June 24, 2009 was a special day in the history of marketing science. On that day, Mars, Inc. shared with the industry its findings that singlesource measurement enabled Mars brands to increase their TV ROI from 70 cents to $2 over a three year period in England, France and Germany where small singlesource panels have existed (3000-17,000 homes vs. 5000 for the U.S. Apollo, now shut down).
The good news for U.S. advertisers is that TRA with 370,000 households national and local (all DMAs measured) singlesource sample now makes these same practices Mars used in Europe, available in the U.S. for the first time on an ongoing basis (previous experiments having not been scalable/sustainable). TRA's unique approach using factual data from existing digital databases (scanner data by household matched to set top box data for same household) is what makes this scalability/sustainability feasible for the first time in history.
This Mars singlesource ROI proof revelation came at the ARF's AMS 4.0 conference in NY. The speaker was Laurent Laurignat of Mars Catalyst, in a co-presentation with myself presenting the latest U.S. TRA results leveraging TRA's 370,000 singlesource households. In today's blog posting I will share with you a few of the detailed findings as to how Mars increased its TV ROI, and amplify on this with the TRA findings presented at that conference.
Background
In order to drive up the TV ROI, one cannot do this simply by raising or lowering the overall allocation to TV (as Marketing Mix Modeling or "MMM" allows an advertiser to do). One must answer, accurately, several questions:
MMM has not really helped with these seven basic questions. For decades, researchers around the world have struggled to make singlesource affordable and scalable as a means to more scientifically address these and other questions relating to messaging, segmentation, and media.
Problem
As reported by Deutsch Bank and IRI in 20041, the average CPG brand makes net 30 cents per dollar of TV advertising investment (after recovering the dollar). However, this is ignoring the cost of the product/distribution. It also ignores the longer–term (beyond one year) effects of TV advertising, which IRI found to double the one-year sales/ROI effect2.
The net of these countervailing factors makes TV on average a breakeven proposition based on average performance. Obviously, one would seek to beat the average performance, if there were a way to do that e.g. singlesource. In the absence of a viable commercial research solution for singlesource, some brands have tried to cut TV and this has generally led to market share declines, as in the case of Maxwell House in the late 80s/early 90s. Thus TV which used to be considered the driving force of all marketing is today regarded as a necessary evil by some in the C suite.
Singlesource appears on the scene as finally commercially scalable and affordable (using the TRA approach) at a time when Internet has drawn attention and mystique away from television advertising, and at a time when getting the answers to the seven primary questions needed to unlock the full power of TV advertising has never been more important.
Findings
The Mars disclosure of actually increasing TV ROI using singlesource in three countries is an exciting historical event. This is the first time in the history of marketing science that anyone has proven that singlesource can be used to actually increase TV ROI despite research imperfections, sample size limitations, bureaucratic and cultural inertia, and any other intervening variables.
Coming at a time when singlesource has finally been made scalable and affordable by means of massive database matching, the door is open now in the U.S. for the first time to begin to make TV advertising decisions on a more scientific basis. The real breakthrough is in the affordability of the research. TRA and Mars have shown that the size of the ROI improvement for a brand spending more than $20MM in TV dwarfs the incremental research cost.
Improvements in marketing cost effectiveness as a result of singlesource could improve the financial performance of many corporations and contribute to a more robust economy less prone to periodic recessions. Only time will tell if such lofty benefits are actually realized.
References
1 Andy Farr, 2004, "Evidence that TV advertising works", WPP Reading Room http://www.wpp.com/wpp/marketing/media/tv/tv-advertising-works
2 Mike Hess, 2006, email sent to answer ANA information request
3 Henry Assael, David Poltrack, Bart Flaherty and Bill Harvey, 2008, ARF AMS 3.0 paper, "Linking TV exposure to purchasing behavior: achieving the Gold Standard of accountability" http://www.traglobal.com/press/ARF_AMS_3.0_CBS.doc
Bill Harvey has spent over 35 years leading the way in the area of media research with special emphasis on the New Media. Bill can be contacted at bill@traglobal.com.
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