{"id":69138,"date":"2022-07-04T01:21:23","date_gmt":"2022-07-04T01:21:23","guid":{"rendered":"https:\/\/essays.homeworkacetutors.com\/2022\/07\/the-declining-effectiveness-of-mass-advertising-marketing-essay\/"},"modified":"2022-07-04T01:21:23","modified_gmt":"2022-07-04T01:21:23","slug":"the-declining-effectiveness-of-mass-advertising-marketing-essay","status":"publish","type":"post","link":"https:\/\/www.colapapers.com\/us\/the-declining-effectiveness-of-mass-advertising-marketing-essay\/","title":{"rendered":"The Declining Effectiveness Of Mass Advertising Marketing Essay"},"content":{"rendered":"
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The declining effectiveness of mass advertising is only the most visible sign of distress. Marketers also face a general proliferation of media and distribution channels,1\u00a0declining trust in advertising, multitasking by consumers, and digital technologies that give users more control over their media time.2\u00a0These trends are simultaneously fragmenting both audiences and the channels needed to reach them. The danger for marketers is that change will render the time-honored way of getting messages to consumers through TV commercials less effective at best and a waste of time and money at worst.<\/p>\n

Among marketers, there\u2019s much frustration and little agreement about what to do next. Some are reaching for marketing-mix models that use sophisticated econometric methods to tease out the different effects of the marketing mix on business results (see sidebar, \u201cBeware the quantitative cure-all\u201d). But the historical data that fuel such techniques may prove an unreliable guide to future returns.<\/p>\n

Marketers need a more rigorous approach to a fragmenting world\u00a1\u00aaone that jettisons mentalities and behavior from advertising\u2019s golden age and treats marketing not as \u201cspend\u201d but as the investment it really is. In other words, it will be necessary to boost marketing\u2019s return on investment (ROI). By adhering to the same investment principles that other functions follow, a CMO can improve the alignment between marketing and financial objectives, capitalize on a brand\u2019s most distinctive elements with greater success, more precisely target the consumers and media vehicles yielding the largest and fastest payoff, manage risk more carefully, and track returns more closely. In short, only by thoughtfully and systematically applying investment fundamentals to marketing can CMOs respond to the complex challenges they face.<\/p>\n

The ROI challenge<\/h2>\n

Today\u2019s ROI challenge has its roots in the halcyon days of mass advertising, in the 1960s and \u201970s. Back then, marketers wrote the rules that still inspire many marketing investments\u00a1\u00aaor, as some tellingly say, marketing spend.<\/p>\n

Legacy issues . . .<\/h2>\n

When network television was king, marketers and the ad agencies serving them rightly focused on the massive audiences that tuned into the most popular shows. The emphasis was on \u201cmass messaging\u201d: the development of powerful advertisements imprinting themselves on the minds of consumers. Many marketers based their TV spending on \u201cshare of voice,\u201d which meant making sure that the advertising budget of a brand was in line with its market share, the spending of competitors, and the company\u2019s growth expectations. Plans for other media expenditures received less attention.<\/p>\n

Golden-age marketers often relied on tools such as day-after recall (a metric tracking how well consumers remembered ads) and compared the results with internal benchmarks to assess the effectiveness of ad copy. As it became clear that recall wasn\u2019t the best measure of creative effectiveness, leading companies developed more elaborate testing regimens, such as the audience response system (ARS), a technique for determining the persuasive impact of new messages as compared with those of competitors. Meanwhile, more precise reach and frequency assessments made media-spending decisions better informed.<\/p>\n

While the model worked extremely well for consumer product companies such as Coca-Cola, Colgate-Palmolive, Procter & Gamble, and Unilever, it wasn\u2019t perfect. Share-of-voice thinking and up-front media buys can create considerable inertia about spending. What\u2019s more, the runaway success of TV-driven brand building meant that many marketers never really had to justify their budgets or to develop metrics that made sense to businesspeople elsewhere in the organization. Indeed, the absence of consensus on how to define\u00a1\u00aamuch less measure\u00a1\u00aareturns on marketing investments sometimes put the credibility of marketers at risk.<\/p>\n

