ANA Marketing Musings

Marketing Accountability – Finally Taking Hold

Of course the journey is very long – but the principle of marketing accountability seems to be finally getting a grip on the overall Marketing Supply Chain. And I am thrilled!

Several recent examples I would like to highlight:

* Ad-ID and E-biz for media are both starting to gain traction. Ad-ID is the new digital coding system that acts as the industry’s UPC code. By applying this to all advertising assets, companies can digitally track, traffic and transfer assets and messages across the entire chain of communications – from advertiser to media delivery. 250 companies are now using Ad-ID. E-biz, or EDI as many of us remember, provides two way digital information flow for television and radio – with applicability to other media as well. Through digital communications, paper and people can be removed from the advertising asset management process. This eliminates costly rework and agency labor, greatly improves accuracy and champions marketing and media accountability. Great progress has been seen – particularly in the local television and radio industries.

* The XMOS studies represent an important step forward in making media management decisions. XMOS literally helps companies identify optimum asset allocations but can also do so within the context of changing creative -- which is the wild card that has largely been viewed as less controllable. This gives companies the latitude to explore different media options to optimize revenue generation down at the brand level. Several “big-name” brands are leveraging this tool to make important brand / media management changes.

* Project Apollo represents a big step forward in consumer research. Apollo is a “single-source” research model that provides critical learning about actual purchases in response to exposure to radio and television media. Measuring “cause and effect” represents a significant leap in learning – providing marketers with increased knowledge about the implications of changing marketing spending and media allocations.

* Procurement departments have certainly proved their worth to improve agency accountability – even though they have elicited pain for marketers and agencies. Having this “third-party” group involved has elicited greater discipline among all parties improving the evaluation and decision making processes.

And, of course, I could go on and on. These “cases” are simply the tip of the iceberg for a “movement” that is well underway – but has a long way to go. We will not let our foot off the accelerator as we convene ANA’s Marketing Accountability Forum in July and ANA’s Annual Conference in October.

Great Marketers Market Great

So what are the common denominators for successful marketers in today’s rapidly changing environment? How can leaders best respond to the challenges of putting consumers in charge … and for making marketing investments more accountable?

I see six distinct platforms that are the foundation for consistent, top notch marketing performance in any industry:

1. Continuous product innovation or reinvention. If you’re not new … or you’re not perceived to be fresh and relevant … then you’re old news … yesterday’s business. Marketers must maintain their relevance in consumers’ minds or get blown away by fast-moving competition. Simply look at what Jet Blue and Southwest Airlines have done to reinvent the airline industry. By simply adding a few television screens and by offering consistent, understandable low fares, they’ve surged past the legacy carriers with sustainable, high quality business performance.

2. Product and service quality is the next critical marketing platform. Consistently being the best-in-class -- year-in and year-out -- is undoubtedly a fundamental component for long-term profitable success. Starbucks is a classic example of winning in the marketplace by consistently exceeding customer expectations … and accomplishing that without the benefit of a sustained communications program.

3. Offering flexible and fair value is an unbeatable way to win consumers’ hearts and minds. I think that one of the best and most recent examples of this marketing platform was Wendy’s extra value meal campaign. Not only was their offering reasonably priced, it was highly flexible. It provided consumers with the appealing choice of substituting a salad, chili or baked potato for the standard French fries offering. This was a stroke of brilliance and ingenuity – and was very useful to blunt the flood of food advertising criticism coming from Washington and special interest groups.

4. Marketing cost efficiency and streamlined marketing processes are paramount. Marketers are consistently looking at their own cost profiles to ensure they are getting the best return for their marketing investment. They need to know whether their marketing supply chain is as efficient as it can be. That’s why procurement departments are becoming increasingly involved in so many decisions, including agency management and media negotiation. It’s also why marketers are becoming more directly involved in functions like talent payments. In fact, the ANA Production Management Committee has just released guidelines for effectively managing television talent payments. And the Committee is encouraging advertisers to meet with their agencies and production consultants to discuss how these guidelines might help maximize efficiencies.

In addition, marketers are working to understand the effectiveness and efficiency of their media buys. Looking to maximize weight against working media, advertisers are striving to reconfigure their marketing mix to improve overall cost balance and to optimize revenue generation. American Express is one of the most visible examples of a marketer shrewdly redeploying its marketing mix.

