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Marketing at Work 12.1 Narrowcasting - Savile Row and science fiction

Marketing at Work 12.1 Narrowcasting - Savile Row and science fiction

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CHAPTER 12 COMMUNICATING CUSTOMER VALUE: ADVERTISING, SALES PROMOTION AND PUBLIC RELATIONS



demographic based on age and gender to tailor their

ads. But even this facial recognition-lite alarms privacy advocates, given that it could greatly popularise

and expand use of the technology.

Intel Corp., which makes such software, said it’s

widely adaptable. ‘You can put this technology into

kiosks, vending machines, digital signs,’ said Christopher O’Malley, director of retail marketing for Intel’s

embedded and communications group. ‘It’s going

to become a much more common thing in the next

few years.’

So far, the technology is in most use commercially in Japan, where a variety of businesses use it to

customise ads. ‘It’s not just clothing stores or restaurant chains,’ said Joseph Jasper, spokesman for NEC

Corp., which makes display screens used for facial

recognition-driven ads. Banks, for example, use it to

target customers based on their ages, separating out

older customers from young people who are more

likely to be opening their first account.

The technology works by digitally measuring the

distance between the eyes, the width of the nose,

the length of a jawline and other data points. Law

enforcement agencies that use facial recognition – as

was done during the recent London riots – compare

the measurements against photos in database.

But for most marketing uses, the measurements

are compared to standardised codes that represent

features typical of males and females in various age

brackets.

Adidas is working with Intel to install and test digital walls with facial recognition in a handful of stores

either in the U.S. or Britain. If a woman in her 50s

walks by and stops, 60% of the shoes displayed will

be for females in her age bracket, while the other

40% will be a random sprinkling of other goods.

‘If a retailer can offer the right products quickly,

people are more likely to buy something,’ said Chris

Aubrey, vice president of global retail marketing for

Adidas.

Kraft said it’s in talks with a supermarket chain,

which it would not identify, to test face-scanning

kiosks. ‘If it recognises that there is a female between

25 to 29 standing there, it may surmise that you are

more likely to have young children at home and

give suggestions on how to spice up Kraft Macaroni

& Cheese for the kids,’ said Donald King, the company’s vice president of retail experience.

In the science fiction film Minority Report, Tom

Cruise plays a character on the run from the authorities. To make his escape, he takes the extreme step

of retina replacement surgery to avoid detection by



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security cameras that are constantly searching for him.

In one scene in the film, he stumbles through a shopping mall, and artificially intelligent advertising display

screens greet him using the name of the original owner

of the retinas and make offers based on that man’s past

consumption history! That takes us onto an important

social and legal issue – what effect might this have

on privacy?

Privacy advocates worry the technology is one

more way for companies to quietly gather data

about people without their permission or even

knowledge. In June, Facebook Inc. rolled out a facial

recognition feature worldwide that could pinpoint

individuals. It was used to automatically identify

friends when you uploaded photos of them onto

the social network. When members realised this

was happening, many loudly objected, calling it

creepy and invasive. The feature still exists, but the

company apologised and made it more clear how

users can opt out.

The non-profit Electronic Privacy Information

Center said such uses of facial recognition have

the potential to violate civil liberties and give

governments too much power. ‘What if the government starts compiling a database of everyone

who shows up to protests?’ asked Marc Rotenberg, executive director of the group. ‘There are

so many 1st Amendment and human rights concerns. It’s a slippery slope. When you think about

facial recognition, you have to ask the questions,

“Why is it being done?” “Who is it being done to?”

“How is that information used?” and “What is it

linked to?’’ ‘

David C. Thompson, an attorney at Munger,

Tolles & Olson who specialises in privacy law, said

the use of facial recognition can catch and expose

people during very sensitive moments of their lives,

such as going to an abortion clinic or a cancer treatment center. ‘The problem is that there are things

we do that we don’t need a permanent record of,’

Thompson said. ‘I don’t need other people to know

where I’ve been and what I’m doing.’

Ed Warm, co-owner of Joe’s Bar in Chicago, said

many customers were excited about the SceneTap

app that gave them the demographics of the crowd

in the bar on any given night, but were clueless

that facial recognition technology made it possible. ‘Frankly, almost no one seemed to care how it

worked,’ Warm said.