Nonetheless, in a world of largely captive audiences, effective messaging, plenty of growth, consistent consumer behavior, and well-understood competition, the approaches perfected during the golden age worked very efficiently: they established priorities, managed risk, and measured the impact of spending on consumer attitudes. Indeed, the model worked so well for its pioneers that, during the 1980s and \u201990s, companies in industries such as pharmaceuticals, retailing, and telecommunications began recruiting marketers from packaged-goods leaders and adopting their techniques.<\/p>\n

. . . exposed by a changing market<\/h2>\n

Fragmenting media and changing behavior by consumers are exposing the traditional model\u2019s limits. Consider the following trends:<\/p>\n

Media proliferation.\u00a0In the United States, the original handful of TV stations has proliferated into more than 1,600 broadcast and cable TV outlets. Similar trends are under way in Europe.<\/p>\n

Multitasking.\u00a0While surfing the Web, the typical US teenager engages in anaverage of two other activities, one of which is often homework (Exhibit 1). Some 80 percent of businesspeople also multitask.<\/p>\n

\u201cSwitching off.\u201d\u00a0Consumers are increasingly selective about what they watch and the advertising messages they trust. According to Yankelovich Partners, 65 percent of them feel \u201cconstantly bombarded with too much advertising,\u201d 69 percent are \u201cinterested in products and services that would help skip or block marketing,\u201d and 54 percent \u201cavoid buying products that overwhelm with advertising and marketing.\u201d<\/p>\n

Back to top<\/h2>\n

By 2010, we estimate, television advertising could be only 35 percent as effective as it was in 1990. Although the impact of recent trends on business-to-business marketing is harder to measure, it is likely to be similarly dramatic as marketing vehicles (such as sponsorship events and trade magazines) become less effective. And while television in some form will remain a formidable medium for many years to come, marketers of all stripes will also have to interact with consumers in novel ways by focusing more on new media (such as the Web and viral marketing) and mastering an environment where messages have to \u201cpull\u201d customers.<\/p>\n

Setting goals, developing messages, and measuring results have thus become more difficult. Marketing expenditures come in an ever-expanding variety of flavors, each with different target segments, payback horizons, and metrics for success. These differences make it harder to follow old budgeting rules of thumb, to focus messages on building mass awareness or loyalty, to optimize spending across a portfolio of brands, and to identify the segments most responsive to different marketing initiatives.3\u00a0As consumers become increasingly difficult and costly to reach, it becomes still harder to track the way they use media. At the same time, many marketers have observed a declining level of discipline in the way the potential impact of advertising is tested and its actual impact reviewed. Some think that in today\u2019s fragmented environment it has become more difficult to measure the impact of marketing programs on jaded consumers. Others suggest that marketing units are too busy delivering messages across proliferating media channels to conduct campaign postmortems.<\/p>\n

Back to top<\/h2>\n

Although marketers know about these problems, the marketing industry\u00a1\u00aawhose wide-ranging participants include ad agencies, media companies, research providers, and marketers themselves\u00a1\u00aahas adjusted to them slowly. Real spending on prime-time television ads, for example, has continued to rise, even as the number of viewers has plummeted (Exhibit 2). The spending patterns of the US automakers, which increased their marketing expenditures per car during the 1990s even as advertising became less effective and their collective market share declined, typify these trends. Marketing power-houses such as P&G are also quite concerned. At the 2004 meeting of the American Association of Advertising Agencies, Jim Stengel, the company\u2019s global marketing officer, said, \u201cI believe today\u2019s marketing model is broken. We\u2019re applying antiquated thinking and work systems to a new world of possibilities.\u201d4<\/p>\n

How marketers should respond<\/h2>\n

It\u2019s time for marketers to be consistent in applying investment fundamentals\u00a1\u00aasuch as clarifying the objectives of investments, finding and exploiting points of economic leverage, managing risk, and tracking returns\u00a1\u00aathat have long been well established elsewhere in companies. Such principles of investment management, applied to the marketing function, can create a coherent overview of a company\u2019s entire marketing outlay at a time of splintering audiences and media. Following these principles also helps marketers to make specific interventions at the points of economic leverage where returns on investment are highest, thereby mitigating the dilutive effect of a fragmenting environment.<\/p>\n

