ReThinking How Media Advertising Works

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Re-Thinking How Media Advertising Works

• Don E. Schultz, PhD.
• Northwestern University
• iMedia Brand Summit
• Deer Valley, Utah
• 13 September, 2004

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Basic Premise Most, If Not All, Our Media
Advertising Models Are Broken or Even Worse,
Irrelevant, in the 21st Century Marketplace
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A Three Part Proposition

• Lack of proof requires use of derived assumptions
  about how media advertising works
• Marketplace observations and on-going research on
  how media advertising really works
• First stage conceptual media advertising model

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A. Our Derived Assumptions

• Note A U.S. view but likely projectable to most
  developed economies
• Assumption 1 A Stimulus ? Response model
• Marketer controls the input and impact
• Based on a 4Ps marketing approach
• Assumption 2 Attitudinal Change ? Behavioral
  Change
• Behaviorist Psychology
• Some form of Hierarchy of Effects underlying all
  media models

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1961 - Hierarchy of Effects Model of How Media
Advertising Works
One-Way
Media Adver- tising
Attitudes/ Awareness
Purchase Behavior
Knowledge
Conviction
Preference
Linear
Influencing and Persuading Consumers
Source Adapted from Lavidge and Steiner
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• Assumption 3 A Supply-Chain model of media
  message distribution

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Porters Supply Chain Model
Media Systems
Media Planning
Measurement
Broadcast
Interaction
Contact
Print
Marketers
Agencies
Consumers/End Users
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• Assumption 4 Each media form works separately
  and independently of any other. Therefore, each
  is and should be planned and measured separately
  and independently.

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Separate and Independent View of Media
Communication Planning, Distribution and
Measurement
Product Marketing
Sales Promotion
Events/ Sponsorships
Direct Mail
Public Relations
Media Advertising
Consumers
Attitudes
Behaviors
?
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Our Media Systems Are Based On Still Unproven
Hypotheses, Discounted Models, Out-of-Date
Methodologies, Intuition and Tenuous Associations
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Yet, Last Year, U.S. Advertisers Invested 250
Billion in Media Advertising Based on These
Assumptions and Hypotheses!
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B. Our Marketplace Observations and On-Going
Research

• Clearly, consumers have solved, or at least
  resolved, the complex, multi-media marketplace in
  which they live cognitive psychology models and
  media multi-tasking

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Magazines
Newspapers
Internet
Outdoor
Consumers View of Media Advertising
Radio
Wireless
Television
World Wide Web
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People Simultaneously Using Or Consuming Multiple
Media Forms at Single Points in Time

• Information explosion forces consumers to extend,
  expand and change their media usage
• Rapid consumer acceptance of new media forms
• Consumers multi-tasking with media i.e.,
  reading the newspaper, talking on a cell phone,
  on-line and tracking the TV all at the same
  time Simultaneous Media Usage

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Evidence? SIMM Studies in USA

• Identification and verification of simultaneous
  media usage (SIMM) among US population Four
  studies in the US since Spring, 2002 (4th in
  analysis now)
• Research among double opt-in subscriber network
  of 60 million individuals
• E-mail, not internet, gathered responses
• Respondents report media usage and other
  purchasing factors products, retailers, etc.
• Current sample base of 30,000 individuals
  (15,000 more in Wave 4)
• Accuracy at .01 level
• Benchmarked to non-online studies
• Weighting and balancing of 14 U.S. census age-sex
  cells

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When you watch TV, do you simultaneously go
online?
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When you go online, do you simultaneously watch
TV?
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Clear Evidence of New Media Advertising Issues

• What comprises an audience?
• Consumers create foreground and background
  media for themselves and for the occasion
• What is the impact of conflicting messages
  delivered at the same moment in time?
• Simultaneous multi-media usage suggests all media
  are likely overpriced

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When you read the newspaper, do you
simultaneously watch TV?
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When you watch TV, do you simultaneously read
magazines?
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When you read magazines, do you simultaneously
listen to the radio?
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On an Average Weekday (Monday-Friday), from
730pm to 11pm do you
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SIMM Evidence Challenges Almost Every Media
Planning, Distribution And Measurement Model
Currently in Use
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C. Synergy Among Media Forms

• Naik and Raman, Journal of Marketing Research,
  November, 2003
• Understanding the Impact of Synergy in
  Multimedia Communications
• Methodology
• Adaptation of basic dynamic advertising model
• Palda (1964) First order autoregressive
  advertising model
• Montgomery Silk (1972) Multimedia
  advertising, with each medium having different
  marketplace effects
• Gopalakrishna and Chatterjee (1992)
  Introduction of interaction terms to capture
  joint effects
• Jazwinski (1970) Addition of Kalman filters to
  model dynamic results over time

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• Demonstrated practicality using real world data
  to explain media synergy synergy between media
  forms demonstrates increase in expected sales and
  enhanced media effectiveness
• Results Demonstrable and measurable media
  interaction and synergy between television and
  newspaper advertising where to add media, where
  to reduce media efficiency improvement

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Tying the Three Pieces Together

• Today, media advertising likely works based on
  consumer media consumption, not on
  advertiser/marketer message distribution
• Our media planning models need to be re-thought,
  revised and revamped to deal with consumer
  simultaneous media consumption
• New media measurement systems are needed
• Media pricing models must be re-visited

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Our First Attempt at a 21st Century Model of How
Media Advertising Really Works
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Media Consumption Model
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The Difference?Its Not How Many Messages You
Send Out..Its How Much Media Is Consumed by
the Audience!
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Well be Developing This First Model During Fall,
2004 at Northwestern University.. Stay Tuned
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Summary

• Our media planning, measurement and evaluation
  models are broken they must be fixed
• Consumer media consumption is one alternative
  model of how media advertising works there may
  be others
• We will continue to conduct research on SIMM and
  other factors that may help explain and
  illustrate how consumers really use media
• We encourage your help and support

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Questions, Comments or Discussion?
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Don E. Schultz Ph.D. dschultz_at_northwestern.edu