Online Advertising Basics

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Overview of the Marketing Budget of a Brand

Marketing Budget

The marketing budget of an FMCG brand typically comprises of the following elements:

1. Above The Line (ATL) budget

2. Below The Line (BTL) budget

The ATL budget broadly comprises of two components: the media budget and the production budget. Media budget is the actual money that is spent on advertising the brand in conventional media such as print, TV, radio, cinema, outdoor, social, and mobile. Production budget is the cost that is incurred to produce the creative units that are used in the communication process. Usually the costs for production are not very high (relative to the budget), except for TV advertising, which has high production costs depending on the kind of brand ambassador or model, location, post-production work, creative and production team, etc.

The BTL budget comprises of two components: the trade budget and the promotions budget. Trade budget is the budget kept aside for offers and promotions for the trade schemes. This is more important for certain categories and brands that are in a more mature stage of the product life cycle (PLC) or that are more dependent on trade ‘push’ than on consumer ‘pull’. On the other hand, the promotions budget is the budget set aside for consumer promotions, for e.g. volume or value offers, and any on ground activations and in-shop advertising.

So, the budget is partitioned mainly across advertising, trade schemes, and consumer promotions. Marketers try to craft the right mix of these tools and its sub-components in order to achieve sales and market share goals, but they are always torn between the long term brand plans and the pressure to deliver results in the short term. For example, consumer promotions generally result in an immediate peak in the sales offtakes, and hence promotions may seem more attractive compared to advertising. But, excess promotions can bring down the profitability of the brand, make the brand more promotions dependent, and cause loss of market share in the long term. Similarly, sometimes internal pressure from trade and sales teams may force more investment into trade schemes.

In summary, marketers and planners make budget and media-mix decisions based on many qualitative and quantitative factors (e.g. marketing and financial goals, past spends, clutter, competition spends, market priority, cost per rating point, media isolatability, etc.) and use tools like optimizers and market modelling to optimize their investments for maximum return.

As an after thought, here is a Forbes article on the emerging trend of how brands are shifting their budgets from TV to online video?

Thank you.

The buzz about Twitter, TV, and Nielsen

What is Twitter for TV ?

Historically, TV viewers have always liked to discuss and debate about TV shows. People always talked about that particular cricket shot, actor, and that movie scene as they watched TV in their drawing rooms. But, the discussion was traditionally limited (geographically) to people inside the room. Twitter for TV allows you to tweet your ‘talk’ as you watch the show and thereby it transforms ‘TV watching’ into a social and an interactive experience.

Twitter arrived at this idea from its past data that TV shows are one of the most tweeted and followed on Twitter. Surely, from Twitter’s point of view the initiative makes a lot of sense. ‘Twitter for TV’ brings social interaction to traditional one-sided TV watching experience. Twitter for TV is in India too and is currently available through Airtel. Globally, Twitter for TV has been a big success from a point of view of the amount of buzz, and experts say that social-tv could be the next big bubble. Currently, Twitter is earning only a few tens of million dollars from the TV association. But certainly, TV is the most exciting space to watch out for as different technologies and companies are converging at this spot in search of the big-ticket revenues.

Video: Exciting data visual of Twitter for TV

abc

What is the value of this ‘Twitter for TV’ Buzz?

It is not very clear how this platform will be used and how this platform will evolve in the future. But, following are some of the key advantages that Twitter for TV brings to table.

1.    The Buzz might bring incremental number of viewers for a TV program

Twitter says that there has been a strong correlation between the increase in the number of live tweets and the increase in the number of viewers for a TV program. Hence, it is partly assumed that there are a set of viewers that are watching the show after looking at the tweets about a show. But, it is yet to be measured to a stage where we can isolate and quantify the number of viewers who switched on the TV (or other devices) after watching the tweet. It will be an extremely powerful data-point for Twitter to understand the impact of this platform.

2.    Broadcasters and TV production houses get real-time feedback about their programs

Broadcasters receive huge real-time data about their content and this helps them to change their content accordingly. But, this is something that is available without this platform too and hence I am not very sure if this is a critical advantage for the broadcasters.