Sami Ari, a 27-year-old social media marketer,

is one of about 8,000 people who have downloaded the app. He knew it was facial recognition



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at work and didn’t mind it. ‘I use it at least once a

week to find a cool place for me and my friends to

hang out,’ said Ari, who describes himself as ‘hyper

social’. ‘It’s not that scary,’ he added. ‘I always get

upset at new Facebook privacy settings, and then

I get over it.’

Your reality now includes this science fiction. Apple

incorporated what it called iBeacon response into its

smartphone and tablet software. Go near one of those

iBeacons with your devices and it may well send you a

tailored advert based on location and other factors about



you. More generally, that technique is referred to as Location Based Marketing. They send you messages, because

they know who and where you are.

Do you agree with Sami? Minority Report was a decade

ago. Good science fiction predicts the future. 1984 and

Brave New World were written much longer ago – 1948

and 1931 respectively. If you think Big Brother is just a TV

show you need to do some reading!

Sources: Case edited and compiled from: Shan Li and David Sarno, ‘Advertisers Start

Using Facial Recognition to Tailor Pitches’, LA Times, 21 August 2011; and Richard

Gray, ‘Minority Report-style Advertising Billboards to Target Consumers’, Daily

Telegraph, 1 August 2010.



The creative concept will guide the choice of specific appeals to be used in an advertising campaign. Advertising appeals should have three characteristics. First, they should be

meaningful, pointing out benefits that make the product more desirable or interesting to

consumers. Second, appeals must be believable – consumers must believe that the product

or service will deliver the promised benefits.

However, the most meaningful and believable benefits may not be the best ones to feature. Appeals should also be distinctive – they should tell how the product is better than

the competing brands. For example, the most meaningful benefit of owning a wristwatch

is that it keeps accurate time, yet few watch ads feature this benefit. Instead, based on the

distinctive benefits they offer, watch advertisers might select any of a number of advertising

themes. Dolce & Gabbana consistently features style and fashion, whereas Rolex stresses

luxury and status.

Message execution

The advertiser now has to turn the big idea into an actual ad execution that will capture

the target market’s attention and interest. The creative team must find the best style, tone,

words and format for executing the message. Any message can be presented in different

execution styles, such as the following:





















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Slice of life: This style shows one or more ‘typical’ people using the product in a normal

setting. For example, two mothers at a picnic discuss the nutritional benefits of Dairylea

cheese spread.

Lifestyle: This style shows how a product fits in with a particular lifestyle. For example,

an ad for Mongoose mountain bikes shows a serious biker traversing remote and rugged

but beautiful terrain, and states, ‘There are places that are so awesome and so killer that

you’d like to tell the whole world about them. But please, don’t.’

Fantasy: This style creates a fantasy around the product or its use. For instance, many

ads are built around dream themes. Gap even introduced a perfume named Dream. Ads

show a woman sleeping blissfully and suggests that the scent is ‘the stuff that clouds are

made of’.

Mood or image: This style builds a mood or image around the product or service, such

as beauty, love or serenity. Few claims are made about the product except through suggestion. For example, ads for Singapore Airlines feature soft lighting and refined flight

attendants pampering relaxed but happy customers.

Musical: This style shows people or cartoon characters singing about the product. For

example, one of the most famous ads in history was a Coca-Cola ad built around the

song ‘I’d Like to Teach the World to Sing’.



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Personality symbol: This style creates a character that represents the product. The

character might be animated (Tony the Tiger for Kellogg’s cereals) or real (the

Marlboro man).

Technical expertise: This style shows the company’s expertise in making the product.

Thus, Maxwell House shows one of its buyers carefully selecting coffee beans, and Gallo

tells about its many years of wine-making experience.

Scientific evidence: This style presents survey or scientific evidence that the brand is better or better liked than one or more other brands. For years, Crest toothpaste has used

scientific evidence to convince buyers that Crest is better than other brands at fighting

cavities.

Testimonial evidence or endorsement: This style features a highly believable or likeable

source endorsing the product. It could be ordinary people saying how much they like a

given product or a celebrity presenting the product. For example, Lucozade supported its

Isotonic brand with a series of adverts featuring professional sports coaches saying how

important hydration was for top sportsmen.



