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 . However, in this race, there are no winners except for the media owners who received a sudden demand for their ad space.
Image 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 . 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) . 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 , sometimes reaching an upwards of $10,000 .
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 . 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 .
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 . 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 . 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.
Image from Time Magazine
Again Nike created an uncontested marketspace during the 2010 World Cup using a similar principle . 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.
Image from football-marketing.com
After realising the low returns on investing in the 2015 Super Bowl, McDonald’s pulled out the following year . 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:
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 . 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 . 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 .
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 . 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.
- Companies race to honour Joseph Schooling | Straits Times
- Local brands spend millions on ad campaigns during the great Aussie medal hunt | News.com.au
- Why Some Top Companies Decided Super Bowl Ads Aren’t Worth It | The Huffington Post
- Mediacorp 2016 Advertising Rate Book for Channel 5, Channel 8, and Channel U
- Based on internal survey of media planners and buyer in Carat Singapore
- Not Advertising In The Super Bowl…McBrilliant | Forbes
- Russell, M. G., & Et Al (2003). Brand Perceptions of TV Commercials During Super Bowl XXXVIII. ResearchGate
- How Nike Brilliantly Ruined Olympic Marketing Forever | ADWEEK
- Michael Johnson’s legendary gold Nike shoes at Atlanta 96 almost never existed | Dailymail UK
- The World Cup Brand Winner: Adidas or Nike? | HBR
- How Obama’s Team Used Big Data to Rally Voters | Technology Review
- They Know Who You’re Voting For: How Big Data Redefines Political Campaigns’ Microtargeting | Data Informed
- Secret of the Obama Victory? Rerun Watchers, for One Thing | New York Times