3.    Provides better ad-targeting and drive brand-engagement with targeted TV viewers

As Twitter knows the people tweeting about a TV show, advertisers can use Twitter to:

  • understand the customer intention about products and brands
  • drive engagement with specific target segments during and post the telecast.
  • understand which shows are the target audience interested in, and in turn optimize media plans.

This is where Twitter is making its biggest bet as the next big advertising platform. However, the benefits for marketers using this platform as an engagement driver are not very clear yet. Marketers must develop unique and relevant content to derive value from this platform.

Nielsen caters to the need for a measurement of this platform

The huge buzz created by this platform led to a need to measure the social buzz around TV. The market research leader, Nielsen, launched its first measurement tool – Nielsen Twitter TV Ratings. Currently, the ratings provide the below four metrics for the TV show:

  • Tweets – Number of tweets corresponding to a linear TV episode.
  • Unique Authors – Number of unique twitter accounts that have sent atleast one tweet for the specific episode.
  • Impressions – Number of times any tweets corresponding to a TV episode were seen
  • Unique Audience – Number of distinct twitter accounts accruing atleast one impression of one or more different tweets for a TV episode

Though this initiative may not be a great source of revenue, it is a strategic win-win partnership for both Nielsen and Twitter as Nielsen gains edge on social measurement and Twitter gains the credibility from the TV ratings major.

Entertainment in Television Advertisements

As I mentioned in earlier blog posts, to communicate something to a recipient one has to command the recipient’s attention and then be relevant to the recipient.

Communication:  Command Attention (Clutter breaking) ->  Be Relevant

This holds true even for communication among two individuals or two groups of people or for television commercials (TVCs). For the rest of this blog we will discuss it in the context of TVCs.

Though the rules seem simple, commanding attention is itself a very daunting task in this fragmented and cluttered world of media. On top of it, the message is driven home only if you are relevant to your fragmented consumer segments. Currently, we shall focus on the first part of the problem – clutter breaking and commanding attention.

What have commercials been doing to break clutter?

Historically, entertainment has proved to be one of the most effective ways to command attention of people. Entertainment is a very pervasive element of television ads today. Research shows that creative entertainment increases the attention to view the entire ad, reduces the resistance to persuasion, and has positive effects on purchase intention.

Wikipedia defines entertainment as – “Entertainment is something that holds the attention and interest of an audience or gives pleasure and delight.”  Psychologists define entertainment as “attainment of gratification of senses”.

Though people have different personal preferences of entertainment, it has been observed that across cultures and time there are recognisable and familiar forms of entertainment such as story-telling, music, dance, drama, sex, sports, horror etc. So, most ads today have atleast one form of content used to entertain consumer such as humour, music, and creative stories, etc.

The answer to the question is – Commercials have been using entertainment as one of the effective ways to break clutter and maintain attention levels, increasing people’s interest to view the entire ad, and research shows that creative entertainment has positive effects on persuasion and purchase intentions.

If all is well, what is the problem about entertainment in commercials?

One observation that always intrigued and puzzled me is that the commercials that are very entertaining and enjoyable don’t always drive home the intended purpose. There are many commercials that are enjoyed a lot and has high ad recall, but they just become only a source of entertainment for the audience.

My observation of several ads and people made me come to the hypothesis that the entertainment provided in the ad actually fulfils the consumer and conflicts with the consumers’ process of synthesizing the brand/product message.  This negative influence of entertainment is especially seen when the brand purpose is not weaved into the story provided for entertainment. For example, in ads where the entertainment part comes first and the brand is shown very late in the ad and they are not so well connected. If entertainment is used to break clutter, then it is important that the brand is shown as a part of the entertainment at the beginning of the ad, else there is a risk that the TVC may be very entertaining but not serving the objective of the ad.

