From Recency to Fusion - October 2002

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ERWIN EPHRON EPHRON, PAPAZIAN, EPHRON, INC.

A GRATEFUL SIGH OF RELIEF

Acknowledgments are a wink and a

nod. Dedications are carved on walls.

This is more a grateful sigh of relief

that friends went ahead and alongside

to help clear the path and keep it

straight.

The names are as they come into my head. There is no particular mean-

ing to the order. Herb Krugman, Gale Metzger, John Philip Jones, Gus Prie-

mer, the Pauls, Gerhold and Chook, Jon Nesvig, Chuck Fruit, Stanley

Federman, Peter Knobloch, Ed Papazian, Frank Harrison, Seymour Banks,

Andrew Ehrenberg, Charlie Ramond, Colin McDonald, Roderick White, Jon

Swallen, Roz Arnstein, Roger Baron, Rick Gordon, Samuel Johnson, Elaine,

Taffy and others I will no doubt remember as soon as this is printed.

Yes, the author had help.

Erwin Ephron

September 2002

Design and production by Emergent Probability.

www.EmergentProbability.com

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CONTENTS

It’s easy to poke a Giant but hard to

make him jump. That’s been my ex-

perience with the $90 billion media side

of advertising.

But sometimes we get lucky.

This is a selection of papers from my

website archive

www.EphronOnMedia.com

I picked these seven for their effect on how we plan advertising today

and probably in the future. I may be wrong.

1. RECENCY PLANNING (1994) ...................................................................5 “Recency isn’t about TV or Print, or reach and frequency. It’s about how

we think advertising works in America’s mature, competitive markets.”

2. MEDIA-MIX (2000) .....................................................................................13 “Marketing-mix modeling finds diminishing marginal response to media

weight. As more dollars are spent in any medium, the sales response per-

dollar for that medium tends to go down. That’s why mixing-media is

seen as the key to greater advertising effectiveness.”

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3. GODZILLA GOES TO MARKET (2000) .................................................21 “No one trusts Godzilla, especially when he’s selling hard. Cross-

platform has that reputation. Buyers see much of it as a labored attempt

to use market presence to increase price. But if it’s media-mix on a

budget, they think it can make sense.”

4. LET’S LEARN TO USE THE “F-WORD” (2002)....................................25 “Database Fusion turns out to be a significant new planning technique,

simply because it gives us a more cost-effective way to target television.”

5. THE CURSE OF SUPERMIDAS (1998)...................................................37 “The curse of old King Midas, according to the myth, was he optimized

on Gold. SuperMidas revisits the curse with the question, What should

we optimize? And it isn’t reach or CPM.”

6. RESPONSE NOT READERHIP IS PRINT’S PROBLEM (1997) .......51 “Magazines seem to have a death wish and agencies are the Dr. Ker-

vorkians. Print has been maneuvered into price-negotiation like TV with-

out the limited inventories or strong demand that makes negotiated

pricing work for TV…”

7. TEACHING TAP TO THE ELEPHANT (2001) ......................................57 “Media planners are like Captain Picard. They believe that if they can

think it, they can make it so. In fact media planners have far less control

over message frequency than they think. They try to teach the TV ele-

phant to dance.”

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RECENCY PLANNING It's not about Reach or Frequency. It's About

How Ads Work in Mature Consumer Markets.

____________________

Advertising in the US has a persistent dark Side. Its most celebrated slo-

gan is "half the dollars are wasted." Only the twist "but, we don’t know

which half," dulls the edge and lets us smile, because It suggests the sim-

ple problem is to fix the half that doesn’t

work. Nonsense.

John Philip Jones, author of "When Ads

Work" and a wise chronicler of advertis-

ing, writes that "half working" is, in his

experience, "a gross overestimate of the

amount of advertising that has a discernible effect on sales." I would agree.

After 30 years, I can count the unambiguous ad successes I have wit-

nessed on one hand and still have a few fingers free.

Europe has a more comfortable view of what advertising can do. Its lead-

ing spokesman, Andrew Ehrenberg, explains that advertising is a rela-

tively weak, essentially defensive force among the many forces that drive

mature consumer markets. Jones suggests advertising’s strength is that it

can be applied continuously, because it does what it does at a very small

cost compared to the major alternative, which is price promotion.

This view of advertising as a weak, but cost-effective marketing tool, is a

good model of how advertising works in the US today. It rejects the idea

that advertising controls consumers by teaching them to buy brands. It

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says consumers control advertising by screening-out most of it and only

attending to what interests them at the time.

How can a weak force have strong effects?

But a weak model is troublesome. A lot of new information, including

Jones’s influential and widely circulated analysis of Nielsen panel data,

show a single exposure can strongly influence which brand is purchased.

