How do you build brands post-Google? As the recession begins to bite, brands are finding that getting through to customers is tougher than ever.
Offline advertising is showing diminishing returns. McKinsey predicts that by 2010, traditional television advertising will be one-third as effective as it was in 1990.
This is partly because online media is growing at the expense of offline. A UK survey by Media Week showed that time spent for both live/realtime TV and teletext tv decreased by 1% and 2% respectively between 2006 and 2007, while internet usage by 50%; an IDC study of U.S. consumer online behavior found that the Internet is the medium on which online users spend the most time (32.7 hours/week). This is equivalent to almost half of the total time spent each week using all media (70.6 hours), almost twice as much time as spent watching television (16.4 hours), and more than eight times as much time as spent reading newspapers and magazines (3.9 hours).
It is partly because of the rise in ad avoidance strategies. DVRs owners (according to an IBM survey) watch at least 50% of television programming on replay, thus avoiding television advertising. It is partly because of a major decline in public trust in brands. People trust people more than they trust the media. In a 2006 survey of U.S. consumers, Forrester found that 83% of respondents trusted friends’ opinion, but only 75% trust product reviews in a newspaper, magazine or TV. (Groundswell, Charline Li and Josh Bernhoff).
The answer would seem to be to move the business online. More than half of the world’s Internet users have made at least one purchase online in the past month, according to Nielsen. The web also seems to offer promising growth for advertisers: Nielsen estimates that spending on online advertising will escalate at 19.2 per cent annually till 2012 and will surpass the TV advertising budget in the US in the next decade.
But advertising on the web poses challenges. Online banner click-throughs on Yahoo!, Microsoft and AOL have declined from 0.75% to 0.27% according to ad monitoring firm Eyeblaster.
Paid search ads now represent the lion’s share of online ad spending. Contextual search ads are great for selling specific factual propositions (flights to Malaga, hotels in Brussels) but they are less effective at communicating emotion. In a recent report from The Wharton School, marketing professor Patti Williams observes that it’s unclear how a company like Crest can leverage search advertising: “How many people are going online to search for toothpaste? It’s not [obvious that] a little ad on the screen is going to attract them. For the biggest bulk of media spending, online is just hard to figure out. The Internet is not that good at big brand-building objectives, so there are a lot of companies struggling with a way to take advantage of the tremendous opportunity Google and other searches offer.”
A 2007 global Nielsen survey found that consumer recommendations are the most credible form of advertising among 78 percent of the study’s respondents. And there are perhaps clues for advertisers in the shift of online consumers to social networking sites. In the UK, social networks overtook webmail by percentage of visits in 2007, with social networks accounting for 5.17% of all Internet visits compared to 4.98% for email services. Advertisers want to follow consumers but that’s difficult. When you are chatting to a friend the last thing you want is to be interrupted with a clumsy brand message. Privacy settings in most networks preclude direct marketing. Facebook recently announced that it was opening up key pages to allow for contextual advertising.
So how do Brands engage with the consumer in a way that provokes conversation and endorsement? The most successful strategies for engagement with social media is for a brand do something which allows people to pass on a key message about your brand.
People can talk about you for three reasons:
You have given them useful information.
H&R Block set out to build awareness of their online tax return offering by creating content customised for channels. The budget was 5% of their annual digital spend only 0.5% of their total ad spend. They grew awareness 52%, and saw an 11% growth in tax services business, feeding net income which rose to $544m from an $86m loss the previous year.
Brand discussion goes beyond the product itself. The entire process and value system around which a product created is also a source of conversation.
You have entertained them.
The hugely popular Cadbury Dairy Milk campaign which featured a gorilla playing the drum solo of Phil Collins’ “In the Air Tonight” received 7m views online, more than 6,000 comments and boosted Cadbury revenues by 5% for that year. (Gorilla ad works its magic on sales of Cadbury bars ).
This jokey video from Philips Norelco Bodygroom raised the issue of persuading men to shave “below the neck” in the summer 2006. The video (cross-posted at youtube.com and at heavy.com) has been viewed 1.8m times, it boosted unaided awareness 8% and contributed to year-on-year growth of 17% for the DAP division (of which shavers represent 45%) to Q1 2007.
There is something in your product that they respond to.
Jeep’s “Have fun out there” website aggregates communities from where they already exist, such as Facebook and Flickr, to create its own uber-community where members drive the content.
The t-shirt company Threadless has used community as a mode to build its business by allowing members of the website to submit and vote on t-shirt designs.
The top designs are selected for printing and sold through an online store with winning designers getting a cash prize and store merchandise. What started as a hobby in 2005 by founder Jake Nickell has been growing quickly with annual sales on track to hit $5 million in 2008.
The last is the best because it means that consumers have engaged with your brand and are doing your marketing for you. With the additional benefit that they are marketing to people who are inclined to believe their testimonials. It is also the hardest to achieve.
New online measurement techniques (such as those used by Market Sentinel) offer the opportunity to chart how effective brand building in online by directly measuring response to creative campaigns, by gauging consumer engagement and by changing the creative to take account of live consumer responses. But how do you measure such responses. A consensus about this is only now beginning to emerge and we will deal with this in our next post.