When selecting an execution strategy, advertisers must be very careful to consider if their

advert might be perceived to be patronising, arrogant or socially unacceptable – especially

if the offended groups are key to the commercial success of the product!28

The advertiser also must choose a tone for the ad. Procter & Gamble always uses a positive tone: its ads say something very positive about its products. P&G usually avoids humour



Advertisers often try

to use humour to

create awareness

and interest in their

products and brands

Source: Image courtesy of The

Advertising Archives.



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that might take attention away from the message. In contrast, many advertisers now use

edgy humour to break through the commercial clutter.

The advertiser must use memorable and attention-getting words in the ad. For example,

rather than claiming simply that ‘a BMW is a well-engineered automobile’, BMW uses more

creative and higher impact phrasing: ‘The ultimate driving machine.’ It is not Häagen-Dazs

is ‘a tasty luxury ice cream’, but rather ‘Our passport to indulgence: passion in a touch,

perfection in a cup, summer in a spoon, one perfect moment.’

Finally, format elements make a difference in an ad’s impact as well as in its cost.

A small change in ad design can make a big difference in its effect. In a print ad, the

illustration is the first thing the reader notices – it must be strong enough to draw attention. Next, the headline must effectively entice the right people to read the copy. Finally,

the copy – the main block of text in the ad – must be simple but strong and convincing.

Moreover, these three elements must effectively work together persuasively to present

customer value.



Selecting advertising media

The major steps in media selection are:

1 deciding on reach, frequency and impact;

2 choosing among major media types;

3 selecting specific media vehicles; and

4 deciding on media timing.



Deciding on reach, frequency and impact

To select media, the advertiser must decide on the reach and frequency needed to achieve

advertising objectives. Reach is a measure of the percentage of people in the target market

who are exposed to the ad campaign during a given period of time. For example, the advertiser might try to reach 70 per cent of the target market during the first three months of

the campaign. Frequency is a measure of how many times the average person in the target

market is exposed to the message. For example, the advertiser might want an average exposure frequency of three.

The advertiser also must decide on the desired media impact – the qualitative value

of a message exposure through a given medium. For example, for products that need

to be demonstrated, messages on TV may have more impact than messages on radio

because TV uses sight and sound. The same message in one newspaper (say, the Financial Times) may be more believable than in another (say, the Daily Mail). In general, the

more reach, frequency and impact the advertiser seeks, the higher the advertising budget

will have to be.



Choosing among major media types

The media planner has to know the reach, frequency and impact of each of the major

media types. As summarised in Table 12.3, the major media types are newspapers, TV,

direct mail, radio, magazines, outdoor and the Internet. Each medium has advantages and

limitations. Media planners consider many factors when making their media choices. They

want to choose media that will effectively and efficiently present the advertising message

to target customers. Thus, they must consider each medium’s impact, message effectiveness and cost.

The mix of media must be re-examined regularly. For a long time, TV and magazines

have dominated the media mixes of national advertisers, with other media often neglected.

However, as discussed at the start of the chapter, the media mix appears to be shifting.



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TABLE 12.3 Profiles of major media types

Medium



Advantages



Limitations



Newspapers



Flexibility; timeliness; good local market

coverage; broad acceptability; high believability



Short life; poor reproduction quality; small passalong audience



Television



Good mass-marketing coverage; low cost per

exposure; combines sight, sound and motion;

appealing to the senses



High absolute costs; high clutter; fleeting

exposure; less audience selectivity



Direct mail



High audience selectivity; flexibility; no ad

competition within the same medium; allows

personalisation



Relatively high cost per exposure; ‘junk mail’

image



Radio



Good local acceptance; high geographic and

demographic selectivity; low cost



Audio only, fleeting exposure; low attention (‘the

half-heard’ medium); fragmented audiences



Magazines



High geographic and demographic selectivity;

credibility and prestige; high-quality

reproduction; long life and good pass-along

readership



Long ad purchase lead time; high cost; no

guarantee of position



Outdoor



Flexibility; high repeat exposure; low cost; low

message competition; good positional selectivity



Little audience selectivity; creative limitations



Internet/social media



High selectivity; low cost; immediacy; interactive

capabilities; growing amount of consumer

attention



Demographically skewed audience; relatively low

impact; can be blocked automatically



As mass-media costs rise, audiences shrink and exciting new digital media emerge, many

advertisers are finding new ways to reach consumers. They are supplementing the traditional

mass media with more specialised and highly targeted media that cost less and target more

effectively – switching from a broad to a narrow focus.

