â€œThe rules of politics apply until they don't apply anymore.â€?
This recent quote is from Time magazine senior writer Joe Klein. Participating on a panel of media/political luminaries that Syracuse University's Newhouse School brought together in late February in the imposing shadow of the New York Public Library, Klein's observation was about what factors motivate people to vote for who they vote for, and how the media's political reporters and commentators try to decipher and keep pace with those motivations.
Klein might have been referring to any number of societal and business arenas that function according to common practices and rules, and fail to function as those practices and rules bumble into obsolescence. Research, for instance. Particularly research as it regards not voter sensibilities and motivations, per se, but consumer behavior, buying behavior. Research is at a crossroads, and which rules apply and which ones don't is on the minds of lots of the people who collectively will spend a projected $276 billion in the U.S. ($450 billion worldwide) on advertising this year, and are still ever so curious in that John Wanamaker sense about which half of that amount is wasted, and which half is working.
Research itself â€” marketing research, that is â€” is about a $16.5 billion industry globally, according to ESOMAR, the World Association of Opinion and Market Research Professionals, and is expected to expand a moderate 4 percent to 6 percent as companies invest some of their growing sales into trying to find out how and why those sales grew. The thing is, practically everybody who's not actually in research and of research is talking about how research is broken. Meanwhile the people in research and of research are mostly talking about how their particular methodologies, samples, data sets, deliverables and analyses are valid compared with those of their competitors, which doesn't necessarily wind up putting the best combination of those tools and solutions into the hands of the customer. So what you have is a group of smart people at research organizations â€” each trying to grab a bigger slice of the $16.5 billion research expenditure pie for themselves â€” locked in a war over the relative merits of qualitative vs. quantitative, offline vs. online, etc.
In the scramble, companies that are best known for selling data on what people either read, watched or bought are doing all they can these days to get their client customers to see them as more than purveyors of data. And everybody else in the business â€” from focus group moderators to anthropologists to brain wave scanners â€” are part of a cacophony of claims to greater validity, each offering value to clients on a case-by-case basis, but none adding up to more than a partial solution.
Meanwhile, the companies that buy the advertising research in $40,000- to $2 million-dollops that include everything from focus groups to viewership diaries, to mall intercepts to Internet questionnaires to syndicated studies to transactional data analysis to visual ethnography â€” namely advertisers, advertising agencies and media companies â€” are in a furor about what they can learn about consumer behavior beyond sketchy â€œunaided recallâ€? numbers and overwhelming â€œhousehold levelâ€? transaction data and a host of other outputs that leave them scratching their heads, wondering what they're missing, and more important, how to act based on the information they've gathered. They want the ad research marketplace to proffer an economical solution to the question, â€œWhat's the next metric?â€? so that they can follow consumers through their real, complex consumption and involvement behavior when it comes to their contact with media channels and marketing messages, be it in their living rooms or cars or on the elevator up to the office. What's more they want it now, at least that's what they're saying.
People on the advertiser, agency and media company side go so far as to use advertising research and its current shortcomings as a punch line for some of their more barbed inside-baseball ribbing. Lisa Seward, media director with Fallon North America, shared one such quip among fellow panelists in the â€œKeeping up with the Changing Consumerâ€? session at the American Association of Advertising Agencies Media Conference in Orlando this past February. One of her Fallon colleagues, she said, has this retort to a statement of even the toughest of today's marketing challenges: â€œThat's nothing that a whole lot of awareness won't cure.â€?
Perhaps one of the most powerful and influential expressions of the way the rules of research no longer apply came from Procter & Gamble global marketing officer, Jim Stengel, at that same Four A's event, who devoted a section of his â€œFuture of Marketingâ€? keynote speech to his conviction that â€œour tried and true systems of measurement don't account for new technologies and connection points.â€? Stengel's presentation invoked the memorable words, 10 years earlier, of then P&G CEO Ed Artzt, who used the Four A's meeting soap box in 1994 to rip the advertising agency business a new one as he suggested â€œthe advertising business may be heading for trouble.â€? Stengel's updated â€œTen Years Afterâ€? report card on agencies, with its overall grade of C-minus and a â€œwe-have-work-to-doâ€? conclusion, had particularly harsh appraisal for progress in the media research area.
â€œMarketing and media metrics have not kept pace with marketing innovation,â€? Stengel stated in addressing 1200 media and advertising executives, who spent the following few days buzzing with questions and answers about â€œthe next metric.â€? â€œDespite the concerns Ed Artzt articulated a decade ago, we've continued to over-rely on TV for advertising and measurement. If we believe that there's a life beyond the 30-second TV spot, why are we still dependent on reach, frequency and advertising pre-market scores?â€?
Stengel's kicker, and what should be a real wake up call for an industry that's finding it difficult to get out of its own way as it grapples with a business agenda that seems quickly to be going the way of the telephone survey respondent in relevance, is this: â€œThe hard truth is, this is a $450 billion global industry and we're making decisions with less data and discipline than we apply to $100,000 decisions in other aspects of our businesses.â€?
