once the utilization has reached 100% is wasted marketing.  It comes at the topic of marketing ROI and effectiveness from a different angle, because of the hard capacity limitation.  It’s not like you could build additional capacity very quickly and may not want to build incremental capacity very quickly to respond to the incremental marketing developed demand.

With revenue performance management it is a new twist on the term marketing ROI.  Marketing ROI has been defined many ways, but we see it as the end-to-end ROI developed in terms of short and long term profit due to an incremental level of marketing.  There are many other uses and definitions, mostly about what gets included and other details that may be limited by the available data sets.  In any case, an ROI performance based approach can help at the overall level and at each of the phases of marketing (see below).  A good definition that I’ve seen has three bullets to it (thanks to Lauren Carlson, Software Advice):

• Revenue Performance Management adds more sophisticated functionality in the area of analytics and data integration.
• This enhancement provides a more holistic view of the revenue cycle from the earliest stages of marketing through sales execution.
• Because of this, companies can see what's working and what isn't, making it possible for marketing and sales teams to optimize their efforts in order to achieve the highest return.

What I like about the term is the sales orientation and focus on revenue.  It will be interesting to see how it progresses in the future.

I was just at the Technology Driven Market Research conference in Chicago and looking forward to the MeasureUp Conference in Boston, June 6, 7 and 8 (www.iirusa.com/measureup - hope you can make it!) and P&G was presenting their view of the phases of the ‘moments of truth’.  Here they are:

• Phase 0 is the initial marketing touch. 
• Phase 1 is the actual choice point at the shelf in the store
• Phase 2 is the post sale product/service experience.

If we’re looking at a complete marketing ROI approach it is these three phases that would need to be included in a holistic approach to marketing ROI.  You could potentially even add a phase 3, which is the social media advocacy phase.  That is, what is the value of marketing in terms of getting consumers (and maybe non-consumers) to advocate about your brand?

With this in mind marketing ROI and ROMI need to make sure they cover from phase 0 to at least phase 2 if not phase 3.  Revenue performance management on the other hand is great to use when talking specifically about direct sales and revenue conversations relating to marketing effectiveness.

Let me know what you think.  I would love to hear.  

Don't forget to check out our new book  ROI of Social Media.

 

 

Cumulative Engagement Modeling - A new way to look at Marketing Effectiveness - a new white paper

I’ve been working on marketing ROI for a long time now.  We’ve delivered Marketing Mix Models, Agent Based Models and many other analyses to help marketers make better strategic and tactical marketing decisions. 

One of the concepts that I’ve found to be very descriptive is Last Touch Attribution.  Last Touch Attribution assigns all the weight of a marketing activity to one response.  It ignores all prior, concurrent and long term values generated by a particular media activity.  Similarly, Marketing Mix Models generally ignore the long term value of marketing and advertising.  They correlate marketing activities through a regression model to the sales volume from a particular time period, usually a week.  But as a rule they don’t include the long term values that these marketing activities deliver.

The long term marketing value generated by any and all marketing activities fall into a few categories:

· Increased awareness and purchase intent

· Changes in the brand attribute profile (imagery)

· Customer equity (the value of any new customer converted to the brand)

Last touch Attribution and Marketing Mix Models are great tools to support marketing in their ability to make better strategic and tactical decisions, but they don’t tell the full story.

This white paper was put together to describe in detail how a new approach is needed to understand how marketing messages drive awareness and purchase intent and that these values accumulate amongst the consumers.  As marketing messages are inserted into the category awareness and purchase intent accumulate.  If messages stop they decay.  If messages begin again they start to accumulate again.

This concept is especially important when we start to add social media marketing to the mix.  With social marketing we need to now compare the value a comment on Facebook or a video viewed on YouTube might have on the brand.  Cumulative Engagement Modeling is a great step in accurately determining how these messages drive incremental awareness and purchase intent for those social media active individuals.

