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THE FOUR BEST (AND WORST) USES OF MARKET RESEARCH

Experience and research suggest that many CEOs look for growth in the wrong places and in the wrong ways, thereby missing opportunities and leaving them for the newbies. In a sense, though, this is good news: success lies in doing things differently, not spending more.

Specifically, there are four approaches organizations often take, none of which reliably lead to the actionable insights that business leaders need:

  • Seek and profile large, growing and profitable markets
  • Solicit feedback from current best customers
  • Segment markets based on customer attributes, such as demographics, or based on product characteristics like “high end” vs. “low end,” “regular” vs. “light,” etc.
  • Benchmark progress against competitors

In each case, it’s easy to see why an industry leader might have interest in the findings; however, these outputs speak primarily to aspects of the existing business or to the franchises of other established players. In other words, mapping current demand reveals little to nothing of the less-visible latent demand that is essential fuel for transformational innovation. As Henry Ford mused a hundred years ago: If he’d asked folks what they wanted, they would have asked for faster horses. Echoing Ford, Steve Jobs noted that consumers can’t describe what they’ve never experienced.

MAKING MARKET RESEARCH WORK HARDER

The first step toward actionable insights is to align market research with desired outcomes. Organizationally, a way to facilitate this is to split the research initiatives for tracking and improving business performance from the ones for transformational innovation. The next step is to give market research the right assignments. There are a number of jobs that market research can perform to advance the quest for profitable growth; let’s focus on the top four:

  1. Focus on consumers’ jobs-to-be-done. Former P&G CEO A. G. Lafley spoke of consumers’ poorly addressed jobs as “nuisances” and encouraged his teams to identify and resolve them. Breakout products such as Swiffer, Febreze and Crest Whitestrips all provide elegant solutions to consumer “nuisances.” And P&G is certainly not alone in applying this successful approach. Many companies have learned that emphasis must not be placed on the attributes of the products themselves, but rather on the task the consumer must perform.
  2. Identify Non-consumers. Are there pools of consumers currently unable to consume your product due to wealth, training, convenience or accessibility? Oftentimes, a reconfigured product—like 5-hour ENERGY Shots or Minute Clinic—can open entirely new markets for growth.
  3. Identify “over-served” consumers. Are there people who would be thrilled with a scaled-down, less powerful, simpler-to-use product or service? As Apple has repeatedly proven, sometimes the best use of technology is to simplify and un-complicate, rather than proliferate options, features and confusion. LegalZoom sprang from the insight that many legal services—from a sublease agreement to trademark registration—were simple and formulaic. The use of high-priced specialists is unnecessary and can be replaced by an intuitive, low-cost online service.
  4. Search for consumers using your product or service in unexpected ways. Fast food chains have discovered that commuters, for example, “hire” milkshakes as an ideal in-car breakfast solution. Even a single versatile product (take, for example, baking soda) can inspire decades of successful innovation and growth in multiple categories (e.g., toothpaste, deodorant, laundry detergent and cat litter).

PUTTING IT ALL TOGETHER

In decades of client work and parallel research, there is no indication of one best way to organize a research function. But what is clear is that top performers—leaders of firms delivering consistent innovation successes and organic profitable growth—take great pains to align desired research outcomes with appropriate resources, methods and incentives.

Insights—especially those that result in breakthrough innovation and profitable

Growth—follow hard work, focus and clear process. Insight is the wellspring of innovation and, as such, is fundamentally concerned with identifying what isn’t—not measuring what is.

Actionable insights are much easier to find if you know where to look and how to identify them. Some of the very best ideas are simply hidden in plain sight for CEOs to find.

This article was originally published on ChiefExecutive.net.

