You Don’t Have to Play the Game to Win It

Jude Koh is the Regional Associate Strategy Manager for CARAT APAC.

Advertisers are often engaged in highly competitive and bloody bidding wars for the “best” TV spot or search term. But are these costly slots actually a good investment? By more deeply understanding our audience and applying our knowledge of statistical distribution, we can more efficiently reach our target consumers and leave our competitors in the dust.

7 – 10 minute read


 

NO REWARD IN GUNNING FOR THE TOP

When Joseph Schooling won Singapore’s first Olympic gold medal this past summer, brands raced to Singaporean airwaves and television sets to be the first to congratulate him before announcing their own promotional Olympics offer [1]. However, in this race, there are no winners except for the media owners who received a sudden demand for their ad space.

schoolingpromosImage from Vulcan Post

Ad space can suddenly become a prized commodity during popular events. Speaking of the Olympics, this past summer, the most coveted spot went for $2 million in Australia [2]. And TV spots during the Super Bowl in the U.S. are notorious for their unbelievably high price tag: sometimes costing upwards of $5 million to air a 30-second commercial (remember that this doesn’t include agency or production costs) [3]. Singapore’s leading TV station, MediaCorp, charges a basic rate of $1,000 for a 30second ad which is compounded by a multiplier factor based on the popularity of the show, the ad position, and seasonality loading [4], sometimes reaching an upwards of $10,000 [5].

Events like the Olympics or primetime TV promise a huge reach which creates intense competition among brands: each trying to outspend the other in order to get the “best” spot. The same can be observed in paid social and paid search; brands are all competing for the same top audience on Facebook or top position in AdWords.

But are there tangible returns for such a huge investment? Not for McDonald’s. The fast food franchise made a huge investment in a spot during the 2015 Super Bowl. Following the event, their store sales went down by 4% that month and 2.6% for the entire first quarter of the year [6]. A separate study across 13 brands in different industries found that well-established brands did not actually benefit from any form of Super Bowl advertising [7].

Clearly, the high price of chasing massive reach does not necessarily pay off for brands. This highly competitive habit of outspending the competition to gain the most coveted spot is like a red ocean of sharks gutting each other over the same prey.

This experience of sharks fighting over the same prey is also similar to ads fighting for our attention by cluttering our screens.

In one hour of primetime TV, on average 15 minutes are actually dedicated to emotional ads about shampoo, cars, and insurance. There is also no relief when we turn to our phones as ads bombard our Facebook and Instagram feeds. On YouTube, we are forced to endure one minute of an unskippable ad before we can watch a 30-second Marvel movie trailer. Instead of informing us, ads are suffocating us and using up our precious data limit.

 

AVOID THE CROWD; FIND A PARTY

I do not intend to buy a car in the foreseeable future, yet I am constantly served car ads. There is a huge disparity between the consumer and the brand which is the reason for low returns on high media investments. The message falls short of what the consumers want.

Nike recognised this and decided not to be a part of the 1996 Atlanta Olympics clutter of ads [8]. Instead, they sponsored runner Michael Johnson by providing him with a $30,000 pair of gold-coloured racing spikes. After he won, Johnson appeared on the cover of Time Magazine with the same pair of golden shoes strung around his neck. His nickname, “The Man with the Golden Shoes”, cemented Nike’s role in his achievement [9]. The brand showcased their product’s performance to a massive audience without spending the $50 million Reebok did to be an official Olympics sponsor that year.

1101960812_400

Image from Time Magazine

Again Nike created an uncontested marketspace during the 2010 World Cup using a similar principle [10]. Because Adidas was the official sponsor, Nike had to get creative—they found different ways and different channels to engage their audience. The brand understood that the beauty of football lies in its unpredictability, a topic that leads to much social conversation. So they created an emotional three-minute video called “Write the Future” which captured how quickly a game can swing between exhilaration and devastation for a team and its fans. The video was released on Facebook and Nike’s followers doubled in less than a week, all driven by the desire to see and share the ad. Furthermore, Nike created engagement opportunities by allowing fans to edit the ad and write their own versions of the future. The brand drove even more engagement by taking popular headlines written by fans on Twitter and Facebook and showcasing them in a massive LED lightshow on Johannesburg’s fourth largest building. The lightshow was visible from 2.5 kilometres away, gathering massive hype around the surrounding area. Although they could not advertise during the televised games because Adidas was the official sponsor, Nike went around the competition by running spots on shows airing at the same time and on soccer matches prior to the start of the World Cup. Their deep understanding of consumers and avoidance of the competition led to massive results: “Write the Future” was viewed by over 20 million people online within five weeks of its debut and Nike enjoyed more than double the share of World Cup buzz than Adidas. Success came from removing oneself from a highly competitive arena and instead, creating engagement opportunities with fans through a passionate narrative.