For example, cable and satellite TV systems are booming. Such systems allow narrow

programming formats such as all sports, all news, nutrition, arts, home improvement and

gardening, cooking, travel, history, finance and others that target select groups. BSkyB and

other cable operators are even testing systems that will let them target specific types of

ads to specific types of customers. For example, only pet owners would see ads from pet

food companies. Advertisers can take advantage of such ‘narrowcasting’ to target specific

market segments. Satellite TV and set-top box-based broadcast media seem to make good

sense with their multitude of channels, each with a specific set of audience characteristics.

But, increasingly, ads are popping up in far less likely places. In their efforts to find less

costly and more highly targeted ways to reach consumers, advertisers have discovered a

dazzling collection of ‘alternative media’, including computer games (see Marketing at

Work 12.2).

Another important trend affecting media selection is the rapid growth in the number of

‘media multitaskers’, people who absorb more than one medium at a time. One term you

might have heard recently describes what you yourself are likely to do: ‘dual screening’ –

dividing your attention between two screens, quite likely a TV and a laptop or tablet. A

marketing trend company reveals that:

A third of the population now owns a tablet, up 152 per cent since this February, while the

number of people using tablets while they are watching TV rose 225 per cent during the

same period.29



Media planners need to take such media interactions into account when selecting the

types of media they will use.



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Advertising in computer games

Video games are big business. We’ve all grown used to

seeing them advertised on TV and online alongside cars,

beers and their rivals for entertainment spending – movies.

This case isn’t about the advertising of video games, it’s

about the advertising in video games.

Why is this a significant issue for marketers? In recent

years, advertising professionals have become increasingly

concerned that traditional media are being ignored by

key consumer segments – especially young men and/or

highly educated urban residents. Research suggests that

these and others key groups are spending less and less

time watching TV and instead using the Internet and playing games, whether it be on a PC, a console or on a handheld device like a mobile phone or iPad. Worse, even if

they are watching TV, the commercial break is a period

when their attention switches from the big-screen TV to

the small one in their hands, meaning all those expensively produced and transmitted adverts razzle-dazzle to

an audience that is not even looking.

Advertising in video games is part of the response – go

where the attention actually is. You’ll have experienced

this during your games of Candy Crush and other freeto-play smartphone games where your experience will

include adverts at the top or bottom of the screen. If you

play marquee titles like FIFA on a console you’ll be well

used to seeing branding and advertising as part of the

recreated world these games show.

‘What’s unique about videogames is that people

are immersed in the gameplay, with their eyes

glued to the TV screen. So it’s pretty hard – if

not impossible – for people to tune out in-game

advertising, and not to recall the ads they see while

playing,’ explains Jordan L. Howard, founder and

CEO of Reloaded.30

Electronic Arts, one of the world’s largest video games

companies, has released a free online version of its popular Battlefield games, called Battlefield Heroes. Why would

it do this? EA intends that the money lost from not selling the game will be more than made up for by means

of reduced costs (no mass production and distribution)

and by advertising revenue from brand managers keen to

place their products where they might be seen by these

elusive groups. Adverts will not appear in the game itself,

but rather during pauses as a new game is waiting to

start, or a new level is loading. EA is periodically releasing

new content – levels, equipment – which will come with

updated ads from new sponsors.31



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AT WORK 12.2

Electronic Arts is also heavily involved with some of

the bestselling video gaming franchises of all time. Adam

Dawson of the Digital Journal takes up the story in a column arguing that in-game advertising is the future of the

entire industry:

Sports series such as Fifa, Madden and NBA 2K

feature more product placement than any other

game genre, creating a lifelike experience with

brand sponsored replays, brand sponsored statistical graphics, pop up ads and advertisements posted

throughout the digitally recreated stadiums. Examples being the Sprite Slam Cam in NBA 2K, Old Spice

Swagger ratings in Madden, and numerous ads surrounding the field in Fifa.