5. Measurements and Metrics. Perhaps the most profound change in marketers’ behavior is the intensified focus on measurements and metrics.  Driven by the old adage, “you can’t manage what you can’t measure,” marketers are seeking greater precision in assessing the outcomes of their actions, as well as deeper knowledge of alternative communications disciplines. Indeed, the desire to transform marketing into a “science” is one of today’s hottest trends.

6. The final platform – and perhaps the most important transformation for marketers -- is making direct Consumer (or customer) Connections. Today, one-to-one connections are more feasible than ever thanks to targeted or addressable media – whether over the Internet … through the emerging arena of wireless … with the growing opportunities forged by cable TV … via enhanced forms of e-mail marketing … or in the new realm of blogging and other such alternative communication forms. In many respects, marketers are finding that “mass marketing is not dead,” it’s just undergoing an exciting transformation to “Mass Marketing – one customer at a time.” The proliferation of communication channels that we have demonized as “Media Fragmentation” has actually become the foundation for abundant new opportunities created by “Media Diversity.”
The pathway to each of these six platforms is through technology, innovation and experimentation. And importantly, they all recognize that marketing has dramatically shifted -- from a focus on the masses, to a focus on the individual. Marketing will continue to evolve -- ultimately, I believe, becoming a true “One-to-One” discipline. Consumers have enormous leverage and power to determine what they want to see and hear. We marketers must determine how we’re going to get invited to the table because in essence, marketing is becoming “By invitation only.”

The Most Socially Responsible Industry in America -- Advertising

The cornerstone principle that underscores all marketing is commercial free speech. When commercial messages for legal products are truthful and non-deceptive, marketers should be completely free to market their products and services unencumbered by government regulation – or the threat of such regulation.

I raise this point – at this particular moment in time – because of the outrageous attempts by Congress to vilify advertisers and marketers for many ills in American society. As noted by my colleague Dan Jaffe in his blog, Senators Harkin and Clinton bashed food marketers for undermining the health of our children by causing obesity. Representative Moran called for the restriction of ED ads. And Senator Grassley outlined provisions to eliminate the tax deductibility of prescription drug advertising.

I have no problems with politicians calling upon various industries to support initiatives that seek to improve the social well-being of all Americans. But I do have big problems when those calls threaten to impose governmental regulation and control -- particularly when the underlying issues are poorly supported by the facts.

I am particularly frustrated when the good work and socially responsible initiatives of our marketing industry go unrecognized and unappreciated – particularly by those grand standing in the political arena.

* Think of the great work done by the Advertising Council and its media partners who provide more than $1.5 Billion in donated media to educate the public on a variety of issues including drunk driving, seat belt usage and, of course, the well-being of children.

* Think of all of the great work done by the Partnership for Drug Free America and the enormous success it has had in curbing drug usage – particularly among teens and young adults.

* Think of all of the great work done by the Children’s Advertising Review Unit and the National Advertising Division of NARC – our self regulatory body -- to ensure truthful and non-deceptive advertising.

* Think of all of the great work done by the Family Friendly Programming Forum – the advertiser-sponsored group associated with the ANA that has successfully delivered outstanding prime time network programs so that parents and kids can watch television together.

* Think of all the great work done by the AAF, the 4A’s and the AEF to promote improved advertising and marketing education at our country’s higher institutions.

The marketing industry has done more than its share to contribute to the well being of people in America. Our industry’s social responsibility track record is second to none – and I encourage any and all politicians to take a fair and balanced look at the incredible good that we do.

All of us – the media, the agencies and our marketers -- should be very proud of the indelible contributions we have made -- and will continue to make – to American Society.

Television Has a Great Future – Believe it or not

In my last blog posting, “Who’s Killing Television”, I focused most of my remarks on key issues that the Television industry needs to address in short order. At ANA’s Television Advertising Forum yesterday, I reiterated those concerns – and, in fact, added one or two more.