AD SPEND BY SECTOR: CONSUMER GOODS AND TELECOM TAKE THE CAKE IN 2012

While global advertising spending increased overall in 2012, not all sectors reaped the benefits. The telecommunications, consumer goods and media sectors saw the biggest increases, earning year-over-year jumps of 7, 6.8 and 5.8 percent, respectively, according to Nielsen’s quarterly Global AdView Pulse report. Comparatively, former top performers like healthcare and durables saw reduced spending for the year.

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TELECOMMUNICATIONS

Although telecommunications continued to experience the most significant growth (7%) in ad spend in 2012, this sector remains relatively low in the ranks based on share of total advertising spend, falling into the seventh spot of 11 categories. With markets like Latin America and the Middle East and Africa toting double-digit growth (35.6 and 13.2 percent respectively), this sector appears poised to move up in the ranks in 2013.

FAST-MOVING CONSUMER GOODS (FMCG)

FMCG follows closely behind telecommunications, posting a strong year-over-year increase of 6.8 percent on the heels of a 9.5 percent ramp-up in fourth quarter spending. These increases and the sector’s long-standing position as leader based on share of ad spend (25.1%) illustrate the crucial role that FMCG plays in driving advertising spend globally.

AUTOMOTIVE

Automotive advertising spend slipped in the fourth quarter (down 2.8% compared to Q4 2011), resulting in modest growth of 3.4 percent for 2012. The sector ranks fifth based on its 7.8 percent share of global ad spend.

ENTERTAINMENT

Entertainment, the number two sector based on share of global ad spend, falls very closely behind automotive based on percent change in ad spend for the year. Despite a nominal 3.1 percent year-over-year increase, it’s nearly 12 percent (11.8%) share proves the category is a major player in the global advertising industry and that entertainment companies are continuing to invest.

METHODOLOGY

Nielsen Global AdView Pulse measures ad spending for TV, newspapers, magazines, radio, outdoor, cinema and Internet display advertising. Ad spend is based mainly on published rate-cards. Some markets may exclude select media due to data availability.

The external data sources for the other countries included in the report are:

Argentina: IBOPE
Brazil: IBOPE
Croatia: Nielsen in association with Ipsos
Egypt: PARC (Pan Arab Research Centre)
France: Yacast
Greece: Media Services
Hong Kong: admanGo
Japan: Nihon Daily Tsushinsha
Kuwait: PARC (Pan Arab Research Centre)
Lebanon: PARC (Pan Arab Research Centre)
Mexico: IBOPE
Pan-Arab Media: PARC (Pan Arab Research Centre)
Portugal: Mediamonitor
Saudi Arabia: PARC (Pan Arab Research Centre)
Spain: Arce Media
Switzerland: Nielsen in association with Media Focus
UAE: PARC (Pan Arab Research Centre)

 

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TV, Video Habits See Big Changes

With rising OTT viewing, many cut cable

As online video gains viewers, cable TV’s losses mount. While 60% of US internet users surveyed told AYTM Market Research that they still had a cable TV subscription in May 2013, another 23% said they had a subscription in the past, but not any longer.

Consumers’ inclination to watch cable and network TV as it airs is declining fast, while consuming video on non-TV devices and watching over-the-top (OTT) content are increasingly becoming regular activities.

In a March 2013 survey, Leichtman Research Group found that 27% of US adults watched videos on non-TV devices every day and more than half of respondents did so on a weekly basis.

Online video and streaming is also bumping up the connected TV and OTT market. The Leichtman study found that in 2013, 44% of US households had at least one TV set connected to the internet, up from 38% in 2012. And as more TVs are connected digitally, OTT viewing is rising quickly. This year, one-third of US adults surveyed reported watching OTT content daily (nearly double what it was 2 years ago) and 59% said they did so weekly.

YouTube and Netflix are big drivers of the movement to digital and OTT viewing. AYTM found that 29% of US internet users surveyed watched YouTube videos at least daily in May, and more than half of respondents did so more than once a week. Netflix has also seen a big bump in its subscriptions and use. In 2013, according to Leichtman, 22% of US consumers surveyed said they streamed Netflix weekly—more than five times as many as watched content via Netflix in 2010.

