Two New Approaches for Improving the ROI of Your Media Plan: Two New Approaches for Improving the ROI of Your Media Plan October 16, 2002 This report is solely for the use of client personnel. No part of it may be circulated, quoted, or reproduced for distribution outside the client organization without prior written approval from Copernicus Marketing Consulting Copyright 2002 COPERNICUS, all rights reserved


Slide2: Media selection is as important as ad copy.


Media Selection Today: Media Selection Today Little in-depth understanding of market Specifically, who are the targets? (Not just females 18-54) No in-depth understanding of the true “impact” of available media vehicles Beyond reach/frequency data No formal calculation of ROI of different media strategies How much product can the media plan “move”, relative to cost and compared to the “movables” of alternate plans?


Slide4: 14% Above average 2% Well below average 68% Average marketing program The Zone of Exceptional Marketing The Zone of Conventional Marketing 14% Below average 2% Well above average The Advertising Performance Bell Curve As a Result….


Two New Approaches: Two approaches for selecting impactful media that reaches high value target segments, cost efficiently. Getting More Value from Ad Tracking Combination of conventional ad tracking with unconventional measures and analysis Media Optimization Modeling Two New Approaches


Slide6: Tracking research should provide insight regarding the effects of different media spending levels. This issue can be addressed from two different perspectives Real-world Spending Level Test Expensive and time-consuming Difficult to manage Open to sabotage Simulated Spending Level Test Approach #1: Getting More Value from Ad Tracking


Slide7: Correlational design Breakout respondents into different exposure levels (e.g., heavy vs. moderate vs. light TV viewers) Compare campaign penetration levels among the groups, controlling for other group differences Emulates the effect of heavy-up (or lighter) spending; give insight as to the likely effects Done separately for TV, print, or radio advertising Simulated Spending Level Test


Simulating Exposure Levels: Media 1 Estimated Exposures X Media Impact Total Effective Exposures for Television Media Probability of Viewership X Number of Ad Spots Estimated Exposures Media 2 Estimated Exposures X Media Impact Media 3 Estimated Exposures X Media Impact Simulating Exposure Levels


Effects of Simulated Spending Level Test: Exposure Probability Effects of Simulated Spending Level Test % Aware of Campaign


Slide10: Reach high-value consumers In impactful media With an optimal mix That takes into account saturation and spillover For the greatest return/profit Approach #2: Media Optimization Modeling Guiding Principles


Media Optimization Model: Media Habits (from Respondents) Media “Impact” (TV, Radio, Print, Outdoor) Media Cost (from Ad Agency) Potential Response Model Optimal Media Plan Economic Value (from Respondents) Media Optimization Model


Media Impact: Media vehicles have different levels of effectiveness In generating impact or campaign awareness, and persuasion Holding ad content, and audience size and composition constant Some but not all of this differential is captured by price Media impact differences are a function of How consumers watch/listen to/read a particular vehicle – their involvement with it and, in turn, the advertising within Survey among media planners makes implicit impact assumptions explicit and provides consensus judgment Resulting in impact indices ranging from 1.0 (prime-time TV) to as low as 0.05 Media Impact


Media Impact: The “effectiveness” of a medium/media plan depends on the number of effective exposures Total Possible Exposures Actual Viewing by Respondent Impact of Medium Number of Effective “Prime-Time” Exposures x x = Media Impact


Slide14: More “hits” = Greater awareness, persuasion, and greater share of purchases But “diminishing returns”after 4-6 hits a month, the model switches to new/complementary media, looking for new targets Model of Potential Response to Advertising Monthly # of “Hits” By Ad % of Purchases 0 2 4 6 100%


ROI Analysis Leads to Optimal Media Plan: ROI Analysis Leads to Optimal Media Plan Effective exposures coupled with economic value, responsiveness and costs can provide us with insight into the ROI of a media plan. Total Possible Exposures Number of Effective Exposures Dollar Impact of Exposures ROI of Plan Actual Viewing by Respondent Number of Effective Exposures Dollar Impact of Exposures Impact of Medium Economic Value of Respondent Cost of Exposures x x x = = = ---


Slide16: Weekday TV Weekend TV Weekday Radio Weekend Radio Outdoor Newspapers 15% 4% 5% 9% 46% 21% Current Spending Plan Budget = $5 MM


Slide17: Weekday TV Weekend TV Weekday Radio Weekend Radio Outdoor Newspapers Television 47% Radio 29% Outdoor 17% Newspapers7% Television 57% Radio 14% Newspapers 15% Outdoor 4% 38% of the Movable $’s Captured 58% of the Movable $’s Captured Current Spending/ Allocation Plan Model Suggested Spending/Allocation Plan


Slide18: The model recommends where to spend the “next” ad dollar …. 0% 7% 8% 11% 17% 19% 0% 0% 3% 10% 10% 10% 20% 19% 21% 28% 22% 14% 31% 25% 25% $3 Million Budget $5 Million Budget $10 Million Budget Weekday TV Weekend TV Weekday Radio Weekend Radio Newspaper Outdoor Magazines


Slide19: We can improve upon current media selection practices Approaches can be simple or complex Gain more leverage from current ad tracking study Employ sophisticated media optimization model Both can generate higher ROI media plans In Summary…


Slide20: How can an agency use this information?


Opportunities for Media Selection Today: Opportunities for Media Selection Today Understanding who the target really is—understanding drivers of behavior and minimizing waste Understanding the true ‘impact’ of media vehicles Optimizing the media mix and media vehicle selection for each client Perfecting algorithms and data to calculate media ROI


Tracking Study Approach: Tracking Study Approach Using tracking study ensures that brand objectives are the starting point for media evaluation Media exposure breakout in tracking study allows Impact estimation by medium Effective exposure levels Ad wearout assessment Complex set of questions to add to tracking questionnaire


Media Optimization Modeling Approach: Media Optimization Modeling Approach Approach is feasible for a wide range of brands Doesn’t require years of scanner data Issues in Optimization Modeling Difficult not to oversimplify Demographic GRPs Broad media types Generalized norms of ‘impact’ Constant cost estimates Difficult to account for all variables High correlation among media types over time Hierarchy of brand objectives Halo effects: consumer exposure to multiple media vs one


Slide24: Media Mix Allocation at Carat


Media Mix Allocation at Carat: Media Mix Allocation at Carat


Optimization of Media Vehicles (TV): Optimization of Media Vehicles (TV) Industry emphasis on optimization has been national TV Quantitative criteria Audience build, cost Audience “quality” Client-based constraints Requires professional judgment to interpret and use results


Media Buying to Maximize Impact: Media Buying to Maximize Impact Carry brand objectives, target insights, and media impact measures through buying process


Areas to Explore Further: Areas to Explore Further Modeling reach v frequency v GRPs Correlating media measures with the range of consumer behaviors (awareness, attitude change., purchase intent, etc.) Cost tradeoffs in allocation between media types Consumers’ claims of media use and actual media use How media work together to impact consumers’ attitudes and behaviors


Closing Thoughts: Multi-media optimization is not a mathematical exercise Media mix has to be tied back to real-life circumstances Brand objectives Consumers’ experience These two approaches are a big step forward More experimentation and research required Closing Thoughts


Closing Thoughts: Media selection does not have to be driven by large, imprecise demographic groupings Individual-level attitudinal and behavioral differences that capture the nuances of targets can be used to better zero in on media that will hit consumers who are most responsive and most valuable to our brand The result will be more accurate and cost-efficient delivery of messages And, ultimately, a media plan that produces a higher campaign ROI Closing Thoughts


Slide31: Thank you!