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May 09, 2005
Blog Post

5 Discoveries from Fortune 100 Marketing Statistics

SUMMARY: No summary available.
By Anne Holland, President

If you work for a Fortune 100 brand, accurate "what moved the needle" measurement is almost impossible.

If sales are up, how much is due to your nifty street team, versus the instant-win packaging campaign, versus a product placement shot on a hip TV show? Or maybe the bump is from dealer/distributor sales incentives.

Our Metrics Editor Stefan Tornquist sat down with the folks at Marketing Management Analytics (MMA), who've been building regression analysis models tracking ad impact for the Fortune 100 since 1989 to discover what they've learned from trying to integrate tracking.

First, they suggested three improvements:

Improvement #1. Gather ye spreadsheets as ye may

"CPGs don't realize that data is the crown jewels of a company. They leave it sitting on Excel spreadsheets all around marketing," said MMA's Ed See. He also often finds data from PR and Internet campaigns stuck in separate silos. (One CPG's marketers were mystified by a sales bump because they didn't know another department had placed an ad dominating Yahoo's home page for a few days.)

Improvement #2. Put data governance under marketing (not IT)

Marketing and IT departments tend to treat analytics like a hot potato. Marketers would rather concentrate on creative, strategy, and whiz bang tactics. IT people want nothing to do with marketing at all.

Best solution? Hire an analytics manager in the marketing department who loves technology and numbers. Don't wait for IT to do it, because the end product -- and the passion -- must belong to marketing.

Improvement #3. Spend more online

MMA's John Nardone noted the typical Fortune 100 isn't spending enough on Internet and email ads to get enough data back for statistically significant results. If you don't invest enough in your test campaign to generate reliable data to make a go/no-go decision on roll-outs, what's the point? Next, although data guys hate to be caught mouthing generalities, Stefan was able to pin the MMA team down on five lessons learned from their years of analysis across hundreds of brands.

Lesson #1. Creative quality matters less than you think

80% of television creative falls within the "norm," said Nardone. "Classically, we have clients who will say, we're launching new creative and we're going to bump up by 20%. We're always the bucket of cold water that says, do you really think you're going to buck the statistics?"

See adds, "but bad creative can drag you down."

Betting the bank on what you consider great creative just isn't smart. "People put more belief in their copy than it warrants," Nardone says.

Lesson #2. Long-term impact requires short-term impact

Marketers who justify a campaign that isn't performing by saying, "We're not looking for short-term results, this is a long-term equity campaign," are fooling themselves. "If there's not a short-term lift, there probably won't be a long-term lift," said Nardone.

Lesson #3. Don't spend before your seasonal curve

Ever wonder if you can jump the gun by marketing before the season? Don't. "It doesn't make sense to spend before your seasonal curve," Nardone said. (Note: This advice bucks data we've seen from some cataloguers.)

Lesson #4. Budgeting for line extensions

The closer a line extension is to the base brand, the more of the base brand's budget you can spend on the extension.

Example: if a company that makes chocolate cookies wants to launch a strawberry cookie -- to the same consumer group -- the company could spend a chunk of the base brand's budget on marketing the new cookie: the "halo effect" of the line extension would extend back to the base brand.

However, if that company were to launch something very different -- say, chocolate milk -- "you would be unwise to take the budget for the chocolate milk line extension from the base brand," said Nardone.

Lesson #5. Current customers equal best customers

Marketers seem to want to disprove this fact. They look at the people who aren't buying and think, "Look at all that potential!" But Nardone and See find that a company's best prospects are their best customers. "On a trend basis, that still seems to be true," said Nardone.

Of course this is something that direct response marketers have known forever. I guess that means if more Fortune 100 marketing leaders had direct response backgrounds, the world would be a better place.

(At least far, far fewer ad dollars would be wasted.)

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