If advertising is a weak force, how can a single ad message produce a

strong effect?" The answer is "Recency." The idea that advertising mes-

sages "sell" those consumers whom are ready to buy. There is no inconsis-

tency between strong effects on certain individuals and weak effects on

the total market.

It is as if there is a window of opportunity for the ad message preceding each pur-

chase. Advertising’s job is to influence the purchase, media’s job is to put the

message in the window.

With these new ideas in the air, there is an uneasy revolution in pack-

aged-goods advertising. Recency is gradually replacing effective fre-

quency as the planning model.

A Single Exposure Is Reach, More Exposures

Are Frequency.

John Jones’ basic analysis shows a single exposure in the 7 days before

purchase has a far greater effect than what is added by more exposures.

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A single exposure is reach, more exposures are frequency. This means

that in the short-term, reach is cost-effective, repetition is wasteful.1

This is a new idea. Ready to buy is more important than number of messages.

That makes the planner’s assignment “buy weekly reach.”

Here’s how it works.

We don’t know where the window is for each consumer (i.e., who is

ready to purchase). But purchases are made each week. So, advertising

should try to reach as many new target consumers as possible in as many

weeks as possible. A pure reach strategy! Plan and buy for continuous

short-term reach. Try not to waste money on short-term repetition.

Recency planning is very different from how we used to schedule media.

It uses one-week as the reach planning period Instead of 4-weeks. It plans

for reach, instead of effective frequency. It stresses continuity in place of

flighting. It relies more on dispersion and less on targeting.

Recency planning is rapidly gaining support in the US, because it’s

mostly common-sense. But revolutions invite reactions and there have

been many.

Isn't Frequency Needed For Considered Purchase?

Many concerns about the wisdom of Recency planning focus on consid-

ered purchase products.

1 A single exposure can work only because it is the last of series of brand mes-sages consumers see. It is effective this time because that consumer is now in the market.

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Many advertisers argue that advertising for a car is not like advertising

for a box of cereal. A single exposure may work for corn flakes where the

empty box signals the need to purchase, but considered purchase adver-

tising often has to sell the idea of buying the product as well as the par-

ticular brand.

I believe Recency planning applies equally well to both cars and corn

flakes.

Each day, for some reason— usually independent of the advertising—

people are in the market for corn flakes or cars. (The cereal box is empty,

the car lease is up.) Advertising usually works by influencing the pur-

chases of that small group of consumers.

And in either case, one exposure does not do all the work. When John

Jones finds "a single exposure close to purchase can trigger a response,"

this is not the first exposure, but the most recent in a series of exposures.

It is effective because the consumer is in the market. That model applies

to cars as well as frosted-flakes.

A similar concern ties the need for frequency to a product’s purchase in-

terval. The argument goes, low frequency might be right for a product that is

purchased every week or so, but not for a product that is purchased every four or

five years.

Recency planning ignores purchase cycle, because it targets the purchase

not the consumer who makes the purchase. As long as there are pur-

chases each week, it doesn’t matter how often, or seldom, the average

user buys.

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If Advertising Only Works With Purchasers, Isn't

Mass TV Wasteful?

Some critics argue that Recency destroys the value of mass media. If TV

works only with a small group of purchasers, what about all the other viewers

who aren’t ready to purchase? Isn’t that wasteful? The answer to this question

is actually the key to mass media.

Low CPMs are misunderstood. They show cost-effectiveness, as much as

cost-efficiency. or example, a shampoo brand buys daytime TV at $10.00

for a thousand 30-second exposures.

Since each incremental unit of shampoo sold makes a $2.00 contribution

to profit (i.e. wholesale price minus marginal cost), then five incremental

sales can cover the cost of the advertising.

And also the cost of talking to 994 other potential customers who may be in the

market next week!

Micro-marketers who argue that exposures not resulting in a sale are

wasted, are as wrong-headed as people who argue that advertising

shouldn’t be expected to sell at all. Some exposures sell, but all exposures

build broad market awareness, shift attitudes and help create the brand

value, which is the foundation for the next sale. These are the hard and soft

effects of TV advertising.

The economics of network television for a super-upscale brand like Mer-

cedes are even more remarkable. For Mercedes, one incremental sale can

pay the costs of network messages to a million men and women.

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True, most of them will never buy the car, but those messages are not

wasted either. They help to create the broad-market perception that Mer-

cedes is special, which makes owning one so attractive to the small group

of consumers who have the money.2

For super-upscale products, value to the purchaser is often in the eye of

all those millions of non-purchasers.

Won't Recency Planning Lead Advertisers To

Spend Less?

