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Validation: More Important than Ever!

October 31st, 2019 Comments off

More than 100 years ago, John Wannamaker was famously quoted as saying: “Half the money I spend on advertising is wasted; the trouble is, I don’t know which half.”

Only half?

Fast forward 100 years, and many marketers still don’t know how much of their advertising is wasted. And with the myriad new methods for advertising (e.g., digital, social media, reviews, etc.), we’d be lucky if we are only wasting half our money. John Wannamaker would be horrified!

That is why it is so critically important for marketers to use validated, sales predictive metrics when evaluating advertising. Validation means that the metric predicts real, in-market behavior: brand preference, sales, share lift, revenue, and loyalty. Advertisers who do not use market proven validated metrics risk wasting significant resources both in advertising expenditure and in the health of their brand.

Validation Obsession

MSW is obsessed with validation and has been for decades. As far back as the 1970’s, MSW began testing their fundamental metrics for predictability. Since then, MSW’s validation efforts have been continuous and rigorous, including cross-client analysis, client sponsored independent studies, publishing in academic journals, and independent industry trade group audits. Here are a few examples regarding MSW’s CCPersuasion metric (which measures a pre-to-post change in brand preference as the result of advertising):

  • L’Oreal: BBDO’s conducted an independent analysis for three L’Oreal brands: Preference, Excellence, and Revitalift. Their analysis concluded that MSW metrics strongly validated with advertising in-market performance. And as determined by L’Oreal a one-point increase in CCPersuasion yielded a 0.6% lift in retail sales. The analysis also determined that as CCPersuasion increased versus the norm, so did Annualized Customer Value (ACV) with a top 10% television ad resulting in an increase of ACV of $42.5 million.
  • Celestial Seasonings: Celestial Seasonings evaluated five selling propositions, moving forward with the strongest which measured CCPersuasion significantly above Fair Share. The brand went to air with an ad that outstripped even that superior selling proposition. “. . . Our advertising didn’t just steal share from competitors; it grew the herbal tea category. While tonnage for most other hot beverages was declining during this time period, herbal tea sales were up, with increases as high as 12 percent in one of the spot television markets,” said VP Marketing Mike Mondello.
  • StarKist Tuna in a Pouch: Our research suggested increased emphasis on the “fresher and better taste” product benefit could improve effectiveness. In fact, the finished execution scored 2.5-times the benchmark. “The results from the initial advertising quarter yielded an ROI of 76 percent, an enormous improvement over the break-even ROI we had expected for the quarter using a traditional approach,” reported Barry Shepard, StarKist.
  • Walmart: Walmart compared the incremental sales generated (from MSW’s Marketing Mix Modeling) by a specific television ad to the CCPersuasion points delivered (the CCPersuasion score combined with media weight) for that ad. The strong relationship (r = 0.82) confirms CCPersuasion measure is a valid predicter of the sales effectiveness for advertising for Walmart.

CC Persuasion Audit Summary

A combination of industry, agency, and academic leaders created the Marketing Accountability Standards Board (MASB) to ensure“ the efficient and effective functioning of a marketing-driven business because decisions about the allocation of resources rely heavily on credible, valid, transparent, and understandable information.” MASB then established their Marketing Metric Audit Protocol (MMAP) to validate whether marketing and advertising research metrics accurately measure and predict the market behavior they purport to predict.

MASB conducted an 18-month study across 12 product categories and 120 brands, comparing MSW’s CCPersuasion metric to Unit Share. Not only did MASB confirm the strong relationship between CCPersusion and Unit Share (r = 0.88), but it also found that accounting for price and distribution improved the relationship to an almost unheard of 0.94. The MMAP audit concluded that “the CCPersuasion metric is able to quantify the likelihood and magnitude of an ad’s impact on future sales volume and market share.” MASB also concluded CCPreference has been “proven to reflect market share with a high degree of accuracy across a spectrum of diverse categories.”

Summary

As Gayle Fuguitt, former President and CEO of The Advertising Research Foundation summarized, “It is the most complex time in the history of advertising, yet the C-suite questions are simple:

  • “Do my marketing dollars drive growth and sales?”
  • “Where do I spend the next marketing dollars?”

MASB’s work, focused on the accurate and comparable measurement of marketing efforts, is advancing the industry to respond to these C-suite needs and to drive much needed growth.”

However, MSW is not resting on their laurels. Their validation obsession drives them to continually evaluate and test their metrics to ensure in-market predictability.

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