Though placing traditional ads in games is effective, there are interactive methods which incorporate the use of actual products in the game. Some

games require players to use items that exist in the

real world in order to progress. For example, in

Splinter Cell: Pandora Tomorrow protagonist Sam

Fisher uses his Sony Ericsson phone to talk to his

superiors, cycle through his inventory and photograph terrorists. Another example is the Japanese

version of Metal Gear Solid: Peace Walker where

Snake can eat Doritos, spray himself with Axe, and

drink Pepsi or Mountain Dew to regain health.32

Gatorade reported a 24 per cent increase in sales following the placement of branding and advertising within

the latest iteration of the Madden American Football

game.33

The growth and potential of these media have not

gone unnoticed by established companies. Historically

advertising agencies have often specialised in one type

of medium – print, cinema or TV. To those we now

have a growing number of agencies who are creating

and placing adverts into games or producing marketing

materials for the $40bn games industry. One such company is Intergi (www.intergi.com) who have worked on

recent blockbuster games such as Skyrim, Call of Duty

and Saints Row. Activision now works with the market

research agency Nielsen to collect and interpret audience measurement figures for computer game adverts.

Google and Yahoo have already invested heavily, and

Microsoft recently bought out a specialist outfit called

Massive.

Microsoft sees its early lead in the in-game advertising

market as a strategic opportunity that fits well into the



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Does advertising your products in a

game bring any advantages? IGA Worldwide, a company specialising in matching brands with games, believes that in

fact there are five clear advantages, and

that work done for them by Nielsen

supports this:35



Adverts are everywhere these days – this neon sign was added to the game

world of Splinter Cell

Source: http://www.trendwatching.com/img/briefing/2006-07/SplinterCell_axe.jpg



TABLE 12.4 Game ads – recall numbers

Key metric



Gamers not

exposed

to ads



Gamers

exposed

to ads



Increase



Brand familiarity



20%



40%



+100%



Brand rating



14%



25%



+79%



Purchase

consideration



28%



47%



+68%



Ad recall



38%



55%



+45%



Positive ad rating



30%



41%



+37%



Source: www.massiveincorporated.com, Massive, Inc.



company’s overall advertising strategy. Why? Table 12.4

shows that Massive believes in-game advertising has an

impact way above that of TV or audio advertising for key

demographic groups.

‘The idea is to have advertisements appear and fit in

naturally to the games just as they would in real life,’

said Jay Sampson, vice president of North American

and Asia Pacific sales for Massive, Microsoft’s ingame advertising marketplace. ‘But these advertisements are also dynamic. So the ads can be updated

or changed by the advertiser at any time.’

‘Emerging media, like in-game advertising, is

a huge component of our overall strategy,’ said

Matthew Carr, senior director of Microsoft Digital

Advertising Solutions. ‘We’re already in a leadership

position here. And we see this as being where the

future growth will be.’34



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1 Realism – as the real world is filled

with advertising, the plausibility and

credibility of game worlds can be

enhanced by incorporating brand

imagery and simulated posters/

displays in the game setting. Nielsen

found that most gamers actually liked

the extra realism ads brought to the

games – whether the AXE (Lynx) deodorant neon sign in Splinter Cell or a

Coke vending machine in Second Life.



2 Non-interruptive – we all hate pop-up ads on websites,

and we grow impatient in waiting for an interstitial to

close, but would we think our gaming experience had

been lessened by a Toyota ad appearing on a hoarding

as we screamed round the Nürburgring, or the advertising for Adidas or Nike around the pitch in many

football games?

3 Engaging – as one ‘media futures’ advertising executive said: ‘The killer benefit of gaming is attention. We

live in a multimedia world and you can’t guarantee

people will take any notice of your TV ad, but gamers

have to concentrate on what they’re doing, or their

character dies. Your message is much more likely to get

through.’36 If the product and brand can be incorporated into the game in a credible way this enhances the

engagement immensely – the neon AXE sign in Splinter Cell was designed into the game so that it became

an obstacle the gamer has to negotiate. Once this is

accomplished, the in-game hero then uses the sign to

tether a rope line to as he abseils his way towards the

bad guys.

4 Recall, awareness and purchase intention – if brands are

making the game more realistic and enjoyable, then

gamers will be much more likely to recall those products at a later date and also be more likely to consider

purchasing them.

5 Measurable – the number of people that see a TV ad or

drive past a roadside hoarding can only be estimated.

Some online multi-player games produce extraordinarily accurate and detailed data about the in-game

behaviour of players – where they were, what they

looked at and for how long. This data is fascinating for

social scientists as well as brand managers.



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So are all brands suitable for in-game advertising?