Smart marketers won\u2019t apply the principles blindly. Translating them to the marketing function calls for a subtle sense of the marketer\u2019s art.<\/p>\n

Clarify investment objectives<\/h2>\n

Good financial advisers start by asking clients about their investment horizons, growth expectations, and appetite for risk. Marketing investments should start with similar questions. Answering them helps align the goals of marketers with those of the company as a whole\u00a1\u00aaessential if marketing is to be reconnected to broader business objectives. If, for example, a company needs growth in contiguous businesses to meet its overall objectives, marketing must help more people accept the brand and expand its relevance to a broader set of products. IBM has shown the way by extending its brand through a consistent association with \u201ce-business.\u201d<\/p>\n

To address the increasingly acute problem of how to optimize a number of investments, each with different time horizons and measures of success, across brands and media channels, it\u2019s also vital to distinguish between \u201cmaintenance\u201d and \u201cgrowth\u201d objectives for different segments and media channels. By maintenance, we mean the minimum spending required for a competitive presence in the marketplace. Competitive spending levels, S-curve analyses, and purchase cycles help determine appropriate levels of maintenance expenditure. By growth, we mean investments to increase a brand\u2019s market share, to drive incremental consumption, or to attract new users to a category.<\/p>\n

Although differentiating between these two types of investments can be tricky, the discipline involved in attempting to do so typically promotes a valuable internal dialogue that helps CMOs impose economic discipline. Over time, savvy marketers get better at categorizing investments, identifying the right maintenance levels for different categories, and allocating growth dollars to the products where they will yield the highest returns.<\/p>\n

Find and exploit economic leverage<\/h2>\n

For CEOs, the key to economic leverage is allocating capital to the businesses generating the highest returns. For marketers, economic leverage comes from aligning messages and spending with a brand\u2019s most compelling elements. In this way, marketers more precisely target their message to the consumers and vehicles providing the biggest and fastest payoff\u00a1\u00aaan essential task as media channels and segments proliferate. Finding and exploiting economic leverage helps marketers know how much it is worth to increase brand awareness as compared with brand loyalty and which segments are most profitable and most responsive to marketing programs at which stages of the consumer decision funnel.<\/p>\n

The heart of this activity is the identification of brand drivers: the critical factors that influence a brand\u2019s image and consumer loyalty and that, if improved, increase revenues and profits. In an image-driven business, such as beer targeted at young men, the brand driver could be, \u201cThis brand is irreverent\u201d or \u201cI like to drink this brand when I am with friends.\u201d In a more transactional business, such as retailing, it could be, \u201cI get good service\u201d or \u201cI found what I wanted.\u201d<\/p>\n

Most marketers understand their brands\u2019 drivers, but few of them use these drivers rigorously enough to manage multimedia programs, nor do they assess the influence of particular drivers on specific customer segments at various points across the consumer decision funnel. Fortunately, proven analytic techniques, such as structured equation or pathway modeling, can help marketers assess the historical outcome of specific programs to enhance brand drivers over time.5\u00a0In fact, brand drivers can be an integrated metric for determining whether a brand\u2019s media and message are effective and in line with the company\u2019s strategy.<\/p>\n

A marketer that relied heavily on sports sponsorships, for example, faced a big increase in the cost of its contracts during the 1990s. The company had to choose between massive increases in its spending or the risky step of streamlining its sponsorship portfolio. Using the pathways approach, the company identified the sponsorships that best communicated its core brand drivers. This knowledge focused its dollars on owning and exploiting a specific set of sponsorships and helped it maintain near-double-digit growth.<\/p>\n

Manage investment risk<\/h2>\n

It\u2019s difficult to boost returns in financial markets without assuming additional risk. But for most businesses, selectively reducing risk is one of the critical elements of improving the return on investments; a savvy strategist, for example, minimizes risk by staging them. Marketers, whose risks were smaller when the media environment was more stable, must now use similar tactics to keep risks in line.<\/p>\n

