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XMOS 2004: Creative Imperatives, Sales Impact

IAB Summer 2004 Road Show. XMOS 2004: Creative Imperatives, Sales Impact. Deeper Insights from the Cross Media Optimization Study series. August 2004. The Day’s Agenda. 9:00-11:30 – XMOS Research Review and Discussion Introduction to XMOS Greg Stuart

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XMOS 2004: Creative Imperatives, Sales Impact

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  1. IAB Summer 2004 Road Show XMOS 2004: Creative Imperatives, Sales Impact Deeper Insights from the Cross Media Optimization Study series August 2004

  2. The Day’s Agenda • 9:00-11:30 – XMOS Research Review and Discussion Introduction to XMOS Greg Stuart ARF Cross Media Initiatives Taddy Hall XMOS Research Insights Rex Briggs Gaining Success with Online Greg Stuart Group Discussion: Executing Success • Rex Briggs – Managing Partner, Marketing Evolutions • Taddy Hall – Chief Strategy Officer, ARF • Matt Pasternak, Dir Ad Effectiveness, Insight Express • Charlie Buchwalter – VP Analytics, Nielsen NetRatings • Break • 1:30-5:45 – Search Research and Educational Tracks • 5:45-7:00 – Cocktail Reception

  3. Test Your Internet Knowledge:Myths or Truths

  4. Q: Internet’s total reach will surpass Cable TV’s reach in 2004 Truth! Internet is projected to have greater penetration than Cable TV this year Radio & Television 98% Magazines 84% Cable TV ~ 67% Internet 2004: 68% Newspapers 55% Internet’s: Truth or Myth eMarketer sourced - AC Nielsen 12/03 for Cable & NNR, comScore, etc for Internet

  5. Q: Online Advertising is the Fastest Growing Medium? Truth: Absolutely! MediumEst % Growth Internet 15.8% Spot TV 14.3% Radio (Ntwk, Spot, Local) 11.5% Cable TV 9.9% Network TV 9.8% Syndication 9.8% Outdoor 8.4% Magazines (Consumer) 6.4% Newspapers (Nat’l & Local) 6.4% Magazines(B2B) -.1% Internet’s: Truth or Myth Source: TNS Media Intelligence/CMR 2004 Estimated Growth versus YAG

  6. Q: 40% of online users shop online in their underwear Fact: 14% of men shop online for their underwear 21% of women shop online for their underwear Internet’s: Truth or Myth Source: www.freshpair.com

  7. Q: Online Advertising is mostly the small 468 x 60 Banners Myth: Not anymore. The LeaderBoard at 728 x 90 is the predominant Online Ad Unit today. * Up +400% vs. YAG. Internet’s: Truth or Myth Nielsen NetRatings May ’04 * Top 25 Sites only

  8. Q: Last week, 10% of the U.S. adults researched online for a product they were going to purchase * * Purchase either online or offline Myth! 40% of all those with access researched online last week for a product they were going to buy ’04 Online sales expected to exceed $140 billion 6.6% of total retail Internet’s: Truth or Myth Forrester 2002 Shop.org 5/25/04

  9. Q: In 6 of the 12 XMOS Studies, Online was the most Cost Effective Medium? Myth! Actually, in9 out of 12 studies Online was proven to be the most cost effective medium in influencing a brand’s branding or sales metrics $ Internet’s: Truth or Myth Source: IAB XMOS

  10. Q: 50% of Households who access the Internet have Broadband? Truth! By 2005, nearly 40 million homes, or 53% are expected to have Broadband access. Internet’s: Truth or Myth Source: eMarketer Nielsen NetRatings

  11. Q: According to Tipper Gore, “Kids are great…with the Internet and all, they practically raise themselves.” A: Myth! It was actually Homer Simpson who realized this unique capability of the Internet. Internet’s: Truth or Myth

  12. Facts Mix More Demands we Loves 10 Myths • Online is not a Branding Medium • Online is not a Mass Reach vehicle • Online does not generate offline sales • We need to get the job done in our primary media • Online is less impactful/efficient than TV • Our Target audience segment is not Online • We are already Online; we have a web site • The sales channel won’t let us use Online • We don’t know how to compare Online and Offline • The client doesn’t like Online www.iab.net/2004xmos

  13. The IAB XMOS Project 2 ½ years, 12 major brands, 18 ad agencies, 27 online publishers, thousands educated, million$ optimized,billion$ in sales gained