The answer appears to be no – with two reasons. First,

if the brand is not one which could credibly appear in

the context of the game, it will look inauthentic. Second,

some groups are becoming increasingly concerned that

in-game ads may be just too effective with certain vulnerable groups – such as young children, as one newspaper

columnist reports:

What is also striking is that advergaming is almost

entirely unregulated. The Advertising Standards

Agency in the UK oversees adverts that play before a

game starts, but not adverts within the game, which

are classed as sponsorship.

‘I think the ASA ought to have its brief expanded

to cover computer games properly,’ says John Beyer,

a director of Mediawatch UK, the lobby group



formerly known as the National Viewers’ and Listeners’ Association.

So far, tobacco advertising has been kept out of

computer games by the software companies themselves. For example, Sony, which publishes the current

Formula One game, and Electronic Arts, which used to

publish it, both refuse tobacco adverts. Also, a game

with alcohol advertising would be unlikely to get an

age rating below 18 from Pan European Game Information, the trade body that certifies games as suitable for

particular age groups. Even so, Electronic Arts and Activision, among other publishers, have worked with fastfood companies despite growing concerns about levels

of obesity in the population. More adverts in games

are also likely to lead to more calls for regulation.37

Sources: See notes 30–37 at the end of this chapter.



Selecting specific media vehicles

The media planner now must choose the best media vehicles – specific media within each

general media type. For example, TV vehicles include Coronation Street and ITV’s X-Factor.

Magazine vehicles include Vogue, the Italian Corriere della Sera and FHM.

Media planners must compute the cost per thousand persons reached by a vehicle. A

full-page colour advert in the Daily Telegraph costs about £60,000 per day – and daily

readership averages around 2.1 million, meaning that the cost per thousand is about £29.

In the Guardian, a similar advert will cost £18,000 but, with a readership of 1.1 million, a

cost per thousand of £16.38 The media planner ranks each magazine by cost per thousand

and favours those magazines with the lower cost per thousand for reaching target consumers. The media planner must also consider the costs of producing ads for different media.

Whereas newspaper ads may cost very little to produce, flashy TV ads may cost millions.

In selecting specific media vehicles, the media planner must balance media costs against

several media effectiveness factors. First, the planner should evaluate the media vehicle’s

audience quality. For a Huggies disposable nappy advertisement, for example, You and Your

Baby magazine would have a high exposure value; GQ would have a low exposure value.

For the numbers given above for the Telegraph and Guardian, the planner must consider

the make-up of the readership – the Guardian may be cheaper per thousand, but is a higher

proportion of the Telegraph’s readership more likely to conform to the targeted segments,

those interested in luxury cars, for example? Second, the media planner should consider

audience attention. Readers of Vogue, for example, typically pay more attention to ads than

do The Economist readers. Third, the planner should assess the vehicle’s editorial quality –

the Financial Times is more believable and prestigious than the Daily Mail, Der Spiegel is

more credible than Bild.

Deciding on media timing

The advertiser must also decide how to schedule the advertising over the course of a year.

Suppose sales of a product peak in December and drop in March. The firm can vary its advertising to follow the seasonal pattern, to oppose the seasonal pattern, or to be the same all

year. Most firms do some seasonal advertising – for example, before major annual events or

holidays like Christmas, Easter and Valentine’s Day. Some marketers do only seasonal advertising. For instance, Bell’s advertises its whisky only in the period leading up to Christmas.

Finally, the advertiser has to choose the pattern of the ads. Continuity means scheduling

ads evenly within a given period. Pulsing means scheduling ads unevenly over a given time



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period. Thus, 52 ads could either be scheduled at one per week during the year or be pulsed

in several bursts. The idea behind pulsing is to advertise heavily for a short period to build

awareness that carries over to the next advertising period. Those who favour pulsing feel

that it can be used to achieve the same impact as a steady schedule but at a much lower cost.

However, some media planners believe that although pulsing achieves minimal awareness,

it sacrifices depth of advertising communications.