How can strategists\u00a1\u00aaand marketers\u00a1\u00aaminimize risk while maximizing opportunity? See \u201cJust-in-time strategy for a turbulent world.\u201d<\/h2>\n

Even in a fragmenting world, marketers must push to ensure that they spend 75 to 80 percent of their money on proven messages (such as advertising copy qualified in research) that are placed in proven media vehicles and supported by proven dollar levels (at or just above the threshold levels needed to influence customers). In these proven programs, marketers should seek to regain the testing and validation discipline that many of them once had.<\/p>\n

The remaining 20 to 25 percent of spending should finance well-structured experiments. One of the best ways to diagnose a marketing organization\u2019s ROI discipline is to assess the extent and quality of the media and messaging tests in progress at any given time. Some will be simple, such as testing higher levels of expenditure or new media for a proven message, reducing the frequency of mailings to see if response rates change, and testing a new advertising message in a particular region. Others, such as a simultaneous test of a new message and new media for a growing segment of profitable customers, are bigger departures from the routine. Marketers who skimp on experimentation, however, may be overtaken by changing media patterns or forced to assume large risks by rolling the dice on unproven programs when markets shift. The recent success of upstart brands such as Red Bull in building consumer awareness through trade promotions, sponsorships, and word of mouth demonstrates the power of alternative approaches. Yet fruitful as they can be, shifting the bulk of an established marketing plan to them is probably too risky.<\/p>\n

Track investment returns<\/h2>\n

The idea that to boost returns on investments it is necessary to measure them carefully might appear simplistic, but this approach can be a major departure for some companies that take a narrow view of their spending or of how to measure success.<\/p>\n

Recording all expenditures and ensuring that marketers direct the right messages to the right consumers can make a\u00a0big difference<\/h2>\n

Although marketers formerly could evaluate just the dollars in their marketing budgets, it\u2019s now vital to consider all of the marketing plan\u2019s expenditures, including, at a minimum, all sponsorships, major media, and sales collateral. Many companies should also integrate sales promotion activity and (particularly for retailers, banks, and consumer telecom companies) store-level spending. The act of recording total expenditures and of ensuring that marketers direct the right messages to the right consumers can make a big difference. For example, when a leading European mobile services provider realized that it had unintentionally been focusing too much on its existing customers, this understanding led to changes in the budget process.6<\/p>\n

Making expenditures transparent is a necessary but insufficient step. While all marketers track their progress, few measure it end to end by following the trail all the way from the effect of spending on a brand\u2019s drivers to the influence of those drivers on consumer loyalty and the influence of loyalty on revenues and margins and, finally, to the question of whether any increase in profits justifies the spending. Only with an end-to-end view can marketers understand not only the current returns on marketing programs but also, and equally important, why they did or didn\u2019t work\u00a1\u00aainformation needed to improve future returns.<\/p>\n

Start today<\/h2>\n

Most CMOs are prepared right now to begin pulling the levers that will improve their returns (Exhibit 3). They should start by integrating the existing research and data sets (such as test results, segmentations, consumer decision funnels, and spending analyses) that often lie in their file cabinets. Then they can make this information the basis of a unified approach to boosting ROI through these steps.<\/p>\n

Back to top<\/h2>\n

Build transparency by identifying (and including in marketing plans) all of the critical buckets of consumer communications spending, even if they are not in the marketing function\u2019s domain.<\/p>\n

Align spending on an \u201capples-to-apples\u201d basis across brands andcountries by adopting simple, universal metrics that distinguish betweenmaintenance and growth investments and between investments in proven and experimental vehicles.<\/p>\n

Isolate the most important drivers across brands and track the drivers\u2019 impact across segments and media channels.<\/p>\n

As marketers dive into the issue of ROI, they also will recognize opportunities for selective investments in new tools, capabilities, and relationships. Exciting developments lie on the horizon. New technologies are beginning to track and link the detailed elements of the consumer\u2019s exposure to media with actual purchasing behavior. New modeling approaches are creating more integrated \u201cwhat-if\u201d simulators by combining econometric tools with an analysis of brand drivers revealed by consumer research. Third parties such as ad agencies, research providers, and media companies, which must also struggle with a changing environment, may be willing to collaborate in new ways.<\/p>\n

