The DoubleThink » accountability

thedoublethinkTV – Interview Dominique Hanssens

Dimitri — Fri, 18 Jun 2010 12:34:20 +0000

The latest video on thedoublethinkTV is an interview with Dominique Hanssens, Dominique Hanssens is the Bud Knapp Professor of Marketing at the UCLA Anderson Graduate School of Management, where he has been on the faculty since 1977. He has served as the school’s faculty chair, associate dean, and marketing area chair. From July 2005 to June 2007 he served as Executive Director of the Marketing Science Institute in Cambridge, Massachusetts. He is also one of the founding partners of Marketshare Partners.

In the interview he discusses a wide range of topics in the area of marketing effectiveness and accountability.

You can watch our other videos on thedoublethinkTV.

TV’s emotional impact

Dimitri — Fri, 12 Mar 2010 20:34:26 +0000

In my previous post I listed some empirical evidence that shows that TV advertising is becoming increasingly effective. One of the reasons is that TV is a superior medium for driving emotional engagement. The role of emotional engagement in driving purchasing behavior has been hotly debated in the last couple of years. This is as a result of advances in neuroscience that have demonstrated that the decisions people make are often a result of what happens in their sub-consciousness. As a result the traditional linear AIDA model, where the role of communications and advertising is to move customers down a linear path from awareness to interest to desire to action by grabbing their attention, has been severely challenged.

Robert Heath has published extensively on this topic and has shown that the role of emotions in the decision making process are very important. In a 2009 Admap article about how TV builds brands he said :”Early advertising models that addressed the role of emotion in advertising reflected the thinking of the time, which was that ‘conscious thinking’ leads to ‘feeling’, which leads to ‘attitude change’, which, in due course, leads to a purchase decision. They were not to know at the time, but they got it seriously wrong. Feelings and emotions are processed much more quickly than thoughts.” Heath has used brain scanning technology to show that we usually make decisions up to 1/5th of a second before we are aware of them. He says that “we always form an attitude about a decision through emotional and subconscious rational processing before we start to consciously and actively ‘think’ about it. So our conscious thinking tends either to support the decision or counter argue it. There is empirical evidence […] showing that the presence of brands inhibits processing of product attributes and encourages consumers to use shortcut to validate their brand choices.” This is illustrated in the diagram below.

If people use brands as subconscious short cuts, then brands need to be built through communicating at the subconscious level.

This is where TV is especially powerful. Contrary to other media such as print that require conscious processing of information (ie reading), TV more than any other medium can work at the subconscious level by evoking feelings through the uses of visuals and sound. This is why TV is such a powerful medium for creating brands. It does this through emotional communication. And Binet and Field have demonstrated, in the study of the IPA databank I mentioned in my previous post, that emotional campaigns consistently outperform rational campaigns in terms of driving sales, share, price elasticity, loyalty and penetration.

A Perfect Storm – ABM Presentation

Dimitri — Tue, 05 May 2009 00:11:46 +0000

This morning I presented at the annual American Business Media conference in Jacksonville Florida. I spoke about the perfect storm in the marketing world today. It’s caused by a combination of an accountability crisis that has been troubling marketing for years and a recession that has really put this crisis in the spotlight.

I briefly touched upon the topics I covered at the ANA conference a couple of weeks ago and used Claude Hopkins’ opening paragraph to show that many companies have forgotten about the very basics the early pioneers of scientific marketing had mastered more than 80 years ago.

Then I shared a case study below which describes how we helped a national retailer optimize their email strategy. It was originally put together by Robert Schwartz who heads up the Digital Dialogue group at Ogilvy. Robert and his team can do miracles with email!

The power of email

The recession has been a real accelerator for the adoption of innovative email marketing. According to Marketing Sherpa’ “Marketing & the Economy Survey” 48% of marketers plan on increasing the use of email. That is higher than any other channel, including search and social media. Cost efficiency is probably the main reason for this but it’s not the only one. For many marketers email is a much less daunting medium than search and social media for example. Most have been practicing direct marketing for years and are therefore very familiar with its principles, which can be implemented very cost effectively in email. Other reasons for email’s popularity are technological improvements that have opened up possibilities in dynamic, highly personalized messaging and rich media delivery.

