Tag Archives: TV

Economics of Brand Loyalty – Does it really exist?

Sorry for the delay & silence between posts, I’ve only just returned from a few weeks holiday in Italy & Scandinavia.

During one of my flights I randomly pick up a copy of the London Times and found a story that caught my interest. It was about loyalty in the times of the GFC and changes in consumer behaviour. The story details a USA based brand study, sponsored by the USA CMO Council from 2007 to 2009 that focused on consumer loyalty and retention across 685 brands. The study used  data from 32 million consumer loyalty cards, similar to a Woolworth’s Every Day Rewards program.

Consumer Behavioural Data

The study found that in 2008, during the height of the GFC the average brand lost a third of its highly valuable customers – a staggering and frightening reality for direct marketers. This defection came from a group that habitually bought a specific brand for more than 70% of their purchases in a category. Brand measures of affinity, esteem and loyalty collapsed under price and promotion pressures. The study also found that in times of economic pressure, customers once loyal to premium brands in a category could be easily shifted to private-label house brands. The shift downwards was found to rapid, however the upwards shift to return to premium brands took far far longer. Over the two years of the study & data analysis, on an aggregate basis 52% of customers deemed as highly loyal either reduced their loyalty or completely defected from the brand.

shopping CMO Study

The findings raise big questions for marketers and agencies (both creative & media). These include:

  • Is the current strategy of hope, that deploys a spray & pray approach of TV, print, outdoor etc still relevant?
  • How do we target more effectively through digital media? What is the impact of Search, Social Media, Blogging etc on purchase behaviour and intent at a retail level?
  • What is the role and effectiveness of current loyalty programs? It would seem that they don’t influence behaviour as much as we all would hope. Do they need to be better planned and executed using dynamic behavioural data in an almost real-time way?

Loyalty as we all know is a key driver of revenue for brands and most marketing activity and investment are focused primarily on customer acquisition metrics with some form of loose LTV ascribed to a business case that justifies the campaign activity. As the above study indicates, in the majority of cases loyalty and retention programs lack structure, data insights, don’t track consumer behaviour and engagement and from the customer perspective lack relevance. Most programs at best follow a strategy of HOPE, where a single digit response rate is deemed successful and everyone involved slaps each other on the back and we as an industry celebrate flawed success.

Mark Buckman - CMO at the CBA

Mark Buckman, the CMO of the Commonwealth Bank in Australia loudly shared his views on the role of direct communications and customer relevance at the 2009 ADMA Forum and in the Sydney Morning Herald. Simply put he believes its time for marketers to lift their game, become smarter and more insightful about engaging in a relevant way with consumers. I couldn’t agree more, most marketing is executed here in a lazy laissez-faire way with a “good enough is good enough” attitude.

Here at Downstream, we’ve also seen the rapid change in consumer behaviour. Search query volume is up significantly across almost every category and especially across banking, finance and travel, consumers are increasingly benchmarking brands against each other. The biggest rate of change we’ve also observed is in retail where Search has been traditionally shunned by bricks and mortar businesses in favour of mass media. This disconnect in the marketing equation unfortunately is consumers are increasingly turning to Search price check and either buy online or being driven to a retail outlet. Unfortunately brands that aren’t found aren’t relevant and are losing share of mind and wallet to their more dynamic, insightful and nimble competitors.

I’d love to know what has happened here in Australia over the past 2 years, how have customers defected from brands they once loved regardless of the price differential. Have the DM & eDM programs held off customer defection, how are the biggest brands in Australia thinking about the more effective use of data, segmentation, evaluation and brand engagement? What is the future of loyalty and how will it be executed more effectively than it is today?

Thoughts and opions are warmly welcome.

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Economics of the Superbowl & Search Marketing

superbowl

We all know the Superbowl is famous for advertising, it is the single biggest event or forum where the great North American ad agencies can flout their talent strategically and creatively to a reported audience of over a billion people. Clients like Pepsi, E-Trade, Sony Pictures, Budweiser and Audi (to name but a few) spend upwards of USD$3M (AUD$4.651M) a spot to engage an audience and create an impact for their brand or product. With an audience of well over 100m alone in North America, cost (think USD$3M+ for the TVC, plus media) and you’d think in today’s world of integration every brand would be seeking to leverage the event and extend the engagement potential of such an expensive and potentially high yield opportunity…yes?

Well unfortunately the answer is NO for some of the brands that took part in the Superbowl. Some major brands missed the opportunity to drive people on-line and extend the brand experience from TV to digital, one of the easiest forms of integration that delivers a significant punch for an advertiser.

A cost of entry in the “Big Ideas” business is a micro-site these days, at least a 2 second URL at the end of the TVC, or if you’ve woken up to the consumer of the 21st Century maybe even a Search program with a simple keyword that relates creatively to the idea.

The benefits:

  1. Extended brand immersion / experience / time with the brand
  2. Extension of the creative idea into a more personal self directed environment
  3. A captured profile, conversion or viral element etc – you choose
  4. A proxy for the effectiveness of the media placement / creative idea (i.e. what % of the audience did you engage within 24 / 48 / 72 hrs etc)
  5. An amplified campaign with a greater ROI for a marginal increase in investment.

Adage reports only one in five (circa 20%) of advertisers directed viewers with a specific call to action in the TVC, miraculously the highest in the past five years. Conversely, Gartner reports 65% of advertisers did construct specific Search strategies to leverage the opportunity (up around 20% on last year).

The reported Search integration winners included E-Trade, Cash4Gold, Frosted Flakes, CareerBuilder, Diet Pepsi Max, GoDaddy and Pepsi. The losers; Budweiser, Chase Bank, Denny’s, Pixar, Vizio, “Year One,” “Angels & Demons,” Taco Bell, Bud Light, Bud Light Lime, Heineken, “Transformers 2” and Coca Cola, they missed it by a mile.

Here’s how Super Bowl advertisers ranked based on the change in Daily Reach on Super Bowl Sunday.

mp-sb-ad-scorecard2

Download the full TNS report on Superbowl effectiveness here.

In simple terms the failure to think of constructing a Search strategy around a specific creative idea / execution had a high probable  opportunity cost. Think of driving just 0.5% of your available audience on-line – 500,000 users @ est. $0.45 / click is a small additional marginal investment of $225k. Maybe less than 2.5% of the total TVC program cost.   Scale this at 1%, 1.5% and the opportunity cost is significant and the potential ROI is off the chart. The equivalent cost to generate that audience through traditional digital media would be 20 to 40 times the cost.

Here in Australia, this level of thinking hasn’t even yet started to permeate advertiser or agency thinking. Connecting Search to ATL activity is seen as bleeding edge, let alone including a specific keyword as the CTA in an execution. Google’s research indicates on average only 2% of consumers can recall a campaign URL as a CTA , vs. 55% from a specific keyword. Good news is there is a massive first mover advantage in this space.

View the winners & losers below and just think how easy it would have been to construct a great Search program & maybe even incorporate a keyword as a CTA. Lets hope we see this soon in Australia.

Brands that hit it!

Cash for Gold

E-Trade


Frosted Flakes

Careerbuilder.com

Pepsi


Brands that missed it!

Budweiser

Dennys

Movie – Angels & Demons

Bud Light

Audi