SIX pioneers of marketing effectiveness past and present

1. Claude Hopkins, the copywriter who earned $2.7m per year selling Bissell vacuum cleaners

We all talk about market effectiveness and marketing science, but these topics are not new. In fact, one of the first proponents of marketing effectiveness was a copywriter called Claude Hopkins. Hopkins was paid by his agency Lord & Thomas to write copy to sell Bissell vacuum cleaners in the US. Here’s the remarkable bit; Hopkins was paid on results and he was paid more than $200k in the 1920’s. That’s the same as being paid $2.7m in today’s money.  How many copywriters today are paid on payment by results? And I wonder how many could earn $2.7m if they were?  Hopkins was so obsessed with trying to understand how advertising worked that he wrote a book called “Scientific Advertising” to share his knowledge – published after his retirement.  Many effectiveness practitioners will tell you this is the first book on the subject of increasing marketing effectiveness.

You can read about Claude Hopkins here:  https://en.wikipedia.org/wiki/Claude_C._Hopkins

You can also buy Hopkins’ book ‘Scientific Advertising’ here

2. Simon Broadbent, quantifying the memory effects of advertising

Around the time that Hopkins retired, another pioneer of marketing effectiveness was born. Simon Broadbent was born in 1928. As a Cambridge mathematician he was the first person to quantify how advertising diffuses through populations (interestingly his original work was on pandemics of disease in orchards). Within this broad framework, Broadbent identified that the memory effects of advertising can be quantified. This idea morphed into the concept of AdStock.  AdStock now sits at the heart of the current debate around short- and long-term advertising effectiveness.

You can read Broadbent’s books about optimising media budget setting here:

https://www.amazon.co.uk/When-Advertise-Simon-Broadbent/dp/1841160482

3. Andrew Ehrenberg, explaining consumer behaviour with statistics

At about the same time as Broadbent was born, another pioneer of effectiveness might have been taking his first steps to marketing greatness.  Andrew Ehrenberg was born in 1926 and initially trained in statistics and psychiatry. He moved into market research in 1955 and his mission shifted to identifying scientific laws that might underpin consumer behaviour. The most famous of these was his application of the ‘Double Jeopardy’ law to marketing. Ehrenberg found that larger brands have more buyers and better frequency characteristics so if you want to grow sales you must grow market penetration. Ehrenberg proved this theory many times over, across multiple categories, and observed the pattern to be so reliable that it could be called a marketing law.

Ehrenberg died in 2010 and you can read his obituary here: https://www.warc.com/newsandopinion/news/obit—andrew-ehrenberg-marketing-pioneer/27183

4. Judie Lannon, one of the pioneers of identifying the emotional sell, and the first woman to sit on the board of JWT.

Judie Lannon was the first woman to be appointed to the board of ad agency J Walter Thompson (now Wunderman Thompson) in 1976. After graduating in psychology at the University of Michigan, Lannon began her career working in research at Leo Burnet in Chicago but moved to JWT and stayed there for the majority of her career. She was one of the first researchers to identify that emotional arguments were as important as rational arguments in selling consumer products.

You can read more about Judie Lannon here: https://www.marketingsociety.com/news/rip-founding-editor-market-leader-judie-lannon

5. Gerard Tellis, 29,000 citations on Google scholar and an expert on advertising in recessions.

Speaking of measurement, imagine having 29,000 citations on Google Scholar. Gerard Tellis is Director of the Institute for Outlier Research in Business & Professor of Marketing at USCMarshall. With 29,000 citations, it’s clear that Tellis has covered many marketing topics, but one of these is a must read for every marketing specialist and that’s his work on how advertising effectiveness changes during a recession. Tellis undertook extensive work into the fortunes of brands that either cut or grew advertising spend during recessions.  I wonder how many global marketers were aware of his finding that, “When the economy expands, all firms tend to increase advertising. At that point, no single firm gains much by that increase. The gains of the firms that maintained or increased advertising during a recession, however, persist.”

You can read more about Gerard Tellis’ 29,000 citations here https://scholar.google.co.uk/citations?user=MhV-CrYAAAAJ&hl=en

6. Byron Sharp, picking up the baton of marketing science from Andrew Ehrenberg.

Some readers might connect the name ‘Ehrenberg’ with the Ehrenberg-Bass Institute in Australia, the academic base for one of marketing’s current high-profile pioneers. Byron Sharp became Professor of Marketing at the Ehrenberg-Bass at the University of South Australia in 1995 picking up the baton from Andrew Ehrenberg. Sharps work is widely publicised and he works to maintain the same standard of understanding marketing and media effectiveness as Ehrenberg-Bass’ founder.  He now leads a team of sixty specialists – all working to put science at the heart of marketing understanding. Sharp’s insistence on brand maximising reach is directly linked to Ehrenberg’s view that brands can only grow by increasing penetration i.e. reaching new customers.