Evaluating advertising effectiveness and return on advertising

investment

Advertising accountability has become a hot issue for most companies. Increasingly, top

management is asking ‘What return are we getting on our advertising investment?’ and

‘How do we know that we’re spending the right amount?’ According to a recent survey by

the US Association of National Advertisers (ANA), measuring advertising’s efficiency and

effectiveness is the number 1 issue in the minds of today’s advertisers. In the survey, 61.5

per cent of respondents said that it is important that they define, measure and take action

in the area of advertising accountability.39

Advertisers should regularly evaluate two types of advertising results: communication

effects and the sales and profit effects. Measuring the communication effects of an ad or ad

campaign tells whether the ads and media are communicating the ad message well. Individual ads can be tested before or after they are run. Before an ad is placed, the advertiser

can show it to consumers, ask how they like it, and measure message recall or attitude

changes resulting from it. After an ad is run, the advertiser can measure how the ad affected

consumer recall or product awareness, knowledge and preference. Pre- and post-evaluations

of communication effects can be made for entire advertising campaigns as well.

Advertisers have become pretty good at measuring the communication effects of their

ads and ad campaigns. However, the sales and profits effects of advertising are often much

harder to measure. For example, what sales and profits are produced by an ad campaign

that increases brand awareness by 20 per cent and brand preference by 10 per cent? Sales

and profits are affected by many factors besides advertising – such as product features, price

and availability.

One way to measure the sales and profit effects of advertising is to compare past sales

and profits with past advertising expenditures. Another way is through experiments. For

example, to test the effects of different advertising spending levels, Coca-Cola could vary

the amount it spends on advertising in different market areas and measure the differences in

the resulting sales and profit levels. More complex experiments could be designed to include

other variables, such as differences in the ads or media used.

However, because so many factors affect advertising effectiveness, some controllable and

others not, measuring the results of advertising spending remains an inexact science. Despite

the growing importance of advertising accountability, only 19 per cent of the ANA study

respondents were satisfied with their ability to measure return on advertising investments.

When asked if they would be able to ‘forecast the impact on sales’ of a 10 per cent cut in

advertising spending, 63 per cent said no.



Other advertising considerations

In developing advertising strategies and programmes, the company must address two additional questions. First, how will the company organise its advertising function – who will

perform which advertising tasks? Second, how will the company adapt its advertising strategies and programmes to the complexities of international markets?



Organising for advertising

Different companies organise in different ways to handle advertising. In small companies,

advertising might be handled by someone in the sales department. Large companies set



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PART THREE DESIGNING A CUSTOMER-DRIVEN MARKETING STRATEGY AND MARKETING MIX



up advertising departments whose job it is to set the advertising budget, work with the ad

agency and handle other advertising not done by the agency. Most large companies use

outside advertising agencies because they offer several advantages.

How does an advertising agency work? Advertising agencies were started in the mid- to

late 1800s by salespeople and brokers who worked for the media and received a commission for selling advertising space to companies. As time passed, the salespeople began to

help customers prepare their ads. Eventually, they formed agencies and grew closer to the

advertisers than to the media.

Today’s agencies employ specialists who can often perform advertising tasks better than

can the company’s own staff. Agencies also bring an outside point of view to solving the

company’s problems, along with lots of experience from working with different clients and

situations. So, today, even companies with strong advertising departments of their own use

advertising agencies.

Some advertising agencies are huge – WPP in London is the biggest in the world (£11.3bn

in 2013), the US-based Omnicon Group exceeded $14.5bn in the same year and the French

Publicis Group is in third place (€6bn).40 Most large advertising agencies have the staff and

resources to handle all phases of an advertising campaign for their clients, from creating

a marketing plan to developing ad campaigns and preparing, placing and evaluating ads.



International advertising decisions

International advertisers face many complexities not encountered by domestic advertisers.

The most basic issue concerns the degree to which global advertising should be adapted to

the unique characteristics of various country markets. Some large advertisers have attempted

to support their global brands with highly standardised worldwide advertising, with campaigns that work as well in Bangkok as they do in Birmingham or Berlin. For example, Range

Rover has created a worldwide brand image of ruggedness and reliability; Coca-Cola’s Sprite

brand uses standardised appeals to target the world’s youth. Ads for Gillette’s Venus razors

are almost identical worldwide, with only minor adjustments to suit the local culture.