nike-wc2010-2-87

Image from football-marketing.com

After realising the low returns on investing in the 2015 Super Bowl, McDonald’s pulled out the following year [6]. Instead, they focused on creating meaningful conversations with consumers. Social media served as a platform for consumers’ feedback and news about their latest, revamped menu. This revenue-generating tactic helped McDonald’s overturn a bad quarter and achieve their best annual earnings yet. By avoiding the competition and engaging potential consumers, McDonald’s rebounded from a bad quarter and performed better than ever.

Nike and McDonald’s had created their own blue oceans—uncontested market spaces. A blue ocean strategy is about finding opportunities and creating and capturing new demand. Nike and McDonald’s, though they sell products with mass appeal and achieved high reach, communicated in a personal way that appealed to a diverse set of consumers.

 

THE LONG TAIL IS A GOLD MINE OF OPPORTUNITY

The long tail is a statistical term used to describe the type of distribution seen below:

long-tail-distribution

Let’s say this long tail distribution is being applied to SEO; similar to what we saw in the fight for primetime television slots, there is high competition for popular key search terms in the head, creating a red ocean. However, when we look at the long tail, we see a blue ocean: overall, there is a sizeable amount of search volume with lower competition and higher conversion rates. And today, technology makes it easier to cater to the long tail.

This advantage was fully made used of by Obama’s campaign team during 2 of his elections.  They are known of running a highly sophisticated digital campaign and by precise targeting of undecided voters [11]. Finding these undecided voters was challenging, so they used statistical analytics supported by technology to go beyond traditional demographic based targeting based, and instead microtargeted voters [12]. This technique involves sampling a group of undecided voters through surveys, layered on data mined from digital platforms to create statistical models. These models predicted different types of voters and their individual hot button issues.

Microtargeting helped the campaign team refine their targeting of the undecided voters and serve messages that pulled at their heartstrings. For example, the campaign team discovered that there were some female voters who agreed with most Republican stances except when it came to the issues of equal pay and women’s health. However, those voters were only 20-40% likely to vote for Obama. To win them over, the team tailored their message to inform these women about Obama’s proposed policies on equal pay and women’s health [11].

114815701_obama_347210c

Image from girltalkhq.com

The campaign team became more efficient in their communication efforts with microtargeting. Specific messages were broadcasted on niche TV networks and programs, avoiding the big networks and primetime slots [13]. They identified the cost per dollar of persuading a voter by building models that marry detailed information about a voter’s viewing habits and their political leanings. This superb efficiency helped Obama beat an extremely well-financed opposition in the 2012 election.

Nike, McDonald’s, and Obama’s campaign team understood the need to move away from the overcrowded red ocean and focus on new opportunities in their own blue ocean. Nike shied away from the obvious mass reach sponsorship tactic, and instead, created meaningful stories across different touchpoints. McDonald’s built relationships with their consumers by listening to them on social media.

Targeting the long tail is about becoming more relevant to the vast majority who are more varied in interest and preference, otherwise not reached by an approach tailored for the “head”. Technology enables us to do this with greater efficiency and accuracy, as seen in the Obama campaign’s use of statistical models to microtarget. To fully take advantage of this, brands need to know the nuances of who they want and how to reach them.

 

AIM FOR A LONG TERM PRIZE

Competing in the red ocean is an exhausting, vicious cycle of winning and losing. Creating a blue ocean allows for more sustainability. The long tail will provide an almost infinite opportunity for brands. With developments in analytics, it is now easier to understand these consumers with precision. Advances in technology also creates more ways to reach consumers. There is no longer a need for us to compete over the top ad spot just to gain mass reach. We can now target more efficiently by creating models of potential consumers, engaging them with relevant messages through different platforms, measuring the outcome, and optimising for future campaigns—all with scale and precision.