Another frequent reservation is that Recency planning will give advertis-

ers an excuse to spend less, because if all you need is a frequency of one,

big budgets are wasteful.

A Recency plan does not spend less money. It reduces weekly weight to

add more weeks of advertising. Since most brands aren’t running 52

weeks of advertising now, Recency simply reallocates the current budget.

Brands do not spend less, they spend more effectively.

Recency planning encourages the big budget brands that can afford to

buy frequency (e.g., McDonald’s, Coke, AT&T) to shorten the reach plan-

ning period to 104 half-weeks or even 365 days. Why? Because the next

sale is always about to happen.

2 TV’s broad reach also supports the used car market.

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Doesn't "Share Of Voice" Argue For Concentration

And Fighting?

Most brands are fighting for share in markets that are not growing, so the

effect of lower frequency on share of voice is always a concern. If a brand

chooses continuity and the competition flights, won’t consumers be influenced

more by the competitor’s advertising because they see more messages?

The answer is "Yes," but only short-term. The problem with flighting is

more weight, weeks one through five, usually means less weight, weeks

six through 10. Heavier-weight for 30 weeks is exhilarating. Going naked

for 20 weeks is chilly.

All brands would like to advertise more heavily for more weeks. The

problem isn’t scheduling, it’s budget. Recency planning deals with the

question of "what is the right media weight," by suggesting too little adver-

tising is too low a weekly reach and excess advertising is too high a

weekly frequency.

But, scheduling need not be a zero sum game. Since flighting wastes

money on short-term frequency, continuity is a winning strategy. If you

buy reach, while the competition is buying frequency, you’re using the

dollars more effectively.

Won't Too Few Messages Lose Sales?

Another concern focuses on the need for frequency to be more certain of

making the sale, i.e., If we reach a consumer only once we can lose the sale.

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Certainly sales are lost because of too little frequency, but more sales are

lost because of no frequency at all. The Jones frequency response curve

shows reach is more cost-effective than frequency. Reaching three con-

sumers, once, will generate more purchases than reaching one consumer

three times.

I believe this is because whether a consumer is "ready to buy" is more im-

portant than the number of messages the consumer receives. When a con-

sumer is in the market, a single message can have an effect, but if a

consumer is not in the market, multiple messages are not likely to make

the sale. So by reaching three different consumers we are more likely to

reach one who is ready to purchase.

Isn't frequency needed to build brands?

The last issue often raised is the importance of frequency to building new

brands. Recency may be fine for established brands, but isn’t greater frequency

needed to build new brands?

Recency planning does not eliminate frequency. Frequency is the sum of

exposures across weeks. It is better thought of as presence. Brand-

building is not ignored. It is intensified by more continuous advertising.

Recency’s contribution is to focus us on the present, the next purchase--

whether the brand is new or established, Cornflakes or cars.

Because if you don’t get enough next purchases, building a brand doesn’t

matter.

- March 18, 1998 -

Originally published in Mediaweek

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MEDIA-MIX The New Media Planning is About Picking

Combinations of Media.

____________________

The brain takes comfort in simple sorting –- I like apples better than oranges.

It is less relaxed with conditional complexity –- But, if I’ve already eaten an

apple, then I’d like an orange.

Media planning today is awash in condi-

tional complexity, not because of produce,

but because of media-mix. This is a mi-

graine-inducing change in the way we

need to think about what we do.

The opening words of the planner’s Bible,

Toward better Media Comparisons, (ARF

1961), reminds us that media planning is

allocation. "This decision is unavoidable,

since . . . the use of any medium to any degree implies the avoidance of some

other medium . . ." Today we would have to add, " . . . implies the inclusion

of some other medium."

The old media planning was about picking individual media. The new

media planning is about picking combinations of media (and permuta-

tions of media, where sequence of exposure is important). This increases

relevant media choice from a manageable few hundred to an unruly few

hundred thousand. It also means comparing apples with oranges. Both

tasks are well beyond the abilities of a planner with a notepad.

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That is the reason for the great interest in media-mix optimizers.

This is an encore. We’ve been there before with television. TV optimizers

were a response to three powerful forces -- recency planning, fragmentation

and sharp increases in prime time pricing. Recency established reach as the

planning goal. Prime time had become too costly for most brands to use

for reach. Fragmentation offered the alternative of buying reach through

dispersion, but the many possible combinations were more than planners

could handle, so optimizers, like SuperMidas and X*pert, were brought in

to help do the job.

These same forces are active in pushing media-mix, but the obvious de-

cline of television is the whip. In the face of strong demand and shrinking

inventories, the networks have raised prices and added commercials.

