I'm not one to worry about the distant future. Remembering to pick up my laundry is challenge enough. Then Steven Spielberg casually mentioned civilization's inevitable move from a carbon to silicon base-his matter-of-fact way of saying when robots take over the Earth. By then, data is not only the new creative, he is the new creative director.
Man vs. Machine: There are many things machines do far better than people. In media, the robotic radio PPM compared to the all-too-human diary is a good example. The vagaries of the diary measurement may be costing radio millions each year in a simple but hidden way. Diary reporting is no longer adequate for how audience estimates are used to select media.
Marketing Mix Modeling: Today, many advertisers leap over conventional measurements like audience, demos and CPMs, and go directly to consumer response to make their media decisions. The tool of choice is complex Marketing Mix Modeling. Advertisers take the pieces of last year's brand marketing spend and match that to brand sales to see how they track.
For media, the deciding measure is its contribution to total brand sales, minus the cost of goods, divided by the cost of the medium. It is the equivalent of advertising-delivered profit before taxes or "Payback." You can't argue with the goal or the model. Both seem to work. It's the marketing input data that need attention, especially the radio data.
Why Radio Should Win: Years of marketing mix studies have uncovered two planning truths. All marketing expenditures show diminishing marginal response. Each additional dollar spent in a medium usually pays back less than the one before. This argues against media concentration and supports media mix. The second truth is each week added to a schedule usually pays back more than the week before. This recommends continuous advertising.
Both findings suggest brands should shift marginal TV dollars to other media -- 20 percent to radio for example -- to improve total media payback. The dollar shift works in three ways:
• Reducing TV dollars should increase TV-generated payback per dollar. (Remember, each added dollar pays back less.)
• Radio's lower spending level should generate payback at a higher point on radio's payback curve, making it more efficient than other media used more heavily.
• Radio's lower cost will buy additional weeks, which should improve total campaign payback.
There is supporting data for this theory.
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