However, despite my concerns, I am, actually, quite optimistic about television’s long-term health and well being. Over time, I believe television will retain its “championship status” as the preferred medium-of-choice by marketers for a number of very important reasons:

* First and foremost, I believe the convergence of high definition TV and the digital power of the Internet will flourish in the years ahead. This is such a “natural” and will lead to a cavalcade of exciting opportunities for all advertisers and marketers. Brian Roberts of Comcast pretty much said that in his speech at the 4A’s media conference earlier this month.

* Second, convergence will be channeled through one of the most important future tools for marketers – the set-top box. This virtual in-home computer will become the advertisers’ best friend and will be the foundation for lots of positive change for television advertising. In particular, the data that cable and satellite companies will be able to provide to advertisers will – for the first time -- deliver important measurements and metrics and facilitate the level of accountability so needed by the marketing community.

* Third, television advertising inventory will continue to expand with the proliferation of channels and programming. With more channels and, theoretically, more content to fill those channels, the laws of supply and demand just may tip the scales back in the direction of marketers. Advertisers will be able to use television more selectively, hopefully moderating the growth of CPMs and bringing them in line with more reasonable measures.

* Fourth, television sponsorship will continue to unfold in new, creative ways with consumers giving greater permission to advertisers to engage them. Specifically, I am pointing to the evolving opportunities afforded by branded content as well as the development of video-on-demand. These vehicles will provide alternatives to the traditional 30-second spot by generating more personalized advertising and content specifically focused at target consumers.

* Fifth, the quality of programming will continue to improve – particularly at the networks. I think this year is one of the strongest we have seen in a long time. If the networks keep getting it right, opportunities will abound for advertisers to cost effectively reach the millions of eyeballs they expect from the television medium.

* Finally – and what I am most excited and interested in -- is the technology enabling more consumer targeting. I believe this trend will continue to accelerate and proliferate. Whether it’s the targeting technology offered by companies like Visible World or the addressable alternatives available through set-top box management, marketers will gain increased ability to zero-in on their core consumers, bringing greater efficiency and effectiveness to their marketing planning and execution. Of course it is incumbent upon marketers to collect consumer information in a fair manner that takes into account legitimate personal privacy concerns.

The television industry has some of the smartest and savviest people in the marketing community. They are very much aware that television is no longer the bedrock for brand communications. That’s why they need to move aggressively to mitigate their structural issues and leverage the spectacular opportunities they have before them – and do so with purpose and passion. If they need a wake up call, they need look no further than the Pepsi One re-launch – which has no television commercials in its marketing plan.

It’ll be interesting to see how the “drama” plays out. Kind of like a soap opera – don’t you think?

More thoughts to come from the ANA Television Advertising Forum…

Who’s Killing Television??

I love television as a marketing medium – pure and simple. It has sight, sound and motion. It has terrific reach, great entertainment value and a captive audience.

For years, television was the Great Brand Builder – the foundation of most integrated marketing communications plans. The growth of existing products was hitched to this powerful steed. The success of new products depended on mass distributed introductory TV ads. This was terrific… exciting… and easy! Indeed to marketers, Television was the best friend we could ever have.

But we’re killing the damn thing – and here are the culprits:

•   Clutter: How many more commercials are we going to jam into the pod? Aren’t we inviting consumers to run out of the room or hit the remote every time they get a whiff that a commercial is coming? Haven’t we provided enough rationale for the DVR industry?

•   Cost: Aren’t network prime CPM’s out of control? We can talk about supply and demand all we want, but the reality is that marketers have had it – and they will continue to shift dollars to friendlier media alternatives. And what about those hidden charges called Network Integration Fees?  Why are marketers still paying for them – when the cable guys have nothing of the kind?

•   Measurement: C’mon now. In this world of technology, why can’t marketers get their hands on affordable commercial ratings data? Not only are marketers getting slammed with overpriced CPMs, they may be overpaying even more because their buys are based on inflated program ratings rather than realistic commercial ratings.

•    Creative: OK – this is purely subjective, but do we really think that the level of television commercial creative is anywhere near what it was – say 10-20 years ago? Where have all the creative cowboys gone – those geniuses that kept us glued to the TV for the eighth, ninth and tenth viewings of that hard-to-resist spot?