I hope you find the white paper interesting.  Please let me know your comments and feedback.

http://www.Marketing-Calculator.com/DownloadNow.aspx

Thanks

Guy

http://www.Marketing-Calculator.com

The Full Measure on MeasureUp (4 of 4)

MeasureUp is a great conference for all things marketing ROI and return on marketing investment ROMI put on by the IIR.  They put on some great events and I highly recommend you take a look at their site for some upcoming events.  To summarize this series of 4 posts the Measureup conference there were a few major points that I came away with:

1. Marketing Mix Modeling may have peaked. Marketing Mix models have provided great insight over the years, but lately many have been shown to only deliver short term insights. When used in a competitive, mature category, such as, for the Oreo brand, MMMs typically deliver short term insights in that temporary price reductions can increase sales. Unfortunately, they also lead to loss of brand value. MMMs don’t include the long term brand value that can be destroyed through continuous price actions. Consumers simply get trained to always buy on ‘deal’.
2. Social media although is growing and is important for many brands, it still has a long way to go to be a major contributor for some of the top consumer brands. For the rest of us, though social media can still drive a lot of brand engagement, it can be measured and will continue to grow in importance.
3. Analytics and measured insights are becoming more and more important in marketing decision making. Marketers are finally embracing analytics and using them to their advantage. There is still a long way to go, but it is progressing swiftly.

There were many more insights and I hope next year you’ll have a chance to participate as well.  Just let me know if you would like further information on any of these topics.

The Full Measure on MeasureUp (3 of 4)

Here are continuing remarks and key notes from the MeasureUp conference.  This is the third in a series  (You can also read my Twitter stream at #ROMI)

1. Melanie Davis, Director of Marketplace Insights at American Express had some great insight as to how American Express uses modeling to support their brand.  They analyzed their presences on Twitter and Facebook with the goal to track online buzz compared to their competitors (primarily bank credit card issuers) using share of conversation and sentiment.  It was modeled using Structured Equation Modeling to determine how online buzz drove their funnel (Awareness, Engagement and Consideration, Conversation, Loyalty and Usage).  This is a great example of using the community engagement funnel (described in our social media white paper.  Download now.  One of the other interesting findings was that even though there was a lot of buzz it was relatively small compared to the number of purchased impressions made using traditional media.
2. Building a business case for marketing, social media and ROI were discussed in my session. With Ted Molter, Director of Marketing at the San Diego Zoo and Wild Animal Park and Nick Popielski, Director of Marketing at Atlanta Gas Light Resources.  Both had compelling stories on how they were able to drive analytics and numbers into their marketing organizations with some astounding results.  Nick Popielski showed how ROI was the only way to get the attention of the C-Suite and provide a solid foundation for the marketing business case.  Understanding the causes of churn led to significant growth in their net customer base.  Ted Molter spoke primarily about online marketing ROI showing how online media including social media was able to drive high conversion rates and ROI.  The numbers reached into the 1,000% range for ROI.
3. Ed Keller of Keller-Faye provided some great insight on their TalkTracker tracking survey.  This service provides both on and offline measurements of word of mouth.  Social media must be looked at from an online and offline perspective when comparing online and offline word of mouth conversations.  77% of them still take place offline according to studies and research conducted by Keller-Faye.  They estimate that over 3.3bn brand conversations take place every day in the US alone.  The top talked about brands are:
   • Coca Cola
   • Verizon
   • Walmart
   • Pepsi
   • AT&T
4. Ellen Stone, SVP of Marketing at the Bravo Network gave probably the most complete discussion on calculating ROI for social media.  There is no question that social media marketing can be very effective at driving buzz and delivering value for Bravo network.  They were using a number of fascinating tactics to drive buzz and deliver incremental viewers to their programming.  This was especially true for the launch of new programming.
5. Unfortunately I wasn’t able to capture the name of the presenter from Publicis, the agency for Denny’s restaurants.  My apologies.  Nevertheless he had some great statistics from their superbowl campaigns.  Denny’s super bowl offer of a free breakfast after the 2008 Super Bowl was wildly successful driving value and sales for the brand.  Unfortunately the advertising campaign was not sustained after the first quarter and it lost its momentum that could have been easily and cost effectively sustained.  Here are a few interesting facts:
   • Add-ons and late arrivals paid for the cost of the ad and the food at the 1,500 Denny’s restaurants
   • 2 million guests enjoyed the meal
   • Restaurant locater on the web was a key metric to determine interim success.  The ad delivered over 14,000,000 hits to website in 12 hours.  It generated over 2,300 news hits, 500 newspaper articles.  It was even mentioned by Jay Leno and Jon Stewart.  “Denny’s” became the 2nd most googled word.
   • Many guests heard about the free meal through text, calling, Facebook and mass emails to friends
   • It took over a million chickens to lay the eggs required.
   • Through this ad, Denny’s was able to meet its financial goals for the quarter.