You can read more about Byron Sharp here https://www.marketingscience.info/staff/byronsharp/

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By far away the biggest short term effects of Brexit will be those caused by currency changes. Since June 2016 we have seen the pound fall significantly against both the euro and the dollar. The Pound is now worth about 20% less against the dollar and about 10% less against the Euro. This means two things: it’s cheaper for those who want to buy things from the UK and it’s  more expensive for us to buy things from aboard.

There’s a big problem here; because much UK manufacturing has shifted aboard over the last half century, we are buying in a lot of imports.  And a lot of these imports come from China. Not only have we slipped against the Dollar and the Euro, we have also slipped against the Chinese Yuan. Prior to the Brexit vote the Pound bought about 9.4 Yuan, now it’s about 8.5 – another drop of around 10%.  All this means we can say one thing for certain, unless manufacturers absorb price increases, the cost to consumers of imported products will rise by about 10%.  Our biggest import areas are machines and machinery, vehicles, electronics, oil, pharmaceuticals, metals and plastics.

Given that many marketers are in the business of selling food and groceries, it’s worth mentioning that the UK imports more than 50% of its food and feed – i.e. animal feed. According to the Food Research Collaboration, the UK has a  £21bn food trade gap. We can expect many of these food important to increase in price.

Given that most households have a relatively fixed budget we could see fewer items being purchased in order to remain within the weekly budget – any non-essential ‘treats’ could be cut back. That means we may spend about the same, but buy less. So for those marketers who are selling something in the UK that was manufactured outside the UK, they can expect things to be more challenging.

But there is a positive flip side to this coin. Just as things from abroad become more expensive, so things that originate here and are sold abroad become less expensive. Typically, and perhaps most easily identifiable are holidays. Those tourists who come to Britain to spend their leisure time will see the cost of their holidays fall. Good news for tourism businesses like hotels and guest houses, venues, attractions, tour companies operating in the UK and tourist destinations in the UK.  In 2013 Deloitte estimated UK tourism to be worth around £126.9bn (9.0%) of UK GDP. Expect to see tourism numbers improve over the next few months and years.

Remaining on the subject of tourism, if our holidays aboard become more expensive we could see increasing numbers of “staycations” holidays taken in the UK rather than abroad. Clearly this is good news for all UK tourist destinations, hotel owners and small holiday business owners.

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• Mobile web use will be an increasing problem for Google: Mobile is now the dominant web use platform. In 2010 over 95% of web activity was delivered via PC, now it’s half that. As of this October, mobile had the edge with 51.3% of web traffic according to Stacounter. Why? Because domestic web consumption has shifted to mobile and particularly to tablets. PCs still dominate at work, but workplace constraints mean most consumer web traffic is generated in the evenings, not daytime. In the evenings, the dominant web platform is mobile not PCs. As we move further into a mobile platformed, high-utility ‘appworld’ the need for traditional PC-based search will decline.
• More large-scale ad fraud will be exposed: This is going to become a much bigger issue because advertisers are going to divert more resources into actually finding it.  Just as doctors screening for a specific illness find more cases, so advertisers will begin to understand the true scale of online ad fraud. The recent Methbot scandal has revealed the scale of fraud that is now possible; c. $5m per day via 6,000 fake domains. 
• TV will remain strong: TV’s ability to deliver mass impact, reach huge swathes of the population and drive high volume, low cost brand search traffic make it a powerful and important communications channel for marketers. Couple this with the relatively high trust scores attached to TV advertising and the growth of dual screening and you can see why TV will remain an important part of the marketing landscape in 2017.
• There will be a bid for ITV: This has been a long time coming. My prediction is that this will happen in 2017. It might be from Google. Hold / Buy.
• Campaign goes online only: Campaign, the UK’s ad industry weekly, will drop its print format and go online.  Many of Campaign’s Haymarket stablemates have dropped their print version. Campaign has only been able to hold out because all ad people over 40 like to see their faces in print.
• Brexit currency changes: As the value of the Pound has slipped against the Dollar, Euro and Chinese Yuan we will see increases in the cost of imports. With an estimated £21bn food trade gap, increases in imported food costs will present significant challenges to FMCG marketers. However, export areas like tourism and specialist manufacturing will benefit.
• Continued decline of newspapers: Continued big problems for newspapers. Goodness me, how their fortunes have changed.  As the ad market has grown, newspapers have continued to lose share. It’s no surprise as our appetite for real-time news puts next day reading into the dark ages.
• EUDPR: Marketers and agencies will start thinking much harder about the new European Data Production Regulations due to come into force in May 2018. Under the new EU regulations the use of non-permissioned data and other breaches will attract fines of up to 4% of global turnover.  Ouch. That’s enough to make every CEO in Silicon Valley sit up and take notice.
• Digital backlash: Out of all this we can see the seeds of a digital backlash. It’s been a great ride since Google launched in 1997, but twenty years on, there are some very big issues in digital; huge and endemic multi-million – correction, billion – dollar ad fraud, the rise of politically damaging fake news and the fact that only 50% of digital ads are ever seen by living, breathing, humans.  All this is enough to push many a marketing director back to the drawing board. Expect to see some interesting changes in spend patterns in 2017.
• Direct mail could benefit from a digital backlash.  Direct Mail. Thought it was dead and buried? Think again.  A digital backlash is the perfect breeding ground for the resurgence of reliable, effective, accountable and physical media. Which channel ticks all four boxes? Direct mail. Add to this the fact that most Millennials have never received direct mail and you can sense a real opportunity.