 

Footnotes:

  1. Companies race to honour Joseph Schooling | Straits Times
  2. Local brands spend millions on ad campaigns during the great Aussie medal hunt | News.com.au
  3. Why Some Top Companies Decided Super Bowl Ads Aren’t Worth It | The Huffington Post
  4. Mediacorp 2016 Advertising Rate Book for Channel 5, Channel 8, and Channel U
  5. Based on internal survey of media planners and buyer in Carat Singapore
  6. Not Advertising In The Super Bowl…McBrilliant | Forbes
  7. Russell, M. G., & Et Al (2003). Brand Perceptions of TV Commercials During Super Bowl XXXVIII. ResearchGate
  8. How Nike Brilliantly Ruined Olympic Marketing Forever | ADWEEK
  9. Michael Johnson’s legendary gold Nike shoes at Atlanta 96 almost never existed | Dailymail UK
  10. The World Cup Brand Winner: Adidas or Nike? | HBR
  11. How Obama’s Team Used Big Data to Rally Voters | Technology Review
  12. They Know Who You’re Voting For: How Big Data Redefines Political Campaigns’ Microtargeting | Data Informed
  13. Secret of the Obama Victory? Rerun Watchers, for One Thing | New York Times
Advertisements

I’d Tap That

Tam Le is the regional strategy senior manager for Carat APAC.

5 – 7 minute read


“Southeast Asia is the new frontier for e-commerce.”
The Wall Street Journal

Today commerce (I hesitate to even say e-commerce because in a few years there will no longer be a distinction) is moving so fast that the Amazon Dash button, launched last March, is already old news. Every day we’re seeing more and more brands innovating ways to remove friction from the buying process.

For example, utilising their plane’s new Wi-Fi service, Cathay Pacific partnered with NET-A-PORTER to let travellers shop from their seats and have their purchases delivered straight to their hotel room [1]. Meanwhile, on a less glamorous front, Papa John’s launched a new app for Apple TV which allows you to order a pizza and pay from your TV [2].

And if things are moving fast globally, they’re moving at lightning speed in Southeast Asia. To quote a report by Bain & Company “No place on Earth matches this region in digital adoption.” Filipinos text more and the citizens of Jakarta tweet more than anyone in the world [3].

From these stats we can see that, as with many emerging markets, consumers here are leapfrogging technology. Many have bypassed PCs for internet via their phones. A StatCounter report estimated that in 2015, more than 70% of Indonesia’s internet traffic originated from mobile devices [4]. But what does this really mean for brands?

GO TO WHERE YOUR CONSUMERS ARE

Among digital consumers, over 80% use social media to research products or connect with sellers. It’s to the point that such social sales make up to 30% of all transactions [3]. Understandably, social media companies and messaging apps are rapidly expanding their services to attract consumers.

For example, LINE (a popular mobile messaging app in Japan, Thailand, Indonesia, and Taiwan), building off its corporate mission of “Closing the Distance”, aims to “close the distance” between consumers and businesses through its business platform, which launched this past March.  It provides businesses with the ability to create an online store, loyalty reward cards, and coupons, all housed within the messaging app. LINE has also expanded its ad distribution platform to allow for targeting by demographics based on consumers’ “activity in LINE family apps, such as LINE NEWS, LINE MUSIC, and LINE Manga, their engagement with brand and celebrity official accounts, and their sticker purchase history” [5]. And in Thailand, its second-largest market outside of Japan, LINE has expanded its payment options and started free next-day delivery of groceries [3].

biz03

But these mobile commerce adaptations are not just limited to social media. One of Indonesia’s hottest start-ups, Go-Jek, started as a mobile app that allows consumers to hire a motorcycle taxi (ojek in Indonesian) without the stress of haggling. Today Go-Jek’s mission has grown to solving the problems of everyday life. To date, it has become a transport, courier, shopping, massage, and beauty service, all rolled into one. To have groceries, concert tickets, or a manicurist arrive at their door within an hour, all consumers have to do is tap [6].

gojek system.png

In the past, CPG brands have participated with Go-Jek’s Go-Mart in different ways. The brands Sprite and Oreo have both made an appearance in a Go-Jek’s blog post about recipes for International Ice Cream Day. This past August, Suntory’s MYTEA launched a 2-month pop-up store within Go-Mart. The pop-up store features discounted packages of MYTEA and free delivery to entice new customers.  Currently Unilever Indonesia is offering a Go-Pay cashback balance of Rp 10,000 for spending over Rp 50,000 on Unilever products such as Buavita juice or TRESemme shampoo. From content integration to PR-worthy price promotions, there are many ways to work with mobile apps and have your brand stand out.