Beyond tools and techniques, marketers need to change the mind-sets and behavior derived from the golden age. The requisite transformation represents a major challenge for most marketing organizations, agencies, and media partners. One company, for instance, had to make a bundle of changes to its processes, culture, and people to reinforce and embed ROI thinking in its day-to-day marketing approach. Some changes were symbolic, such as using a hard-nosed analysis of returns to dump a \u201csacred-cow\u201d sponsorship the CEO favored. Others involved formal training for marketers about the goals they should target and the tools and processes they should use. The company\u2019s business-planning processes, performance assessments, and team structures needed to change as well. Unless an organization\u2019s mind-set and behavior evolve, efforts to improve marketing\u2019s ROI won\u2019t succeed.<\/p>\n

Marketers aiming for strong returns should start seeing themselves as investment managers for their marketing budgets. That may be more difficult and time consuming than relying solely on old rules of thumb or new analytic approaches, but it is the only answer in today\u2019s marketing environment.\u00a0<\/p>\n

Beware the quantitative cure-all<\/h2>\n

Some companies wonder if marketing-mix models or marketing-ROI systems are the antidote to the bewildering complexity of today\u2019s marketing environment. These analytic techniques, which have been around for years, seem to provide exactly what marketers are looking for: sophisticated insights into the relative importance of different media channels. Indeed, when consumer decision processes, media channels, and basic model parameters are stable, such models work well. We have seen them take in reams of data and complex inputs\u00a1\u00aaweights of mass media, copy-effectiveness scores, relative pricing levels, store-level execution variables, and even weather reports\u00a1\u00aaand provide insightful perspectives on issues facing the underlying business or valuable contributions to the budget-setting process.<\/p>\n

Yet savvy marketers have long known that the strength of marketing-mix modeling\u00a1\u00aaa rigorous analytical assessment of the past\u00a1\u00aais also its Achilles\u2019 heel when it is applied to situations where important changes are under way. Take, for instance, the automotive industry (where the Internet is transforming decision-making processes) or packaged goods (where indirect-marketing approaches, such as product placements, are gaining importance for many brands). In situations such as these, marketing-mix models may provide unreliable forecasts.<\/p>\n

Relying on such models without first undertaking a broader rethink of marketing investments also raises another problem: right or wrong, these models may inspire blind faith in analytic results. In our experience, boosting marketing returns cannot be only about getting the numbers. It must start with an understanding of the brand as a holistic economic entity and extend to the way a marketing department does business.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

The declining effectiveness of mass advertising is only the most visible sign of distress. Marketers also face a general proliferation of media and distribution channels,1\u00a0declining trust in advertising, multitasking by consumers, and digital technologies that give users more control over their media time.2\u00a0These trends are simultaneously fragmenting both audiences and the channels needed to reach […]<\/p>\n","protected":false},"author":7,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5820],"tags":[8240,8241,8239,9572],"class_list":["post-69138","post","type-post","status-publish","format-standard","hentry","category-marketing","tag-affordable-uk-dissertation-services-research-essay-assistance","tag-complete-my-paper-chicago-turabian-citation-formatting","tag-excel-in-homeworks-with-case-study-support","tag-online-homework-assistance-with-annotated-bibliography"],"_links":{"self":[{"href":"https:\/\/www.colapapers.com\/us\/wp-json\/wp\/v2\/posts\/69138","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.colapapers.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.colapapers.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.colapapers.com\/us\/wp-json\/wp\/v2\/users\/7"}],"replies":[{"embeddable":true,"href":"https:\/\/www.colapapers.com\/us\/wp-json\/wp\/v2\/comments?post=69138"}],"version-history":[{"count":0,"href":"https:\/\/www.colapapers.com\/us\/wp-json\/wp\/v2\/posts\/69138\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.colapapers.com\/us\/wp-json\/wp\/v2\/media?parent=69138"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.colapapers.com\/us\/wp-json\/wp\/v2\/categories?post=69138"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.colapapers.com\/us\/wp-json\/wp\/v2\/tags?post=69138"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}