The post 2017 UK Marketing Predictions first appeared on Marketing IQ.

Before we get into the detail, I think it makes sense to divide my 10 predictions into two groups: “structural change” and “reality checks”. The “structural change” predictions deal with fundamental corporate realignments that will be forced upon businesses in order to survive in the UK communications industry. The “reality-check” predictions relate to businesses that will have to make significant changes in how they operate to remain healthy and be in good shape to meet the challenges of the next few years. So below is a summary of what I think will happen in online and offline marketing and media community in 2009.

Structural changes (1-5):

1. The full effect of the flow of advertising revenue from offline to online media in recent years will make a profound impact on the the UK media scene in 2009. Media owner denial about underlying structural shifts in our industry will evolve into acceptance and the adoption of a ‘change or die’ corporate mentality. On reaching this enlightenment, media owners will use the recession as an excuse to make the big changes they’ve been putting off for years. There will be ruthless cost-cutting, divestment, re-structuring and closures.

2. In print, some established brands will collapse. One national newspaper will close or be sold. But the worst pain will be reserved for regional and local media which will come under severe financial pressure because of the combined effect of the shift to online, the crisis in the housing market and reduced expenditure from advertisers, particularly car dealers and retailers. Regional and local directories like Yell and Thomson will also have a very difficult year. All in all I predict regional media will be in for a torrid year, and suffer worse perhaps than any other channel.

3. In broadcast there is also going to be serious financial trouble. Some smaller TV stations may suffer badly and probably collapse. ITV’s situation will get steadily worse. Sky will continue to feel the impact of Freeview through declining rates of subscription growth, but its subscription base will make it less dependent on advertising revenue and allow it to weather the recession in reasonably good shape. Problems will come for Sky if the recession goes on for more than a year and consumers think twice about re-subscribing. Regional radio will suffer badly because of its dependence on cars and retail.

4. Online will not be exempt from any pain (see also 6,7,8) but it will be display advertising networks that have to bear the brunt of it. The whole area of blind networks delivering view based conversions will come under increased scrutiny. These advertising / business models will be under the magnifying glass of both advertisers and investors. Ad revenues will decline and investors will start to duck out. This will cause a shake out in online display advertising networks; some will fold and the lucky ones will be taken over.

5. On the agency side of the business, some traditional agencies could run into serious financial trouble and some may even go under – particularly those with an over-dependence on automotive and retail brands. As usual in a recession, those agencies able to prove a causal link between their activity and sales are likely to suffer less than those agencies who can’t.

Reality-checks (6-10):

6. The business models of social media stars like Facebook will come under increased financial scrutiny as brand owners realise it’s very difficult to communicate in these environments and investors realise it’s therefore very difficult to make money. Some social media sites will be bought up by bigger online and perhaps offline players seeking to broaden their offering.

7. Microsoft may concede it can’t win in paid search and may even surrender and divest from it. Even if this doesn’t happen, watch out for other significant online and offline investments from Microsoft.

8. Google will show signs of maturity and will be forced into making a big move to maintain momentum and investor interest. Anticipate something like a big traditional media owner purchase, the takeover of a big social media player or more mobile developments.

9. There will be significant shedding of non-core corporate assets across the board. More companies will lose patience with their seedlings and turn out the light. Rather ironically from a corporate point of view, traditional media businesses are likely to close their digital businesses. This will reflect the fact that the dominant business model in these companies cannot yet monetise online and digital profitably.

10. Consumers will be lackadaisical about very high speed broadband. As the revelations about high speed actually being slow speed gain more momentum, offers of higher speeds will be met with increased cynicism. As a result, take-up will be slow and providers may run into problems. Those companies betting that offering even higher speeds will add new life to a maturing market may lose.

Despite all this, here’s to a Happy Christmas and 2009.

The post UK advertising predictions 2009 first appeared on Marketing IQ.