These trends are all pointing in the same direction: Traditional TV viewing is on the wane, and digital video is rising fast. But this does not mean that TV’s role in the media ecosystem is totally diminished. As TV manufacturers and networks offer more dynamic viewing options, the nature of how and what US consumers watch on TV will continue to change.

AYTM additionally found that that over half of cable TV viewers said they watched less than half of the channels available via their subscription, and an overwhelming 74% said they would prefer to choose individual channels rather than paying for a whole bundle. As cable and network TV providers strategize how to keep consumers tuned in, all options are on the table.
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Social Advertisers Rely on Branded Pages More Than Paid Ads

More than seven in 10 market to customers via branded pages

Although it’s been one year since Facebook’s underwhelming initial public offering, the bloom has not quite come off the social media rose. eMarketer estimates that US social network ad spending will grow 31.6% in 2013, to total $4.2 billion by the end of the year.

But brands are looking deeper than just pumping money into targeted display ads delivered on social media platforms.

In Q1 2013, Forrester Consulting, on behalf of digital marketing firm Kenshoo Social, surveyed US advertisers who spend at least $100,000 on social media ads annually. The research firm found that 73% of respondents used branded pages on social networks to deliver messages, making it the most popular social media tactic among social advertisers. By comparison, 56% had purchased ads on a social media platform, while 52% had created branded accounts on microblogs such as Twitter. Meanwhile, business-focused social networks got scant attention from these ad buyers.

Six in 10 social advertisers who either purchased ads or paid to promote content on social media properties rotated through multiple pieces of creative. A much smaller group—35%—were interested in targeting several niche audiences, a sign that advertisers may be writing off some of the potential benefits of ad targeting on social media.

While demographic targeting on social networks was the most common way for advertisers to zoom in on prospective customers, just half of respondents said they used this technique. Even smaller numbers engaged in geographic targeting (43%), targeting based on users’ interests (41%), targeting fans (38%) and targeting based on a user’s previous actions (37%). With social media networks accruing a wealth of information on their users, advertisers who fail to narrow messaging are missing out.
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Ad Agencies See Effectiveness in Online Video

Ad execs think online video ads are equally or more effective than television ads at reaching audiences

The online video advertising ecosystem has gained both prominence and complexity, but that might be because buyers have found that the ads really work. A March 2013 survey of US advertising agency executives conducted by online video ad platform BrightRoll found that the vast majority of respondents (75%) said online video ads were equally or more effective than traditional TV. Nine out of 10 also thought online video ads had equal or greater impact than display ads.

Ad execs may be responding to US consumers’ seemingly endless demand for online video. Video monetization firm FreeWheel reported that in Q4 2012, total video views among US internet users climbed 23% year over year.

The popularity of digital video viewing is helping drive the expansion of the online video ad market. eMarketer estimates that video ad spending in the US will grow 41.4% this year, to reach $4.1 billion. BrightRoll found that the greatest percentage of advertising professionals—one-quarter—expected online video ads to see the highest growth rate of any ad category, with mobile video a close second.

The growing complexity of the online video ad market means that advertisers now have a variety of ways to measure return on investment. But which method is best? This year, 36% of ad executives indicated that their clients placed the highest value on gross rating points (GRP) or target rating points (TRP) to measure the size of their audience. Still, another 30% said clients valued the percent of impressions that reached their target audience, while 24% named the percent of unique viewers in target.

Ad buyers are faced with an increasingly complicated equation when it comes to online video ads, and they need to consider which sites to purchase ads on, what format the ads will take and how to measure their effectiveness.
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Mobile Marketing Spending Translates to Sales, Brand Lift

Mobile web and apps get most investment

Spending on mobile marketing keeps rising, as brands learn the power of reaching consumers on these devices, and consumers become increasingly mobile-first.