Putting my frustrations aside, I actually have great hope. With the advent of enhanced TV technology – including improved consumer targeting tools – I believe television marketing has the opportunity to be reinvented as the communications vehicle-of-choice in 3-5 years. But the television industry business model must change. The reporting and measurement tools must evolve. The pricing must become more competitive. And, most importantly, we must rethink our whole strategic approach to brand building. Can it be done? Absolutely. Will it be done? I’m taking bets!

AdAge's One-Sided Look at the Family Friendly Programming Forum

One of the great privileges I have had during my tenure at the ANA is to work with the esteemed Family Friendly Programming Forum. The Forum is a confederation of volunteer advertising and agency executives that effectively works in partnership with the ANA and with the television network community towards one overarching objective – to assure the existence and growth of a family friendly television environment in prime time.

The Forum is not only the most successful organization working to change television; it is the only one that has focused on creating alternatives.

Unfortunately, Advertising Age somehow glazed over the Forum's numerous accomplishments when they published an editorial last week, entitled "Family Forum Must Show Might." (Unfortunately, the article is not online) AdAge took issue with the way the group handled the change in content on NBC’s "Father of the Pride." I was very troubled by their position and felt compelled to use my blog to counter this one-sided piece.

Here’s what really happened. The Forum withdrew its "Family Friendly" endorsement for “Father of the Pride” when, in the spirit of cooperation, NBC confirmed that the show decided to take a more "adult" positioning. AdAge suggested that the Forum needs to monitor the initial production of programs it endorses. The ANA disagrees. The Forum's historic track record suggests that the current levels of intra-industry communication and collaboration are sufficient to insure consistency with Forum standards. When those standards are not met, the Forum withdraws.

Furthermore, Ad Age had it wrong when it indicated that the Forum provided script development funds for "Father" – funds which were later returned. Ad Age is obviously not aware that the Forum provides no funds to the networks for shows that successfully find their way to prime time.

The Forum was created six years ago from the collective wisdom of founders Andrea Alstrup, Johnson & Johnson, and Bob Wehling, Procter & Gamble. The ANA serves as a "management partner" to facilitate their objectives and advance their respective causes. All advertisers represented on the Forum must be ANA members.

I wish that AdAge had taken note of the Forum's incredible string of accomplishments in their relatively brief existence. The Forum:

* Influenced the introduction of ten prime time family television shows including the much acclaimed Gilmore Girls (WB), American Dreams (NBC) and 8 Simple Rules (ABC). The Forum’s contributions this season include Complete Savages (ABC) and Clubhouse (CBS). These superb programs were responsibly developed through the group’s heralded Script Development Fund.

* Acknowledges the very best in family television entertainment through the annual Family Television Awards program. This year, the program will air on the WB network on December.

* Champions the development of future leaders in family-friendly programming through its scholarship program at the University of Southern California, Carnegie Mellon and Loyola Marymount University.

* Recognizes the need to be vigilant and sensitive to present and future challenges. For the second consecutive year, the Forum will sponsor this important discussion through its joint symposium with The National Council for Families and Television.

The accomplishments of this group reflects the industry’s volunteer efforts to influence and institute positive change – change that has, in fact, been heralded and acknowledged by the US Congress. The Forum’s success and momentum are grounded in the high principles and standards the group has set and the practices they follow. Those standards are the boundaries for the organization’s behavior, core operations and decisions. The net result is an extraordinary success rate and a series of contributions that, we, as an industry, should appreciate and honor.

I respect AdAge's right to disagree with the Family Friendly Programming Forum's decisions and actions. But disagreements should not be the basis for calling these actions “shameful” – particularly when the organization’s honorable history suggests otherwise.

Maybe that’s the reason they decided not to publish their editorial online.

An Update on Network Integration Fees

An update to my last post on the network integration fees charged by NBC, CBS and ABC. TargetCast, a NYC based media independent media planning and buying agency, recently informed us that they have calculated that advertisers last calendar year spent between $110 -$125 million on these fees alone! TargetCast used TMS-Media Intelligence/CMR data to crunch this number.