Harvard professor Thales Teixeira has conducted interesting research on this regard and wrote a paper – “Why, When, and How much to entertain consumers in advertisements?” This is based on a facial tracking study (software used to track the facial emotions) in response to the TVCs. This is a first of its kind study and is the latest (dated January 2013).

One of the key hypotheses for the study is – Does high entertainment in advertisements have detrimental effects on persuasion and purchase intent, while having beneficial effects on a person’s willingness to watch the ad?

Key Results from the Study:

1. Entertainment can overcrowd your product message.

2. Viewers tend to pay less attention to the message associated with the brand once they’re already entertained.

3. If entertainment is not brand-associated (brand comes first and then the entertainment part starts or both at once), then it works only as an attention capturing device.

4. An excessive amount of entertainment is ineffective because it reduces the ad’s persuasiveness, as the entertainment conflicts with the persuasiveness.

5. Medium level of positive entertainment leads to a higher intent to purchase the advertised brand than low or high levels.

Entertainment plays both a co-operating and a conflicting role

Prof. Teixeira found that entertainment plays both a co-operating and a conflicting role, depending on its type (i.e., location in the ad). Entertainment that is associated with the brand is co-operating, as it acts as a persuasion device both in the interest and purchase stages. Entertainment that is not associated with the brand acts predominantly as an attraction device at the interest stage, thus indirectly cooperating but also directly conflicting with the ultimate goal of the ad.

The paper talks about the role of the location of entertainment and brand in the ad and its effects on the purchase funnel. If the ad is solely intended to induce purchase from previously aware or interested consumers, early placement of the brand is recommended. This might be the case for established brands or mature products. Yet, if the purpose of the ad is to generate awareness and interest, for example for new brands or products, and other marketing tools will be used to trigger purchase, then placing the brand later in the ad will be more effective to increase its attractiveness. Lastly, for ads intended to increase interest and purchase, ad persuasiveness and attractiveness should be balanced.

The study shows that entertainment, while increasing interest, can hurt purchase intent, especially if it appears before the brand, and can help purchase intent, when it occurs after the brand. So having the brand appear later may work if the objective is more towards building awareness. But still I am not a strong supporter of entertainment coming first and then brand later. If you want to be safe, make sure that the brand has an appearance somewhere in the beginning of the ad (especially when entertainment is used for clutter-breakthrough).

Thank you.

Similar Posts on this blog:

https://brandalyzer.wordpress.com/2012/09/20/centuryplys-latest-gorilla-tvc/

https://brandalyzer.wordpress.com/2012/01/15/television-advertisements-and-relevance/

https://brandalyzer.wordpress.com/2011/09/03/flipkart-attacks-the-online-fears-with-its-new-set-of-tvcs/

References for this post:

https://brandalyzer.wordpress.com/2012/01/15/television-advertisements-and-relevance/

http://www.hbs.edu/faculty/Pages/event.aspx?num=387

http://www.affectiva.com/assets/Entertainment-effects-on-Purchase-Funnel.pdf

CENTURYPLY’s latest Gorilla TVC

CENTURYPLY is undoubtedly one of the major furniture brands in India. Century Plyboard stayed away from TV advertising from the last four years, before it came back on TV with its new TVC on the World Anger Day – 28th Aug, 2012.

In this blog post, we shall evaluate this TVC from Century Plyboard and understand if it met its objectives. Please watch the TVC below.

TVC

Objectives:

Though Century Plyboard is a major brand in India and consumers trusted the brand, research suggested that it is not an aspirational brand in the eyes of the consumers. So, Century Plyboard wanted to build a campaign that brings out the brand as a “lifestyle brand” and truly make it aspirational. As we all know, for any brand, the ultimate apex in brand hierarchy is to be aspirational for its target group.

However, in process of making it a lifestyle/aspirational brand, Century Plyboard also wanted to communicate a key functional aspect – “durability of the furniture“.

Let us check the TVC on some of the key parameters.

1. Does it command the attention of the recipient?  √

No doubt that the thrown car and the angry gorilla at the beginning of TVC attracts your attention, and is clutter-breaking among any group of advertisements. I would say 100 out of 100 for the Bates team for such a clearly clutter-breaking start for the TVC.