The Mobile Marketing Association (MMA), in partnership with IHS Global Insight, studied US mobile marketing expenditures and their impact on sales for the “Mobile Marketing Impact Study,” released in May. The study found that this year spending on mobile marketing—including mobile advertising, mobile customer-relationship management and mobile direct-response marketing on nonmobile media—will reach $10.46 billion. By 2015, spending on the channel will approach $20 billion.

That spending will translate to an economywide impact of $216.9 billion in sales in 2013, according to the MMA’s projections, rising to $401 billion in sales in 2015, a ratio of about $1 in mobile spending to $20 in sales, also known as the marketing impact ratio (MIR). The study noted the seeming lack of diminishing returns for mobile investment. As companies spent more money on mobile marketing, their MIR did not decrease.

Mobile advertising accounts for the biggest share of total mobile marketing spending, at just under 50% of expenditures this year, or $4.87 billion—a share that will hold relatively steady through 2015. eMarketer estimates higher US mobile ad spending, projected to reach $7.3 billion this year.

There is no question that as mobile and tablet advertising help companies achieve their brand goals, and thereby drive sales, it is spurring bigger outlays. InsightExpress found that in 2013, mobile and tablet advertising got strong results across brand health metrics, raising ad awareness, purchase intent and brand favorability. Tablets performed particularly well.

Breaking down how companies are apportioning their mobile advertising dollars, the mobile web will see the greatest share of money spent, as brands work to mobile-optimize their sites. In 2013, the MMA predicts companies will invest $3.16 billion in the mobile web, translating to about two-thirds of spending. By 2015, that share will drop down to 58%, as mobile apps get significantly more investment.

Dollars spent on mobile apps will rise by 158% between 2013 and 2015, according to the MMA, to reach $3.26 billion in spending in 2015.
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Online Video Advertising Moves Front and Center

Video and TV often bought together

The process of buying video ads has become increasingly complex, with more websites, ad networks, exchanges, and demand-side platforms (DSPs) than ever before, according to a new eMarketer report, “Buying Online Video Advertising: Making the Most of Your Budget.” But buying online video ad space is, at its core, similar to buying traditional TV advertising. For advertisers, it starts with knowing how to reach their target audience mixed with a good grasp of brand objectives and how they shift at different stages.

What’s at stake here is money—a lot of money. And the total is growing rapidly. Estimates from eMarketer indicate that US digital video ad spending will nearly double in only four years, climbing from $4.14 billion this year to $8.04 billion in 2016.

Besides the basics of defining audience and objectives, marketers typically need to factor in a variety of elements when choosing where and how to buy digital video advertising, including costs, types of ad and pricing formats, whether to buy direct from video sites or to buy audiences via ad networks, and whether to use real-time bidding (RTB). In addition, many advertisers must consider how digital video ad buys tie into their television buys.

Evaluating costs means more than simply calculating how much the advertiser pays the publisher. When marketers choose which video sites to advertise on, and where on those sites to place ads, they also need to factor in the video buy’s effectiveness.

Many marketers can find the road to that intersection in the type of site, and the ad’s location within that site. In a somewhat rough estimate from Credit Suisse, the CPM for midtier sites and placements in 2013 will be approximately $25 and reach nearly $33 for premium destinations.

The Credit Suisse data focused on traditional CPMs, but many advertisers are looking for engagement and prefer cost-per-click or cost-per-completion arrangements. And several marketers are moving toward some kind of cost-per-action pricing.

One advantage of this completion-based pricing method tends to be a more involved audience—and marketers who get a better picture of audience interest.

Advertisers must also choose a video format for their ad. Video ad formats vary widely, ranging from in-stream ads such as pre-rolls and mid-rolls to page takeovers and interactive units. Video ad sites’ offerings are rarely uniform.