Still more to come. Stay tuned for the next installment. Let me know what you think of the insights gained.

The Full Measure on MeasureUp (2 of 4)

Here are continuing remarks and key notes from the MeasureUp conference.  This is the second in a series  (You can also read my Twitter stream at #ROMI)

The second day focused more on optimizing traditional media.  The keynote was from Avanish Kaushik, Analytics Evangelist at Google, Inc.  He is also the author of Web Analytics: An Hour a Day  and Web Analytics 2.0 

Avanish is a lively, engaging speaker.  Definitely worth the price of admission.  His primary message relating to web (and of course, Google analytics) is get started, make mistakes, learn and improve.  That is, learn to be wrong but do it quickly.  He provided an impressive array of tools that could be used to quickly analyze the impact of web-marketing on conversion and web design.  There were so many examples of using google analytics to increase conversion it was hard to keep up.  Here are a few:

• How to reduce bounce rates by pointing to design flaws
• How to use experimental design to continue to optimize page layout and design.

With the keys to the kingdom Avinash was able to show that sites could easily be significantly more effective.  One of his thought provocations was, “don’t have opinions, have hypotheses.” 
Avanish also introduced a new term, Hippo decision making.  The Highest Paid Person’s Opinion.  How often is this true when there are no analytics to back up the conversation and decision making. 
His last bit of advice was to continuously ask for feedback from your consumers about their experience with your website with the following three simple questions:

• Why are you here?
• Were you able to complete your task?
• If not, why not?

Here are a few more notes from the other speakers:

1. Scott Deaver, EVP Strategy for Avis Budget Group had a few good insights about his business. Unfortunately I wasn’t able to catch his entire talk but he mentioned a few interesting comments concerning metrics:
2. • Linear metrics
   • On/off metrics
   • Good enough metrics

   He left us with the statement “Don’t fall victim to the tyranny of the measurable.”

3. Dominique Hanssens has a fascinating message in that great marketing doesn’t just drive revenue and profit but it also drives the share price. If marketers can get it right, they can deliver long term incremental share prices. He also pointed out a few potential flaws in the valuation on the stock market. For example, he found that differentiation was not well understood (that is, not reflected in the stock price) but awareness and brand equity was. He also found that customer satisfaction clearly has a long term impact. It would be interesting to find out though whether positive customer satisfaction has a long term impact on share price, but does a negative have a short term impact. For example, how does the negative impact of the recalls for Toyota impact the share price? Is it a long term impact as well or has it hit the stock price in a short term way.
4. Lisa Wellington of Coca Cola and Greg Michaels of Kraft provided some great insights into their methodologies relating to marketing ROI and ROMI. Coca Cola puts the rest of us to shame when we look at how they have a comprehensive system applying globally. They are a big user of Baysian regression, pooled models, conjoint testing, copy testing and scenario planning with highly granular models, looking to understand the relative influence of brand, flavor, pack type, pack size and region. Even in the face of the imprecise nature of the data, they are still able to make great decisions to drive their business forward based on good consumer and modeling insights.
5. Kraft, not far behind showed how modeling has helped them to drive great decision making with their brands. Greg’s point of building a good model now as opposed to a perfect model later illustrates how they are able to use modeling to structure the decision making and conversations marketers have when they endeavor to build their businesses. One of the books he recommends is The Black Swan by Nasim Taleb.
   
   One of the interesting points highlighted by Lisa Wellington related to the great social media divide. Although social media wasn’t discounted for its value to help many brands, the problem is that it is still, for some of the major global brands, such as Coca Cola and American Express miniscule. For Coca Cola in particular, even though it has one of the largest followings on Facebook (5Million, I believe is the quoted number), that represents less than 0.1% of the world population (their target audience). Traditional media is still very valuable and will remain that way for a long time at reaching the masses when and where they want to be reached.