Great! Now that it got the attention of the consumer, it would have to be relevant and communicate the message.

2. Communication of Durability √

As the consumer watches attentively, the next scene that attracts attention is that the gorilla is not able to break the door and it enters the house breaking through the roof. As the gorilla lands on a dining-table, the dining table doesn’t break and the gorilla chases the person in the scene to the cupboard. Until this point, the consumer is still attentively wondering “what is the gorilla upto?”.

Now, as it turns out that the gorilla is the husband’s imagination of his wife’s anger, it brings out an element of empathy and fun making the whole commercial very enjoyable. The message in the background also re-emphasizes on the visual communication.

It is a great story with an element of suspense, and clearly communicating the durability of the furniture.  I give 100/100 in the communication of the functional aspect “durability”.

3. Does it bring the Lifestyle/Aspirational element? Χ

Though the advertisement communicates the durability aspect, it communicates it in a raw manner and definitely doesn’t communicate it creating an aspiration for the brand. The point of concern is: is “durability” a differentiated factor among branded furniture or is it a hygiene factor where the consumer is looking for more than durability. This is why Century Plyboard as a brand should become a lifestyle brand and be more aspirational in the consumer’s mind. This helps to enhance the product portfolio and target the up-class consumers, together bringing in the brand aspiration.

The TVC clearly falls short in the aspect of creating aspiration. The commercial is definitely enjoyable and it has the brand recall with “CENTURY PLY” cards at the end of the ad. The advertisement would have been perfect, had the situation been that people don’t have much trust in its durability. However, the situation here is to somehow create an element of aspiration for the brand.

On the whole, it definitely does well on breaking the clutter, consumers will enjoy the ad, communicates the aspect of durability and increases the awareness of “CENTURYPLY”. However it falls short in creating aspiration.

CDM launches a new TVC before Friendship Day

For years, Cadbury Dairy Milk (CDM), India’s favorite chocolate brand, has been trying to be the symbol of celebration and expression of every sweet moment in your lives. In continuation of its pursuit, Cadbury Dairy Milk celebrates the beginning of new friendships with its latest TVC, ‘nayi dosti ka shubh aarambh’. The TVC showcases the first magical moments of a blossoming friendship between a young girl and boy on the sidelines of a wedding, an occasion that in itself connotes new relationships.

watch?v=s2jsCGLO56g&feature=player_embedded

The new commercial plays out at a traditional wedding ceremony. A teenage girl and boy exchange notes on how every family has a “dancing uncle/aunty” and an “allergy aunty/uncle”. They quickly realize that the two families have much more in common than they thought. When the girl excitedly asks, Tumhaari family mein mere jaisa kaun hai?” the boy smiles and replies ”Main”. A piece of Cadbury Dairy Milk is exchanged to celebrate their new found friendship and the closing VO states, ”Nayi Dosti Ka Shubh Aarambh. Also, the commercial plays the same jingle which would help establish a strong brand recall.

On Air on July 21

It is set to hit TV screens nationwide on July 21, 2012 and is expected to have a presence in over 70 television channels. To further
strengthen the brand’s digital presence, the TVC was released online on YouTube and Facebook on July 13.

Ad Timing: Friendship Day and College Re-opening

The campaign is perfectly timed to be on-air two weeks before the Friendship Day on 5th August. Also, with most colleges opening in June of the year, it also has good timing with students just starting to make new friends in colleges. CDM wants to be the chocolate through which the students express their emotions of the ‘friendship moments’.

The TVC will be supported by a robust integrated marketing campaign, including on-ground activations in 80 colleges, creative print placements, interesting radio capsules in leading radio stations across many cities and outdoor, to urge people to make new friends and celebrate special “friendship moments”.