Revisiting Network Integration Fees

Earlier this year the ANA conducted a survey of member marketers on the issues and challenges they face in TV advertising. A resounding 74% of the 140 major advertisers we surveyed said the integration fees the major TV networks charge are unfair. Here is a sampling of some of the feedback we heard:

"The fees are a legacy charge that no longer have a justifiable purpose. We're better off taking the money and improving the measurement capability of the industry." "Integration fees are a thing of the past, when there was a 'physical' reason to charge. With new technologies, etc., there is no reason. It's basically money in their hands.

"Integration fees were put in place years ago when a person used to have to manually have to place the commercial in sequence. Today everything is done on computer."

"The notion of integration fees is antiquated. Its real reason for being was back in the days when a human being was required to be in the studio to manually insert commercials in programming. With the advent of technology, a human is no longer needed. Therefore, we should not be charged for this. This is just another example of how the networks have figured out a way to rip off advertisers."

The ANA gets the message: advertisers are outraged over network integration fees. In their view these fees represent an old surcharge that has nothing to do with today's television production and trafficking realities. This survey indicates that the networks and advertisers need to revisit the issue. I urge our colleagues in the media to think hard about this issue.

How the ANA's Enhanced TV Initiative Will Work

Recently, I blogged about the ANA's Enhanced TV initiative and why we are undertaking this project. To wrap this up, I thought I would share with you actually how this will project will work. The test and related meetings are only open to those ANA members who have elected to participate in the project.

Our test will run approximately one year and consist of two cycles. The first cycle will include the launching of the project, testing the different enhanced television advertising propositions (video on demand, Tivo, etc.) and analyzing consumer interaction. The second cycle is an integral element to the success of the initiative because it allows the participating advertisers to modify their approach based upon the initial discoveries and re-test the propositions. To track their advertising assets, participants will utilize Ad-ID.

Although we are still determining which specific technologies and will be included in the initiative, we can generically delineate what we hope will be gleaned from the experimentation. As an example, in the ad supported video-on-demand (VOD) realm we hope to answer some of the following questions:

• Do viewers forego watching real time programming to watch VOD where one may extricate commercials from the programming via VCR functionality/fast forwarding?

• Do households that access an ad supported offering also view the cable network?

• Do VOD households show any other kind of programming genre affinity?

• What is the amount of time users spend on the ad supported offering viewing (daily and weekly) as well as the amount of sessions (daily and weekly)?

• If VCR functionality is available as part of the VOD offering, how does it impact viewer behavior, i.e. fast forwarding through commercials (front and back), programming and so forth?

• How will the programs be packaged: by network brand (MTV on demand), by genre (news, children’s, sports), or by cable or broadcast service (basic or expanded basic on demand)?

• Will on demand product cannibalize ratings and ad revenue?

Keep an eye on this space and www.ana.net for updates in the months ahead.

The "Whys" Behind the ANA Enhanced TV Initiative

As I blogged earlier, the ANA is creating a venue in which advertisers will participate in test cells for upwards of a year in a variety of enhanced TV applications including addressability, ad supported video on demand, and personal video recorders. You may naturally wonder why we feel the ANA is suited to tackle this and why our members are electing to participae . Let me shed some additional light .

Some advertisers have tested some or all of the emerging models, but for proprietary reasons , the results are not widely shared. This inhibits the learning which could accrue to all interested parties. Since little information from these trials is broadly shared, they are not gaining traction with the advertising community.

As the advertising industry’s trade association that is advertiser, agency, media and content provider neutral, we believe the ANA is in the best position to lead a non biased initiative to explore this new frontier. We offer an environment that is advertiser, distribution, content and technology neutral. Through our relationships with the key constituencies, the ANA can bridge the gap for the benefit of all advertisers and discern its implications for the future of TV advertising.

There are a variety of reasons why ANA members are excited about participating in this initiative:

* This is a relatively new and rapidly changing field and it may be difficult for many advertisers to keep abreast of developments in this arena, gain valuable learning when experimenting and make the right choices that will best affect their brand’s future.

* Since it is an emerging area, many advertisers do not have internal personnel that specialize in the enhanced TV arena. For example it may be cross functional and handled both by television specialists and/or or the interactive group – neither of which may have the time and energy necessary to comprehend this important future media arena.

* Finally, the shared learning of the advertisers that participate in the test cells will allow participants to accelerate any learning they might garner.

Next up - How the test will work.