Still some great more insights from the conference. Stay tuned for my next post.

The full measure on MeasureUp (1 of 4)

The MeasureUp conference in Chicago was the latest version of the former ROMI Conferences and it had some great insight on measuring, proving and improving marketing and social media ROI (You can read my Twitter stream at #ROMI). MeasureUp is a great conference for all things marketing ROI and return on marketing investment put on by the IIR. They put on some great events and I highly recommend you take a look at their site for some upcoming events.

The first day was primarily on social media and some of the interesting marketing and customer service applications being employed.  There is certainly a lot to understand with social media but each of the presenters provided some valuable insight into social media strategy, tactics and measurement.  The second and third days emphasized traditional media marketing ROI with some social media ROI sprinkled in.  One of the things that I’ve found, now that I’ve trained a few thousand marketers around the world in just about every vertical, is that in order to measure marketing ROI and ROMI you must first have a good understanding of marketing strategy and tactics.  This is definitely the case when we start to measure the response to social media marketing.

Here are some of excerpts from the first day of social media:

1. Social media is very valuable for customer service and support. PitneyBowes’ Aneta Hall had a great presentation on how their company has been able to effectively utilize social media to minimize the number of calls to the call center. This is both true for ongoing support issues and for support events, for example a postal rate change requiring updating of the postal machines. Hall calculated that PitneyBowes was able to deflect about 50,000 calls to the call center and at $10 per call, represented a savings of about $500,000. Please visit a series of podcasts on a pre-conference workshop with Aneta Hall.
2. Measuring the ROI of innovation is a fascinating topic. Luisa Uriarte, Partner at Maddock Douglas and Ainslie Simmonds, VP, Innovation at Maddock Douglas gave some interesting insights in their three by five process. Just developing new brands and products without doing your homework can lead to disaster, both for the brand and your career. Their process systematizes the research and decision making in order to reduce risk and increase returns. Where their process leaves off our agent-based modeling can deliver some great insight to make certain the new product gets properly launched into the marketplace.
3. Esmee Williams, VP Marketing of AllRecipes, one of the top recipes communities boasts 2.5bn pageviews per month. They are #1 18 million pieces of user generated content and are now #1 in the number of iPhone recipes. It is a great site for the food category, because when users make comments they are more often than not going to make a brand mention. They use a unique method of measuring message association and purchase intent in order to deliver higher quality advertising to their advertisers. In addition to their consumer centric approach they also have branded subpages where brands can build sub communities. Advertisers have many options with which to reach the community. It can be done through relevance, effectiveness, videos, traditional banners, sponsorship (editorials and user generated content), branded profiles, widgets (users can give and get widgets) and newsletters.
   
   AllRecipes’ research illustrated which types of advertising delivered the highest purchase intent scores between banners & newsletters (mid level purchase intent), sponsorships (low purchase intent, profiles with (high purchase intent) and without a logo (low purchase intent) and give (high purchase intent) & get (mid level purchase intent) widgets. (If you would like a white paper on the ROI of Social Media which uses the concept of a community engagement funnel.  Download it here now.)
4. Matt Moog of Viewpoints Network which manages the ratings and reviews for Sears.com provided some fascinating insight on how to optimize the use of ratings and reviews in an e-commerce site. The question asked ‘is a reviewer more valuable than a customer because they drive sales because of their reviews?’ For Sears.com, for each review it drives 4 visits (=readers) per month or 48 readers per year. Matt’s contention was that it may actually be that the ratings and reviews are so valuable to drive conversion of other visitors that the reviews themselves are more valuable to the company than had that reviewer actually made a purchase.
   
   Matt made the comparison of reviews creators that will write content and have 150 Facebook friends, thereby delivering 150,000 impressions, versus the cost of paid search to deliver 150,000 impressions.
   
   Ratings and reviews can be used in many ways. They can be used to change the assortment and improve customer service. By coordinating with search to reviews can be written based on what visitors are searching on to help them more easily find what they’re looking for.
   