Symbol of different things in different contextual situations

Cadbury Dairy Milk is trying to own every sweet moment of celebration and expression in your lives. This is part of the long-term brand building campaign ‘Shubh Aarambh‘. CDM has taken a very difficult challenge  and it has done a decent  job by partly owning the festival and family celebrations with its product line ‘Cadbury Celebrations’. It later built on the valentine moment between a boy and a girl.

It now comes up with this intelligent TVC trying to own the moment of ‘friendship’ with the message and building on its earlier moments – valentine, family, and celebration – with the background of marriage.  This is intelligent, as CDM is trying to become the message itself within different contexts, and bringing all the moments together.

It is very encouraging to see Kraft Foods continuing its strong brand-building activities, despite the inflationary times. With the consumers feeling the price increases on all products, consumers are already decreasing their discretionary spends such as chocolates. So, it is very interesting to see whether this will translate into sales in the short-term or not, but it definitely is going to help the brand in the long-term.  This is a classic example of a strong campaign with a long-term vision for the brand.

The press release for this advertisement has been shared by the strategic communications agency, The PRactice (www.the-practice.net).

AdStock GRPs

AdStock is a simple mathematical model of how advertising builds and decays. It is invented by Simon Broadbent as he studied Milward Brown’s ad awareness data.

AdStock helps to:

  1. Optimize your advertisement scheduling
  2. Used in marketing-mix modelling to come up with advertising ROIs, etc.
  3. Helps you decide when to be off-air and when to be on-air
  4. Helps you understand the advertising decay behaviour

How advertising builds and decays?

Let us take awareness as a parameter to understand the concept of AdStock.  As a consumer watches an advertisement for the first time, let us assume that consumer gains certain awareness of the brand, category, etc. Now, when the same consumer watches the advertisement for the second time, the advertisement builds on the awareness. The advertisement hopefully will strengthen the awareness, recall, preferences, etc. So, advertising builds on itself and that is why we call it as a campaign building.

Similar to the way it builds, an advertisement also decays in similar fashion. If a consumer has seen an advertisement A1 10 times in a week and the same consumer has seen an advertisement A2 only once in a week, then the way the consumer forgets the advertisements is very different.  The decay rate of an advertisement depends on various parameters such as: the strength of the advertisement itself, media plan, media vehicles chosen, category involvement of the consumer, etc.

The normal GRP data doesn’t take into account the build and decay rates. So it doesn’t take into account the residual effect of advertising, though a company doesn’t advertise in a specific period. AdStock is nothing but the GRP data taking into account of the build and decay of advertising, which is more sensible in marketing applications.

Optimize your advertisement scheduling

As explained, the AdStock GRPs are the GRPs weighted for the advertising build and decay rates.

Let us look at case to optimize the scheduling strategy for an advertisement. For this case, the advertisement is assumed to have a half-life of 6 weeks (hypothetical). This will come out for a decay rate of 12.24% as shown in the table below.

We have four options of scheduling, each using roughly the same (1200-1500 GRPs) amount of GRPs. Once we translate these raw GRPs into AdStock GRPs, it will help us decide which scheduling strategy is the most optimum as explained below.

The AdStock GRPs are adjusted based on the decay rate.  For example, the number 469 in Wk 2 is arrived by: (250 of Wk2) plus (250*87.8) (decayed GRPs of Week 1) = 469.

Similarly, 662 in Week 3 is arrived by: (250 of Wk 3) + (250*87.8) (decay of Wk 2) +(250*77.0)(decay of Wk 1)= 469

From the above, it is clear that Option 1 gives the maximum ROI. The other parameter important for selection of an option is the off-air time. Which of the above options gives me the maximum off-air time (when you don’t air the advertisement)?

From the above table, it is clear that Option 1 gives the maximum off-air time for the advertisement by still maintaining more than 500 GRPs. In the above example, 500 GRPs is considered as the threshold and if it goes below, then the advertisement has to come on-air.

To sum it up, AdStock helps marketers understand ‘When to advertise‘? AdStock is commonly used in scheduling, marketing-mix modelling, etc.

Any comments on this regard are most welcome.

Thank you.