This case study describes how we helped a national retailer optimize its entire email communications channel in 12 months. The scale of this engagement was enormous. They send out approximately 2 billion per year that are generated through more than 100 automated email triggers (eg shopping cart abandonment, thank you emails, …) and over a thousand email campaigns created by the retailer’s different business units. On this scale, even the smallest incremental improvement has a tremendous impact on overall marketing ROI. We optimized the email channel through 5 workstreams : Capture, Optimization, Segmentation, Dynamic Content and Creative 2.0.

Capture

Optimizing the email channel starts with capturing the email addresses and the additional data that can help drive relevance through personalization. This was a crucial. Because of the low margins and relatively high cost of direct mail and FSI’s our retailer needed to dramatically increase their email capture. There is no silver bullet when it comes to email capture. The key is to relentlessly capture email at every touchpoint. We implemented and optimized email capture mechanisms at the point of sale, in the call centers and on the homepage. In addition to that we worked with external vendors to append email addresses to the customers we already knew. As a result of this very aggressive email capture strategy we tripled email opt-in’s in 12 months.

Optimization

This workstream consisted of both technical and creative optimization. We implemented standard technical assessment tools to improve overall rendering and deliverability of emails. We optimized the creative, content and messaging of our emails through heatmapping and testing. This often resulted in very simple improvements that had high impact. One example of this was the reactivation program which was designed to reactivate customers who hadn’t interacted with the email channel in the last 3 months. We optimized this program and put in place a 3 touch communications cadence where the 1^st touch would offer free shipping, the 2^nd free shipping and 10% off and the 3^rd free shipping and 15% off. The reactivations doubled as a result of this and the program’s revenue grew 129%.

Segmentation

We built a highly sophisticated targeting engine that allowed them to micro segment their customers based on life time value, general shopping behavior, drive time period specific behavior (eg holidays, back to school, fathers day, …), propensity to buy and several other segmentation layers. This allowed the various constituents within the organization to find their high potential targets with pinpoint accuracy and it helped them deliver the right message at the right time. We complemented this enterprise wide targeting engine with an email specific segmentation. This segmentation grouped the email audience based on their engagement with the email channel and based on browsing behavior we observed on the website.

Dynamic content

The segmentation enabled us to dynamically personalize the content in our emails based on the customer’s shopping and browsing behavior. We also dramatically shifted the focus from purely promotional messages to transactional messages that had promotional content embedded in emails that were sent out for order confirmations, warranty details and other transaction related occasions. Open rates for these transactional messages average 80% compared to only 27% for purely promotional messages. Our new dynamically targeted emails increased the likelihood by a factor of 11! We also saw a 59% increase in average order value. These incredible results demonstrate the power of increasing relevance through personalization.

Creative 2.0

The email inbox has for a long time been the wasteland of creativity. New technology has changed that and has given us the ability to deliver fresh, exciting and emotionally engaging content through email. This can be done through consumer generated content and innovative use of video. In December of last year we ran a campaign that allowed consumers to send donations and support messages to the troops through an online wish registry. We took one of the campaign’s TV spots and edited so that it would fit into a smaller area of an email and would start playing automatically when the email was opened. The results were phenomenal. 40% of all messages left on the registry and 25% of all online donations were driven by this single email.

Marketing Accountability in 1923

Dimitri — Thu, 23 Apr 2009 12:00:17 +0000

A couple of weeks ago I found a copy of Claude Hopkins’ “Scientific Advertising” as a pdf online. This book was written in 1923 and it was probably the 1^st book ever written on the application of mathematics in marketing. If you haven’t read it, I highly recommend it. It opens with the following beautiful paragraph :

“The time has come when advertising has in some hands reached the status of a science. It is based on fixed principles and is reasonably exact. The causes and effects have been analyzed until they are well understood. The correct methods of procedure have been proved and established. We know what is most effective, and we act on basic laws. Advertising, once a gamble, has thus become, under able direction, one of the safest of business ventures. Certainly no other enterprise with comparable possibilities need involve so little risk.”

So what on earth has happened to marketing in the last 85 years one would think! The most recent Jupiter study on CMO priorities of 2009 had “Achieving measurable ROI on marketing efforts” at the top of the list. Surely this must be a formality by now!