   In my opinion ratings and reviews are one of the hidden gems in social media strategy and tactics. By fully utilizing ratings and reviews marketers can easily increase conversions without having to develop new marketing initiatives. Combined with some of Matt’s tactics, ratings and reviews can then be improved even further.
5. Scott Chappell of Sessions College of Professional Design gave some great insight on targeting specific messages through specific social media channels. Sessions College is selling something very different from a consumer packaged good. It is a two year commitment. He also showed how you can increase the number of touches to a prospective student without having to risk an unsubscribe, nor having to risk a de-friending. Instead of being able to email a prospect only once a week or once per month, with Twitter and the combination of Twitter, Facebook and LinkedIn Sessions College of Art and Design may reach out to some individuals up to 48 times in one month.
   
   He also showed how you can use different social media channels to deliver different types of messages. He focused primarily on Facebook, Twitter and Linkedin, each focusing on messages of Culture, Industry and selling with little overlap between them.
   
   Of course social media comes with its challenges. Those outside of marketing wish to use their social media assets to do more than engage. They want sales. For example their blog has 33,000 subscribers. He has to constantly protect this engagement channel from those in the organization that wish to change it into a selling channel thereby violating the trust of the subscribers and devaluing what has been built up over the last few years.
   
   If you would like to hear a pre-conference interview with Scott please click on the link.

There are 3 more posts on this topic.  Please stay tuned.

Interesting read on the marketing effectiveness of commercials…

At the 2009 Joint Statistical Meetings in Washington, DC, August 1st – 6th there was an interesting presentation about the effectiveness of advertising and commercial viewership.  (as summarized by Laura Sanders in Science News, August 29,2009).  I was unable to find the original article electronically, but here are a few summary points.

Advertising Effectiveness of commercials

For example, during the research period the cooking reality television show Hell’s Kitchen drew 2.96% share as measured by the cable box, but its commercial audience was 2.42% for a drop of 18%.  On the other hand, high retention took place for NUMB3RS drawing 1.90% and 1.78% during the commercials.
David Schweidel of the University of Wisconsin – Madison did the research and looked at the drop off rates based on:

• Audience size
• Genre
• Network
• Time of day

Some conclusions:

• People were less likely to avoid a commercial late at night.
• The length of the commercial break
• Whether there were other channels with simultaneous commercials
• Dramas did better than reality TV

This is an interesting initial research based on a regional analysis (a large West Coast metropolitan area.)  Losing up to 20% of an audience during the commercial break is a big difference and clearly will have an impact when the commercial ratings system starts to be implemented.

Let me know if you have any other research along these lines.  Or if you attended the presentation, and have any other insights, I would love to see it.

What is the long term value of marketing?

There have a been quite a few blogs and other posts talking about why more smart marketers aren’t trying to make the case that investing in a recession can help a company be stronger once the recession is over than competitors that don’t invest.  This spurred the question, how should we define the long term value of advertising, (whether it’s during a recession or not.).  Here are my thoughts.
Advertising has both a short term and a long term impact.  (For the purposes of this document, I am defining advertising as any message received about a brand or the category, regardless of whether it was received directly from the manufacturer through mass media or direct response, or indirectly through the distribution channel, experts & endorsers, other consumers or any other brand information sources.)
Short term advertising effectiveness can probably best be measured based on last touch attribution (see a previous post on this topic.)  This method attributes all revenue to the last touch, regardless of prior or concurrent touches.  It totally ignores any residual effects that accrue to marketing as described below.
Medium term advertising effectiveness includes the impact on the emotional impressions of the brand.  There are two dimensions:

• Awareness – Awareness for a brand typically has a long term effect.  Awareness decays over time, where a particular consumer is either aware of the brand or unaware of the brand.  There is no partial awareness.
• Consideration set – Just having awareness of a brand doesn’t mean it’s in the consumer’s consideration set.  What brands require is that the advertised brand will be considered as one of the choices in the category.  Advertising must keep the brand in the consideration set by continuing the advertising.  If advertising is discontinued, a brand may eventually fall out of the consideration set.  This is probably certainly true for categories that are highly considered where the consumer is expecting that the value of their purchase will provide long term benefits, either through a valid warranty or through the brand impact of a purchase among friends.  (e.g., ‘I like to be seen showing off my branded clothing’).  Consideration also decays over time.  Just as in the case of awareness, the consumer either holds the brand in the consideration set or not.  There is no partial consideration.
• Purchase intent - The incremental intent to purchase attributed to a specific media channel.  This decays over time as well.  Purchase intent, however, can be any value and therefore can be either increased, through more advertising, or reduced through the lack of advertising.
• Brand imagery – The attribute association scores measured in many brand health tracking studies.  The association scores can be strengthened based on the message (s) in the creative.  These include attributes such as, ‘this brand is good value for the money’, ‘this brand is eco-friendly’ or ‘this is a luxury brand’.  They are emotional and driven by both the advertising and prior experience with the brand.