“Do they have certain ad units that are proprietary to them where the audience can choose multiple videos to watch? Will they allow us to put a skin around the video so it really looks like it’s our own content and that we actually own that page?” said Erica Bigley, digital media manager at Ford Motor Co. “All of the partners we work with do each one of those a little bit differently, so we know which one will work best for what we’re trying to push at that time.”

The interactivity of user’s choice is just one active ad format marketers can decide to include in their online video campaigns. A Q2 2012 study from Millward BrownDynamic Logic and YuMe found that in most cases, interactive ads delivered greater brand metric results.

While marketers often place television and digital video in separate buckets, some are beginning to look at them as a single universe—T/V (television/video).

“We’re pretty much approaching all of our major broadcast partnerships in concert with our digital programs,” said David Matathia, director of marketing communications at Hyundai Motor America. “When we’re working with network partners, it’s now rare to see a standalone TV or a standalone digital deal. It’s almost become standard practice to package digital and broadcast together.”
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Mobile Gets One Out of Five Paid Search Clicks

CPC rates are declining

Global paid search ad spending continues to rise, with year-over-year growth in Q1 2013 reaching 15%, according to Kenshoo’s “Global Search Advertising Trends” report. In the US, year-over-year growth reached 24%.

Much of that increased search ad spending is going toward mobile devices, as consumers do an increasing percentage of their browsing and research on smartphones and tablets. But search advertisers, especially in the US, still put a premium on desktop search.

Kenshoo found that in the US, the allocation of paid search ad spending across devices is not keeping up with the distribution of clicks. In Q1 2013, the tablet and phone accounted for nearly 20% of paid search clicks, but the devices only garnered about 14% of search spending. The biggest lag was on the phone, which accounted for about 9% of clicks but only 5% of total spend.

In the UK, by comparison, there is a much narrower gap between mobile spend and clicks: Mobile devices get 28% of clicks and 25% of spend.

In terms of cost-per-click (CPC) rates, globally prices are trending downward, and that is especially true in the US. In Q1 2013, the average US CPC was 38 cents, down from a one-year high of approximately 47 cents in Q3 2012.

The computer still garnered the highest CPC rates in the US, at 56 cents in Q1 2013, while the phone was a comparatively inexpensive 30 cents per click, and tablet paid search clicks were right in the middle, at 46 cents.

eMarketer expects total US search spending to reach nearly $20 billion this year and top $25 billion in 2017. Mobile search spending tripled last year, according to eMarketer, and is expected to increase another 80% this year, to reach $3.6 billion. By 2017, more than half of search spending will go toward mobile formats.
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THE SMALL SCREEN CAPTURED BIG AD REVENUE IN 2012

Advertisers gravitated to the small screen in 2012 and pulled away from newspapers and magazines, according to Nielsen’s quarterly Global AdView Pulse report. The $350 billion in global TV ad spending represented a 4.3 percent year-over-year increase, and a strong second half in North America contributed to a 3.2 percent rise in global ad spending for the year. Overall, TV ad spending accounted for 62.8 percent of global ad dollars in 2012.

Ad spending in print mediums other than magazines and newspapers did rise in 2012, but the percentage increases trailed those in the TV realm. While spending in newspapers and magazines dipped for the year (-1.6 and -0.2 percent, respectively), these mediums remain key ways for advertisers to communicate with consumer, as they maintained the second and third place spots based on share of overall ad spend. Newspapers accounted for nearly 20 percent and magazines accounted for 8 percent, proving that they remain major mediums for advertisers to communicate with consumers.

Display Internet advertising, although measured in a smaller subset of countries, grew 9.9 percent in 2012. Latin America played a noteworthy role in the increase, as Internet ad spend in this region jumped 21.2 percent for the year. The 7.4 percent annual increase in Internet advertising in Europe was also noteworthy, given the region’s current economic situation.