Hopkins was of course talking about direct response communications and since then marketing’s role has expanded. But even if you look at today’s direct response campaigns by some of the biggest companies in the world it is shocking how many have forgotten about the basic principles the early pioneers of direct response perfected.

You can download a copy of Scientific Advertising here. Happy reading!

ANA accountability presentation

Dimitri — Mon, 13 Apr 2009 23:47:52 +0000

Earlier this year I did a short presentation on marketing accountability to the Association of National Advertisers (ANA). They seemed to like it and asked me to present it at their annual Marketing Accountability Summit which was scheduled for last week. I had planned a vacation to Mexico so I wrote up the content and sent it to a colleague who presented it last week while I was sitting on the beach, soaking up the sun with a margarita in my hand. Here’s the write-up :

8 things marketers can do to become more accountable

The recession has brought an unprecedented drive for accountability in the marketing world. Here are 8 things marketers can do to become more accountable :

1. Start with the basics

If you want to understand the impact of your marketing efforts you need to start with measurement, then move on to analysis of the results and finally use the insights from the analysis to optimize your marketing efforts. Now marketing budgets are under increased scrutiny many companies are looking for instant optimization by skipping measurement and analysis. This never works. You need the foundation of metrics and insights before you can optimize.

2. Align metrics to objectives

Measure what you need to measure, not what you can measure. Many marketers get over-excited about modern measurement tools that allow them to track everything. This often means they end up drowning in metrics. Starting from the business, marketing and communications objectives and aligning your metrics to them will ensure you focus on the metrics that matter. Mapping metrics to objectives also often improves the quality of the objectives themselves.

3. Use more than 1 metric

The last couple of years have seen a number of efforts by marketing professionals and academics to summarize marketing’s performance in one metric. Reicheld’s Net Promoter Score, Peppers and Rogers’ Return On Customer and Doyle’s Increase in Shareholder Value are examples of such efforts. While some of these metrics can be useful performance indicators, they will never be able to explain the workings of marketing in its entirety.

4. Use a mix of financial and non-financial metrics

Finance departments everywhere are forcing marketing departments to adopt financial metrics. This is a good thing. Focusing on financial metrics only however is not. It does not improve the understanding of how marketing works. Counting the money is not enough. Marketers (and finance people) also need to understand where the money is coming from. London School of Economics professor and marketing accountability guru Tim Ambler once compared the exclusive focus on financial metrics to the effects of cannabis – it distorts the reality and thereby creates the illusion of control.

5. Build a results repository

A results repository which stores all marketing related metrics in on place is probably the most important asset a marketer can have in the quest for accountability. Though this sounds very obvious, it is surprising how few companies have one. This doesn’t have to be a sophisticated database. A simple excel sheet or access table can often be a great improvement. It’s not about the technology, it’s about having the discipline of consistently capturing marketing performance metrics over time.

6. Track marketing cost data

It is interesting how few companies adequately track metrics related to the costs of marketing. Cost metrics tend to be stored in financial systems and kept at a very aggregate level. This often makes them useless for performance analysis. Keeping track of your marketing costs by marketing objective, program, channel, geography, segment and medium can greatly improve your ability to understand the effectiveness of your marketing investment.

7. Use statistical modeling to identify drivers of business performance

Econometric modeling has been around since the 1950’s and it’s power in helping understand marketing effectiveness is well documented and understood. A recent study of the IPA awards however revealed that only 15% of the submissions used econometric modeling to measure performance. In my experience, even companies who do econometric modeling often struggle with integrating them in marketing decision making. This is a shame as econometric modeling can often identify the key marketing drivers that are correlated with business outcomes and help marketers focus on them.

8. Build a marketing dashboard

Marketing dashboards are a very visible and tangible output of your measurement efforts. This not only makes them popular, it also means dashboards can become the catalyst for doing the 7 things mentioned above. If you build a dashboard you start with measurement. The design of a dashboard usually leads to a conversation about what metrics are important. You will need a set of metrics to populate the dashboard, which usually includes both financial and non-financial metrics. The financial metrics will require the discipline of tracking marketing cost metrics. And all metrics need to be stored in results repository that powers the dashboard. A typical results repository also usually holds 80-90% of the data required to do econometric modeling.