Standardisation produces many benefits – lower advertising costs, greater global advertising coordination and a more consistent worldwide image. But it also has drawbacks. Most

importantly, it ignores the fact that country markets differ greatly in their cultures, demographics and economic conditions. Thus, most international advertisers ‘think globally but

act locally’. They develop global advertising strategies that make their worldwide advertising efforts more efficient and consistent. Then they adapt their advertising programmes to

make them more responsive to consumer needs and expectations within local markets.41 For

example, Coca-Cola has a pool of different commercials that can be used in or adapted to

several different international markets. Some can be used with only minor changes – such

as language – in several different countries. Local and regional managers decide which commercials work best for which markets.

Global advertisers face several special problems. Advertising media costs and availability

differ vastly from country to country, for instance. Countries also differ in the extent to

which they regulate advertising practices. Many countries have extensive systems of laws

restricting how much a company can spend on advertising, the media used, the nature of

advertising claims and other aspects of the advertising programme. Such restrictions often

require advertisers to adapt their campaigns from country to country. For example, alcoholic

products cannot be advertised or sold in Muslim countries. In many countries, Sweden

and Norway for example, food ads are banned from kid’s TV. To play it safe, McDonald’s

advertises itself as a family restaurant in Sweden. Comparative ads, while acceptable and

even common in the USA and Canada, are less commonly used in the UK, unacceptable in

Japan, and illegal in India and Brazil. When it goes wrong for a company, it can go badly

wrong. Google makes a lot of money through attaching ads to web pages. In 2011 it paid a

fine of $500m to avoid criminal prosecution by US authorities for attaching ads for Canadian pharmacies who were illegally posting drugs to US addresses.42



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CHAPTER 12 COMMUNICATING CUSTOMER VALUE: ADVERTISING, SALES PROMOTION AND PUBLIC RELATIONS



421



China has restrictive censorship rules for TV and radio advertising; for example, the

words ‘the best’ are banned, as are ads that ‘violate social customs’ or present women

in ‘improper ways’. McDonald’s recently avoided government sanctions there by publicly

apologising for an ad that crossed cultural norms by showing a customer begging for a discount. Similarly, Coca-Cola’s Indian subsidiary was forced to end a promotion that offered

prizes, such as a trip to Hollywood, because it violated India’s established trade practices

by encouraging customers to buy in order to ‘gamble’.43

Thus, although advertisers may develop global strategies to guide their overall advertising

efforts, specific advertising programmes must usually be adapted to meet local cultures and

customs, media characteristics and advertising regulations.



MAKING CONNECTIONS Linking the concepts

Think about what goes on behind the scenes for the ads we all tend to take for granted.





Pick a favourite print or TV ad. Why do you like it? Do you think that it’s effective? Can you

think of an ad that people like that may not be effective?







Dig a little deeper and learn about the campaign behind your ad. What are the campaign’s

objectives? What is its budget? Assess the campaign’s message and media strategies.

Looking beyond your own feelings about the ad, is the campaign likely to be effective?



SALES PROMOTION

Advertising often works closely with another promotion tool, sales promotion. Sales

promotion consists of short-term incentives to encourage purchase or sales of a product

or service. Whereas advertising offers reasons to buy a product or service, sales promotion

offers reasons to buy now.

Examples of sales promotions are found everywhere. A free-standing insert in the Sunday

newspaper contains a coupon offering £1 off an album download. An email from Ocado.com

offers a £5 discount on your next home delivery. The display at the end of the aisle in the

local supermarket tempts impulse buyers with a wall of beer multi-packs. A businessman

buys a new Sony laptop and gets a free carrying case, or a family buys a new car and receives

a rebate of £500. A DIY chain might receive a 10 per cent discount on selected Black &

Decker portable power tools if it agrees to advertise them in local newspapers. Sales promotion includes a wide variety of promotion tools designed to stimulate earlier or stronger

market response.44



Rapid growth of sales promotion

Sales promotion tools are used by most organisations, including manufacturers, distributors,

retailers and not-for-profit institutions. They are targeted towards final buyers (consumer

promotions), retailers and wholesalers (trade promotions), business customers (business

promotions) and members of the sales force (sales force promotions).

Sales promotion is viewed as an effective short-term sales tool in many companies, but

there are significant problems. Externally, a company faces more competition and competing

brands are less differentiated. Second, increasingly competitors are using sales promotion

to help differentiate their offers. Third, advertising efficiency has declined because of rising

costs, media clutter and legal restraints. Finally, consumers have become more deal oriented,

and ever-larger retailers are demanding more deals from manufacturers.



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