Cinema ad spend continued to climb each quarter throughout 2012, which helped the sector see a spike of nearly 6 percent for the full year. While cinema spending remains relatively small, accounting for just 0.3 percent share of ad spend, regions like Europe (7.4% increase YOY) and Asian Pacific (10.3% increase YOY) continue to contribute to the medium’s growing importance among advertisers looking to reach theatre-going consumers.

“With 63 percent of ad dollars being spent to advertise on TV, it’s clear that the medium is widely regarded as the most efficient and effective way to reach consumers, continuing to grow especially in emerging markets,” said Randall Beard, Global Head, Advertiser Solutions for Nielsen. “As we move into 2013, we’ll be monitoring which regions, sectors and media types continue to drive global advertising, and which emerge and propel the industry to new heights.”

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METHODOLOGY

Nielsen Global AdView Pulse measures ad spending for TV, newspapers, magazines, radio, outdoor, cinema and Internet display advertising. . Ad spend is based mainly on published rate-cards.  Some markets may exclude select media due to data availability.

The external data sources for the other countries included in the report are:

Argentina: IBOPE

Brazil: IBOPE

Croatia: Nielsen in association with Ipsos

Egypt: PARC (Pan Arab Research Centre)

France: Yacast

Greece: Media Services

Hong Kong: admanGo

Japan: Nihon Daily Tsushinsha

Kuwait: PARC (Pan Arab Research Centre)

Lebanon: PARC (Pan Arab Research Centre)

Mexico: IBOPE

Pan-Arab Media: PARC (Pan Arab Research Centre)

Portugal: Mediamonitor

Saudi Arabia: PARC (Pan Arab Research Centre)

Spain: Arce Media

Switzerland: Nielsen in association with Media Focus

UAE: PARC (Pan Arab Research Centre)

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ONLINE EVOLUTION: 2013 MARKS THE YEAR OF BRAND ADVERTISING

For marketers, 2013 marks a shift in online advertising—to bigger budgets, sounder metrics and a continuing focus on brand advertising that we identified last year. According to the 2013 Online Advertising Performance Outlook, a report produced jointly by Vizu, a Nielsen company, and the CMO Council, advertisers are changing how they view the online medium. Long the bastion for direct response, marketers are now embracing online for branding purposes aimed at shifting consumer perception.

In 2013, advertisers project brand ad spending to grow more quickly than direct response. Sixty-three percent of marketers project that the dollars allocated to online brand advertising will grow in 2013, and one in five believes the increase will exceed 20 percent. These numbers are in line with what Vizu saw in marketers’ 2012 projections, demonstrating continued momentum on this front.

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Roughly half (51%) of marketers also expect spending on direct response to increase in 2013. One in four stated that increase will exceed 20 percent; however, 41 percent say their digital direct response advertising budget will stay the same as last year.

While brand marketers are projecting overall growth in brand ad spending in 2013, they are also predicting their spending in particular digital channels will grow faster than others. Nearly three-quarters (70%) of brand marketers plan to increase their use of social media in 2013, followed closely by mobile advertising (69%) and video advertising (64%).

These numbers are all up from 2012 projections, indicating a continued shift toward the channels where consumers are spending an ever-increasing amount of their time. And the brands aren’t alone in their thinking. Agencies are also projecting growth in mobile advertising (81%) and video advertising (73 percent), followed by social (57%).

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There’s no doubt that digital advertising is on the rise as more advertisers and agencies begin to understand and accept the opportunities the medium brings. How they use digital, however, will continue to evolve.

To download the 2013 Online Advertising Performance Outlook, please click here.

METHODOLOGY

For the report “2013 Online Advertising Performance Outlook,” Vizu, a Nielsen company, collaborated with the CMO Council, which fielded a survey of 287 senior brand leaders, 176 agency executives and 152 publishing representatives. The online survey was fielded during January and February 2013. Readers can download the “Online Advertising Performance 2012 Outlook” to track significant shifts in response. The 2012 study can be downloaded at http://brandlift.vizu.com/knowledge-resources/research/2012-industry-outlook/.

 

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