By partnering with popular local apps, such as LINE and Go-Jek, brands can place themselves right where consumers already are spending their time and money.

 

DEVELOP TRULY MOBILE PLATFORMS

Given the high rate of smartphone adoption, brands that want to develop their own e-commerce portal need to develop truly mobile-first platforms that specifically target the mobile user and consider the mobile interface instead of simply shrinking a desktop platform.

taplens-68316677.gifThe interface should be informed entirely by phones and engineered to reflect how we actually use them. Taking a step away from e-commerce, consider Pokémon Go and Snapchat. Mobile-first platforms like them keep scrolling to a minimum because it isn’t perfectly suited to mobile use. Scrolling is an inheritance from desktop, and it’s not always ideal for smartphone technology. In another way, Pokémon Go and Snapchat are also excellent examples of native experiences because they’ve taken full advantage of the smartphone’s camera. Today, your phone’s camera does more than just take pictures: it detects our friends’ faces, records the location of each photo, reads our credit card information and uses the information to save us time on filling out forms. Snapchat’s Lenses and  Pokémon Go’s augmented reality takes advantage of the smartphone camera’s multifunctionality and as a result, have won over consumers’ fingers [7].  Additionally, their vertical displays reflect how consumers actually use their phones. By genuinely putting the device first, native experiences are intuitive because they are designed to be—and that’s why consumers take to them.

 

In order to win over the Southeast Asian consumer, mobile must sit at the heart of the commerce strategy.

 “No place on Earth matches this region in digital adoption.”
Bain & Company

 

CONSIDER THE WHOLE JOURNEY

Despite the rate of high mobile commerce in some markets like Indonesia, the entire Southeast Asian region only has 3% online retail penetration (China and the U.S. sit at 14% penetration). Only one in four consumers over the age of 16 has ever made a purchase online [3].

However, although online retail penetration is currently low, consumers are already highly influenced by digital content. For example, penetration is only 1.2% in the Philippines, but 34% of those online consumers reported that they were influenced by online content prior to making their purchase [3]. This is why social media and messaging apps, as mentioned earlier, are so critical in building the consumer journey and converting potential purchases to actual sales.

Regarding digital content, Southeast Asia’s digital consumers are increasingly turning to videos to learn about products, particularly how-to videos such as cooking recipes and make-up tutorials. This has proven implications for a brand’s content strategy. For example, one major FMCG company created two different videos to promote a hair styling product in Indonesia. One was a typical ad featuring a celebrity, similar to a television commercial, and the other was a how-to video by a vlogger, lasting nearly six-times-longer. In the end, the tutorial garnered about 40% more smartphone views than the usual celebrity promotion. These results validated the company’s engagement strategy for beauty content [3].

YouTube Tutorial.PNG

When building a commerce strategy, it is important not only to consider the actual purchase phase, but to also engage consumers every step of the way.

REACH RURAL CONSUMERS

The growing ubiquity of the internet, thanks to the rise of smartphones, brings the market to places previously not physically accessible by companies.

In Thailand, 85% of consumers not living in large cities use mobile devices for online purchases [3]. In Indonesia, over a third of the popular, local online retailer BliBli’s customers live in rural areas where smartphones often provide the only source of internet and orders are made almost exclusively off mobile platforms [4].

Technology has given many in rural and semi-rural areas access to CPGs previously unavailable due to a lack of infrastructure supporting retail construction.

 

CONCLUSION

Every day the lines between the digital and physical world cross over and become more blurred. Friction is continuously being removed from the buying process and that presents advertisers with new opportunities to decrease the gap between consumers and brands.

Opportunities such as partnering with locally popular mobile apps that already know our consumers and their interests and behaviours. However, if brands are to build their own commerce platform, it should be approached with a mobile-first strategy to address the needs of those whose sole access to the internet is through a smartphone. But the work shouldn’t stop there, even if consumers aren’t making purchases online yet, many of them are researching brands through online content (especially videos) on social media apps.

This will not be an easy process by any means. Southeast Asia is filled with many challenges, such as a lack of infrastructure; however, instead of seeing these challenges as problems, agencies and their clients should reframe them as opportunities to reach new audiences and address their ecosystem’s unique needs.

