Researchers can now determine the impact of advertising by directly measuring sales tied to each available element of the marketing mix through "advanced analytics," a mathematical modeling system.
"It will definitely change the way we do business," said Lewis Cashman, VP-global marketing research at Campbell Soup Co. "We have more insight into how our dollars are being spent. A year ago, we had no one doing advanced analytics at Campbell's; now we've hired six internal people."
DELIVERING ON PROMISES
"It's what the early days of modeling promised and couldn't quite deliver," said Joe Plummer, exec VP of the Brand Consultancy Group at McCann-Erickson Worldwide, New York. "With larger data sets and analytic software, we can deliver."
A demand for accountability and increased efficiency from marketers, and the increasing array of media choices, has put a premium on the demand for this kind of analysis.
"The pressure is on in most organizations because the chief financial officer is asking, 'What are we getting for what we're spending?' " said Don Schultz, professor of integrated marketing communications at Northwestern University's Medill School of Journalism. "How do I improve the return on investment?' "
Major marketers have been re-tooling ad strategies and in some cases increasing budgets. From 1992 to 1994, Kraft Foods redeployed $125 million of marketing spending from trade promotions and free-standing inserts toward media ad spending as a direct result of advanced analytics.
Campbell actually increased spending (see chart at right).
"We've increased advertising expenditures by about 30% because we've seen that there are certain brands that are very responsive to advertising," Mr. Cashman said.
Another reason for greater research needs, according to Jayne Spittler, senior VP-director of media research at Leo Burnett USA, Chicago: "The proliferation of media choices leads us to a great need to be able to understand how media work in the overall advertising and marketing process so that we can make better decisions. [We] didn't use to have to delve as deeply."
Advanced analytics isn't new; its principles began with the advent of retail scanner data and have been fine-tuned over time. However, advances in computer technology and software-allowing for the ability to manipulate large amounts of data-and the advanced knowledge and vision of the analysts themselves have refined the process.
Y&R ALUM FOCUSES ON ANALYTICS
One of the consultancies focused on analytics is 7-year-old Media Marketing Assessment, Wilton, Conn. Founder and president Ed Dittus, a former Y&R employee unable to sell his idea there in the start-up phase, now works closely with agencies like Burnett; BBDO Worldwide; Foote, Cone & Belding; and Y&R for clients such as Campbell and Kraft Foods.
Four months ago, Media Marketing was acquired by Carat International, the large media-buying unit of Aegis Group, London, which had developed a similar tool about two years ago.
"We have a commitment at Kraft that we want to be leaders in the application of information," said Eric Leininger, VP-marketing information services at the food giant. "We've implemented [the work of Media Marketing] pretty broadly across the company. This is simply part of the way we're doing business."
Another company practicing analytics is Skunkworks Marketing Lab, a 5-year-old marketing consultancy in New York whose clients annually spend $300 million in media advertising.
Early last month, Skunkworks was acquired by Bozell, Jacobs, Kenyon & Eckhardt.
OUTSIDE PACKAGE-GOODS BIZ
"We typically work outside the consumer package-goods industry-automotive, technology, financial services," said Skunkworks President Rich Mascolo, adding the company also delivers insight into Web site feasibility.
'NOT THE PAT ANSWERS'
"We're smart enough to know that solutions for our clients are not the pat answers that have existed in the past," said Chuck Peebler, chairman-CEO of BJK&E.
"Agencies have been recognizing for several years that they had to change in a significant way and be a completely credible and well-equipped marketing counselor to their clients," added Michael Palmer, exec VP-diversified services at BJK&E. "Skunkworks will remain very autonomous and free-standing . . . The purity of the product has to be maintained."
There's still a long way to go, according to some consultants.
"I think a tiny portion [of advertising] is measured today," said Sean Rice, president of analytics consultancy Hudson River Group, Valhallah, N.Y. "It's a ripple in the pond. We have a big impact where we're doing [analytics], but we aren't doing much. I think there's a huge opportunity out there."
"There probably are no breakthroughs yet," Mr. Mascolo said, "but there are definitely some advancements being made. What's going to happen is that these analytical disciplines . . . are going to be institutionalized and codified on software and online. It's the ability to institutionalize a common market view that is really going to be a breakthrough."
Other companies focused on advanced analytics include A-to-S Link, New York, and ASI Market Research, Stamford, Conn., as well as Information Resources Inc. and ACNielsen Corp., although these data giants seem to have had trouble competing on the analysis front.
"The real value is in the analysis, the understanding and the strategic development," said Northwestern's Mr. Schultz, "The data-gathering people never figured that out."
In this era of accountability, it seems many will come around, since the interest stems from those who spend the money.
"It was the marketers who drove this [analytics] trend," said Kraft's Mr. Leininger.
BACK TO MEDIA
And more advertiser money is heading back to media advertising.
"The 1980s saw dollars shift from advertising to promotions," said Simon Dratfield, VP-response analysis services at ASI. "In the companies that use this stuff, and use it well, you're seeing a much stronger emphasis on advertising than you have in many years."
"Ad agencies have to realize this is good for them," said Hudson River's Mr. Rice.