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Sunday, February 3, 2008

$2.7M - Gone in 30 seconds

I just finished watching Super Bowl XLII. The biggest and the most expensive yearly marketing event-$2.7M for a 30 second ad spot! I always wonder who the audience is for these ads-customers or the CEO of the company paying for the ad. The Measurement of the effectiveness of these ads is still not a science. It usually comes down to whether the CEO liked it and her friends/family liked it enough to give her compliments about the ad. After that, one always finds a way to rationalize the money spent on the ad. The argument usually given is that Super Bowl is the most watched program on TV in the US. 80M+ Americans watch some or all of the show and it is a good way to build the brand and reach all customer segments.

I will apply the things I have learned in Complex Systems, Psychology, and Marketing to explain four Universalities in advertising. That should be sufficient to come to the conclusion that there are better ways to spend $2.7M of company money than on a 30 second Super Bowl ad spot.

To keep things simple, we will only consider two broad reasons why companies advertise during the Super Bowl:

1. Sales: To acquire new customers for existing products or to introduce new products
2. Retention/Positioning: Keep the current customers from leaving the company or to position the brand (create/reinforce an identity for the company/product)

Tomorrow, you will hear from "experts" about which ads were good and which were bad for what reasons and no one will talk about how they affected sales or retention:-)

1. Sales

Let's look at things from a customer's perspective. The human mind goes through the following five steps of buying.

1. Awareness: You become aware that something called "x" exists. During the Super Bowl, Diet Pepsi Max was an example of an Awareness ad.

2. Interest: You understand what "x" is, what it does, what its features are, etc. With technology products, this is the stage when the product trials occur. At the end of this stage, you should be interested in learning more about this product. During the Super Bowl, Toyota Corolla was an example of an Interest ad.

3. Willingness: If "x" relates to you i.e. you like it and we (marketing people) make you think that you need it:-) or you start thinking oh! "x" would be nice to have or I could use "x". At this stage you decide that someday you will buy or do something about "x". The research and comparison with what else is available also occurs at this stage. During the Super Bowl, the National Drug Council Ad was an example of a Willingness ad.

4. Intent: This is the stage when you decide to buy "x", usually with a time period in mind. For example, you may decide that you will buy "x" next weekend or on your birthday, etc. Also, if the product is highly priced, you decide if the price goes below "$y", you will buy it. Promotion campaigns are helpful during this stage. During the Super Bowl, Victoria's Secret was an example of an Intent ad. It did remind me that I need to buy something for Valentines day before February 14th, although I will not necessarily buy it from Victoria's Secret:-)

5. Purchase: By now, you almost know what you want/need and how much you are willing to pay for ''x". This stage is about how and where to acquire "x" i.e. what is the right channel: web, in-store, phone, etc and make a lease vs. buy decision. During the Superbowl, Vantage Point ad was an example of the Purchase ad. It was able to convince me to see the movie at a theater near my home when it comes out on February 22nd.

As shown above, advertisements play a specific role in each stage of the buying process to move you to the next stage. Sometimes an ad can cover two or more stages of buying process. E.g the Vantage Point ad covered all five stages.

2. Retention/Positioning:

The human brain is programmed to look for confirming data. If you like something or dislike something, you would love someone else (including a TV ad) to reconfirm your beliefs. For example, if you like Coke or Bud Light, you'll love seeing their respective ads on TV which increase retention/loyalty (i.e. you will not try a product that competes with the product you like if you keep on getting confirming data that you made the right decision by choosing the product you like). On the other hand, if you don't like something-let's say your Comcast cable service-any loyalty message from a TV ad won't have any effect on you or may have a negative effect.

TV Advertising either seeks to connect with your emotional side or rational side. Loyalty messaging is usually emotional. Of all the Super Bowl ads you saw, which ones do you still remember?

Most likely, the ads you remember are the loyalty ads-Coke, Bud Light, Victoria's Secret, etc. These ads are consistently repeated as well. However, there are cheaper ways of accomplishing the same thing other than the Superbowl ad spot.

There may be a few ads you liked but they don't do anything for sales and retention because they were created for the CEO:-).

In both cases-Sales or Retention-if there is no follow up advertising/marketing campaign after the Super Bowl, the Super Bowl ad was a sheer waste of money. Humans have limited memory to store information and without repetition it is extremely difficult to remember any marketing message.

To summarize, there are four Universalities related to advertising:

1. Advertising without repetition is useless.
2. Advertising plays a specific role in one or more of the stages of buying process (Awareness-> Interest -> Willingness -> Intent -> Purchase).
3. Advertising creates brand loyalty/retention by providing confirming data.
4. Advertising is still not a science.

Furthermore, there is a correlation between the ad and the context. E.g. when the Vantage Point ad aired, early in the game, the game was slow and the ad was fast paced which grabbed your attention and hence became more memorable.

Think about the complexities related to advertising and all the other things you can do for your customers with $2.7M. Is a 30 second Superbowl ad spot really the best way to spend that money? If you still think it is, please share your thoughts.

P.S. The main reason the Patriots lost today was that their strategies/tactics were predictable to the Giants.