Each of these have some decay rate if no further messages are received about the brand.

Long term advertising effectiveness has two components:

• Brand equity is an emotional consumer element that lasts significantly longer than the purchase intent above and can be interpreted as the residual marketing impact that makes any future advertising more effective.  That is, any advertising this year delivers value in the following years.  This too, probably has some decay rate if no further advertising is done, although I haven’t seen any discussions to this effect.  Its impact is also affected by external events.  If the brand has high brand equity, the impact on future purchases is present.  In a recession, however, the impact is reduced.  In uncertain economic times the value of investing in long term brand equity is lower because of potential deleterious effects outside of the control of the brand.
• Customer equity can be defined as all those customers that have tried the brand at some point in the recent past.  (It is sometimes called penetration).  Since a consumer has used the product/service in the past less advertising will be required to induce them to use it again (assuming there was no negative customer satisfaction event).  Investing in customer acquisition has a higher long term value over just advertising to drive revenue from existing customers.  This long term effect may also be slightly different for an initial trial versus continued usage.  Just giving out samples may not have the same customer equity value as a consumer actually purchasing a brand and consuming it.

Some exceptions to consider:
1) If there was a negative customer satisfaction event, this can be overcome, but it would require a bunch of advertising, or another negative customer satisfaction event from their new competitive provider/brand?
2) How does advertising drive ubiquitous brands like Coca Cola or Pepsi?  I have been told there is a long term advertising effect to advertising.  Also, what is the long term value of Coca Cola’s sponsorship of the Olympic games?

Very Long term advertising effectiveness - Is there a very long term brand value?  For example, when I was a kid, I loved the Ferrari.  I still do.  Is there any value today, based on the advertising and marketing undertaken a few decades () ago?  Is there any present value of advertising, based on results that may or may not be achieved decades from now?

Implications for marketers

A few questions to think about:

• For fast moving consumer goods (FMCG) marketers with high penetration and an older brand, how can marketers deliver incremental medium and longer term value to their marketing?  Very little marketing will drive customer equity, since the brand already has high penetration.  Is there incremental customer equity delivered through a line extension in the form of some new variant with some new (or perceived) attribute.  Or is marketing all about driving short term purchase? Or should marketing now harvest the brand and reduce advertising to an extent that market share stays about even?
• For FMCG marketers with a new brand, what is the optimal mix between driving brand value, short term sales and customer equity?
• For highly considered products and brands that are purchased infrequently (e.g., life insurance or a car), how do these classifications differ?  Short term advertising may deliver new customers where the customer is already in consideration.  After all of the long term brand building done, the consumer is finally ready to purchase and is spurred to purchase your brand due to some short term offer or advertisement.

Have I left anything off?  I’m sure I have.  Please let me know.  I would love to hear from you.
If you’d like to hear about some tools to support marketers in these areas let me know.  Many of the currently employed tools don’t quite cut the mustard to provide the tactical and strategic decision support necessary to make the best decision and reduce risk.

Marketing Effectiveness and ROI – now in Malaysia

It looks like my calendar is filling up for the summer.  After the June conference in Boston, in July I have been invited to speak and present a full day marketing ROI workshop in Melaka, Malaysia at the INCOMAR 2009 (2nd INTERNATIONAL CONFERENCE on MARKETING and RETAILING 2009) conference put on by the Chartered Institute of Marketing Malaysia and the Universiti Teknologi MARA.  I’ve spent a lot of time in Malaysia recently and it should be fun to be able to put on this presentation and workshop with this group. 

Many of the concepts from my book, Marketing Calculator:  Measuring and managing your return on marketing investment.

For more information, please go to:  www.marketing-calculator.com.

I hope you can attend.