  14. The Conclusion Better Results Same Budget 8% to 34% increases in Awareness and Brand Image 5% to +1000% increases in Purchase Intent Plus, increases in Sales for Ford, P&G, Kraft, more

  15. 12 Public Studies to Date • XMOS 1.0 • Unilever’s Dove • XMOS Branding - 1st wave • McDonald’s • Colgate Total • Kimberly Clark Kleenex • AstraZeneca Nexium • XMOS Branding - 2nd wave • Universal Studios Home Video • ING • VeriSign • XMO$ Sales & Branding • Ford F-150 • P&G’s Olay • Kraft’s Jell-O • Nestlé's Coffee-mate

  16. Conducted with Numerous Agency Partners Saatchi Zubi

  17. Thanks to the XMOS I Sponsors

  18. Summary Of XMOS Results * Not the actual optimized level, but considered an interim increase ** Brand ran Optimal level so there was no gain from more online spending *** Because of differing objectives, cross media comparison was inconclusive

  19. What Does XMOS Really Mean to the Industry? • There is $17 Billionto $85 Billion of Inefficiencyin the U.S. Advertising Marketplace today Assumes total U.S. Advertising Budget of $250 Billion and a minimum recorded gains from optimization of 7% for KCC (250B x 7% = $17B) up to 34% for Colgate (250B x 34% = $85B)

  20. What If Brand Optimized & Competitor Didn’t?Assumes category growth 3%, optimized sales increase of 11% • Optimized Non Optimized • Brand’s ShareBrand’s Share • Starting Share 25.0% 25.0% • Year I 26.9% 24.4% • Year II 29.0% 23.7% • Year III 31.3% 22.9% • Year IV 33.7% 22.1% • Year V 36.3% 21.2% • Overall Sales Change +69% -2% Example assumes overall category growth of 3% and average annual gain in sales based on XMOS studies gain of 11% in total sales growth due to Online. All other variables assumed constant

  21. Next Up • Taddy Hall • Chief Strategy Officer • The ARF – Advertising Research Foundation

  22. Where do We Go From Here If You Were to do One Thing Right, What Should that Be?

  23. Summary Of XMOS Results * Not the actual optimized level, but considered an interim increase ** Brand ran Optimal level so there was no gain from more online spending *** Because of differing objectives, cross media comparison was inconclusive

  24. How Bad is Online Creative? • Of the last 5 XMOS programs, creative testing was done prior to the study launch Only 1 brand’s ads required no adjustment 2 brands found 1/2 the ads were not effective Diluting the effectiveness of the campaign 2 brands discarded ALL ads & started all over Both developed better ads that scored much better

  25. Creative!Is“Mission Critical”

  26. A B Nothing Else Matters if Creative is Wrong Better creative can make the difference between success and failure Source: XMOS

  27. Colgate Purchase Intent for Online Only Better creative can make the difference between success and absolute failure Ad A *sig

  28. After Vs. Minor Differences Make a Major Difference Before +86% increase (in all brand metrics) Source: Marketing Evolution

  29. Before Ad Recall- 5.1 pts (19% increase) Aided Brand Awareness- No increase Brand Image- No increase Purchase Intent - No increase After Ad Recall- 10.1pts (40% increase) Aided Brand Awareness- 4.7 pts (8% increase) Brand Image- 3.9 pts (15% increase) Purchase Intent - No increase Source: Marketing Evolution

  30. Make Sure EVERYTHING Works! Source: InsightExpress Same Media Budget  310% Increase

  31. XMOS Advertisers Road Show Schedule • Upcoming XMOS: Road Show is AM & Search is PM July 14 Los Angeles Park Hyatt July 15 San Francisco Omni July 20 Dallas Omni Park West July 27 New York Millennium Broadway Hotel Aug 10 Detroit Marriott Dearborn Inn Aug 12 Chicago Ritz Carlton • More at: www.iab.net/2004xmos

  32. Next Steps: New Round of Studies • XMO$Sales & Branding • Seeking 4 marketers to measure SALES & Branding impact of all media. • The IAB will pay half the cost of each study • See greg@iab.net or doron@iab.net

  33. Total XMO$ II Fund Raise Goal = $1,200,000 Committed Sponsors to Date See greg@iab.net or doron@iab.net

  34. Group DiscussionExecuting Success • Rex Briggs, Managing Partner, Marketing Evolution • Taddy Hall, Chief Strategy Officer, ARF • Matt Pasternak, Dir Ad Effectiveness, Insight Express • Charlie Buchwalter – VP Analytics, Nielsen NetRatings

  35. Thank You www.iab.net/2004XMOS

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