So much for continued tolerance for the 50 percent waste Wanamaker grudgingly put up with in his day as he pioneered department store merchandising. â€œToday I challenge each of you to take action to help move your own expertise and resources to a more measurable business model,â€? Stengel exhorted.
At the same time, admonishments aside, in 2014, when those responsible for the program at the advertising industry's big conference that year get the great idea to convince Stengel's P&G progeny to keynote the event, what will the message be as it pertains to research? When he or she tells everybody what the report card looks like two decades since the notorious Ed Artzt speech, the likelihood that research and researchers will be a highly regarded component of advertising's â€œvalue chainâ€? is mighty slim. But whether or not that progress report is positive or negative may all depend on whether people in Stengel's position at organizations that market their wares to consumers decide to invest the time and resources needed to â€œmeasure holistic ROI,â€? as he terms it.
Research and its manifold quantitative and qualitative methodologies, techniques and applications, after all, is a service underwritten directly and indirectly by advertisers, similar in many ways to the way television programming is a service paid for by viewers. Advertisers and their value-chain partners â€” their marketing services agencies and the media, event and distribution organizations that make the connections to consumers â€” have a choice of either putting up or shutting up when it comes to, as Stengel phrases it, â€œapply our knowledge, our resources and our best talent to developing applications for measuring the innovative new marketing channels that have become available to us.â€?
What measures will truly track and become predictive with respect to the way consumers are engaging media? What's fast enough to enable marketplace responsiveness, and what's scalable enough to make one-to-one insights add up to mega-brand intelligence? These are the kinds of questions advertisers and their agencies are asking themselves as the demand for accountability intensifies. This Grail-like pursuit for insight into â€œthe consumerâ€? is only taking on added relevance as publicly traded companies match up dollars expended with demonstrable results. It's shareholders who demand accountability, and it's consumers â€” some of them those very same shareholders â€” who demand speed of responsiveness to their evolving needs. There are no easy answers, although the easiest conclusions to reach may not be good news for the advertising research business as it currently exists.
â€œWe thought we had problems with research in the last decade,â€? said GroupM CEO Irwin Gotlieb in addressing the topic of â€œMedia and Creative Agencies in the Digital Landscape at the Four A's media conference event in Orlando. â€œAs much and as long as we've complained, things are about to go from bad to worse. We are getting closer to the point where our research providers may not be adequate to the task, and could put our overall business at risk.â€?
Gotlieb, in calling for â€œsubstantially more robust research,â€? listed the shortcomings of TV research â€” samples sizes that hark back to the days when a handful of broadcasters sent over-the-air signals to three to five TV stations in most of the markets; the mortifying use of viewer diaries in most of the local markets. But the economics of bringing people meters into wider use has been a deal-killer for years, because although advertisers, their agencies and even media companies are intent on getting more reliable data on who's watching the shows and who's watching the ads, they haven't seen fit to underwrite the cost of doing so.
Part of the reason for that is that there's no market dynamic among providers of the data. In television, there's only Nielsen Media Research and no competition. So how do advertisers, their agencies and the media companies who foot the bill for what they universally regard as a highly flawed measurement service exert their combined heft? They're saying they have to get research that better tells the story of how consumers may be more likely to be influenced favorably to buy this product or that service because of a supermarket demonstration or a Captivate system ad aired in the elevator of their office building than they are by a 30-second commercial broadcast to 8 million viewers on prime-time network television. Still, attempts to spawn competitors to Nielsen have come and gone, so today there exists no legitimate market leverage to bring to bear on a company that's a monopoly player in its field and which is also under quarter-by-quarter share price duress from its stakeholders. What's more, VNU is not an exception among research brand parent companies who operate under such share price duress.
The other reason is that, when advertisers and their partners talk about insisting on better research, it's a real question how motivated they might be to make more scientific and more accountable what has forever been a mix of art, alchemy and numbers games. John Wanamaker's admission about not knowing which half of his ad budget was going down the toilet might have been folksy candor in his day, but today â€” when half of advertising spending worldwide is about $225 billion â€” there are a lot of shareholders who aren't looking kindly on folksy candor as a way of doing business.
Gotlieb's address at the Four A's outlined a near future in which â€œevery media type that we have today will be delivered digitally or at the very least, have a significant digital component.â€? He went on to observe that â€œwe will have more choices, more fragmentation, greater ability to target and segment, and far greater complexity. Media will have the ability to generate transactions and to track them. And as such, will be far more valuable than it is today.â€?
So, in 2014, when the 20- or 30-year-olds in advertising and marketing today emerge to become leaders of organizations like P&G and GroupM, they will, no doubt, meet to review and peer out at their future in the business. Chances are that, unless portions of every advertising budget for every advertising program begin to find their way into research that predicts and measures performance, research will still be the punch line for at least some of the advertising industry's self-deprecating jokes.