 

REFERENCE

[1] http://www.lifestyleasia.com/477202/net-a-porter-and-mr-porter-partner-with-cathay-pacific-for-in-flight-shopping
[2] https://techcrunch.com/2016/08/30/you-can-now-order-pizza-from-your-apple-tv
[3] http://www.bain.com/publications/articles/can-se-asia-live-up-to-its-ecommerce-potential.aspx
[4] https://techcrunch.com/2016/07/29/indonesia-will-be-asias-next-biggest-e-commerce-market
[5] https://linecorp.com/en/pr/news/en/2016/1294
[6] http://www.demystifyasia.com/what-is-a-gojek
[7] http://www.psfk.com/2016/09/digital-design-expert-mobile-first-is-dead-think-mobile-native.html

LINE screenshots courtesy of https://linecorp.com.
Go-Jek image courtesy of https://www.go-jek.com.
Snapchat Lens gif courtesy of https://support.snapchat.com.
YouTube image courtesy of https://www.youtube.com/watch?v=BPynMoOO47g.

 

Marketing Myth: 80% of Sales Come from the Top 20% of Brand Buyers

Tam Le is the regional strategy senior manager for Carat APAC.

The following article is the first in a series of what we’re calling “Marketing Myths.” There are a lot of misconceptions and “rules of marketing” out there that have been disproven over time by research. Each article in the series will focus on one marketing misconception, drawing largely on the work of Byron Sharp and the book How Brands Grow. Through the series, we hope to help you avoid these marketing myth pitfalls and make you stronger media professionals.

3 – 5 minute read


Over the years, I’m sure you’ve come across Pareto’s Law: the heaviest 20% of a brand’s customers deliver at least 80% of its sales. Although there are definitely extreme buyers, a small percentage of customers who purchase the brand very frequently, the ratio is rarely as extreme as 80/20.

pareto-law-colour-01Pareto’s law is often used to justify a marketing strategy that targets the heaviest buyers versus a mass marketing strategy that targets all category buyers. The buyers are worth more, so the brand’s marketing team can justify spending more per buyer and ignoring the 80% of lighter buyers who only contribute to 20% of sales.

However, in Sharp and Romaniuk’s 2007 study of buyers in Australia and South Africa, they saw that from shampoo to cat food, the heaviest 20% of buyers rarely contributed more than 65% of sales volumes and sometimes as low as 35%. On average, the top 20% only contributed about 50%; so the ratio is more like 50/20. With that new ratio, it becomes much harder for marketers to justify ignoring the other 80% of lighter buyers who actually contribute to about half of sales.

To further undermine the strategy of targeting the brand’s heaviest buyers, is Sharp’s “law of buyer moderation.” It points out the fallacy of assuming a buyer’s purchase behaviour in a past year will predict their future buying behaviour. For example, let’s say Buyer A bought 5 boxes of pasta in 2015 and was categorized as a heavy buyer, whereas Buyer B bought 0 boxes of pasta in 2015 and was categorized as a non-buyer. But in 2016, Buyer A only bought 3 boxes of pasta and Buyer B bought 1 box. Our heavy buyer became a more moderate buyer, and our non-buyer became a light buyer.

This is consistent with Anschuetz’s 2002 findings which studied the sales data of a leading brand of tomato sauce in America using IRI and AC Nielsen panel data. The analysis showed that the non-buyers in Year 1 of the study went from accounting for 0% of sales volume to 14% of sales volume in Year 2, and the heavy buyers went from accounting for 43% of sales volume in Year 1 to 34% in Year 2. Conclusion: Non-buyers and light buyers are heavier buyers than you think, and heavy buyers are lighter.

 

What can we as media professionals take away from these studies? First and foremost, a marketing strategy that aims to increase sales by only targeting the heavier buyers is unlikely to succeed. And conversely, targeting the large amount of lighter buyers and non-buyers has a far greater chance of success.

As unsexy and outdated as mass marketing sounds, reaching all buyers of a category is vital, especially because the light, occasional buyers make up a greater percentage of sales volume than previously assumed.  However, mass marketing doesn’t have to be unsophisticated. With constant digital advertising evolution, there are new opportunities to reach consumers in different ways and different times to be more relevant and fit better into their lives. We have the opportunity to create sophisticated strategies for mass marketing that will yield high reach and high relevancy.

 

To read more Marketing Myths: https://rocketapac.wordpress.com/category/media-musings/marketing-myths.
Pareto’s Law image courtesy of http://www.warrenknight.co.uk