Both make television less effective. Advertisers know this and are seeking

options. The move from TV is not rampant, but it is inevitable, and that is

spurring agency interest in better media-mix planning data and optimiza-

tion.

Just as a second beer never tastes as good...

Just as a second beer never tastes as good, a second dollar in the same

medium never buys as much response. That’s why the idea of mixing

media has always been attractive. It’s in the physics of a flattening sales

response curve.

Marketing-mix models will often show a high return-on-investment for a

low-budget medium, simply because spending fewer dollars puts it at a

better point on the response curve. The general rule is spend more money

and the response-per-dollar goes down. Spend less money and it goes up.

EPHRON ON MEDIA 15


But, while sales-per-dollar go up, total sales do not, so a brand can’t

scrooge its way to growth.

Media-mix gives advertisers a way of beating the curve. Where market-

driven CPM’s reflect relatively comparable media value, spending fewer

dollars in more media will produce a greater response.

There are also the under-explored benefits of focus and synergies. Some

media may just communicate better to some consumers (reading people

versus viewing people) and mixed exposures may have a greater summed

effect (sell the car on the TV and the deal in the paper).

These are the arts of media-mix. The science is knowing which medium

to add and when to add it. CPM alone offers no guidance, CPM and

reach-build together do. This is the routine stuff of optimization.

Because a media-mix optimizer deals with several media, the problems in

building one are far more complex than those encountered with TV alone.

The big three are database, comparability and frequency value.

The first big hurdle is which data to use?

The first big hurdle is reaching consensus on what data to use. This is dif-

ferent from TV optimization, where the only choice is Nielsen. The me-

dia-mix database has to contain two things. The "currency" measurement

for each medium (e.g., NTI for TV, MRI for print), so that the optimized

schedules will price-out. And a means of estimating duplication between

media, so that it can calculate reach.

EPHRON ON MEDIA 16


A database with these qualities does not exist and creating one is a bear.

The simplest approach is to use the currency for ratings and within-

medium duplication, and calculate the across-media duplication rates

from a single-source study like MRI or Simmons. The weakness of this

approach is the MRI and Simmons recall measurements of television do

not track with NTI meter measurements of television. As a result, the du-

plication with television data will be poor.

This is a fatal flaw. Because TV is so important in media-mix, duplication

with television data controls the optimization.

The alternatives are to use random duplication -- even though we know

cross-media duplication is not random -- or to use data fusion.

Data fusion

Fusion is not just theory. It is currently used in the UK, Japan, Latin

America and Europe. For years, US media researchers have been told that

fusing together surveys designed to measure specific media may be pref-

erable to using a single survey that measures them all.

Reigning media statisticians like Gerry Glasser of Statistical Research, Inc.

and Marty Frankel of MRI, have long said these statistical techniques

could be appropriate in the US. Never-the-less introducing fusion, or any

kind of data modeling here, has proven difficult.

As of this writing, you pays your money and takes your choice. There

will probably be both an MRI-based single source optimizer (offered by

EPHRON ON MEDIA 17


IMS and Telmar), and a Nielsen/MRI fused database (offered by Kantar,

the SuperMidas people).1

Data access is another media-mix issue. In TV optimization, all of the

players -- buyers and sellers -- had access to the Nielsen database. Turner

Cable was especially aggressive in using the new information to switch-

pitch the dominant broadcast networks. In media-mix optimization, only

agencies and TV sellers are likely to have access to Nielsen. Competing

media which can best use the data -- magazines, newspapers, radio, out-

door and internet – may be shutout by its high cost.

But there is a crack of opportunity. If competing media can interest Niel-

sen Media Research in selling limited, affordable NTI data access through

the media-mix database, it could open the way to more intelligent com-

petitive selling. Today when other media attempt to sell against televi-

sion, this lack of access (and lack of familiarity with what the Nielsen data

show) is a high brick wall.

Optimization requires the "Time Planning" of all media.

Because TV is the primary (dollar) medium for most advertisers, TV will

set the data standard for all media. To be a candidate, a medium will

need a planning period and a TRP definition that conforms reasonably to

those used for television. The critical TV planning period is the week, so a

full-function media-mix optimizer will have to do weekly-reach planning

for all media. This requires data reporting magazine issue readers by

1 Actually the first US example was the MARS Pharmaceutical Readership study fused with the Nielsen TV Index database (2002).

EPHRON ON MEDIA 18


week and the ability to calculate the week-by-week reader duplication

with other magazines and other media. Weekly planning is simple for

time specific media, like TV, internet and radio, but it needs to be devel-

oped for out-of-home.

Media-mix raises the quiet issue of CPM comparability to a shout. Agen-

cies are far more willing to accept it within a medium (that a cable :30 is

equal to a broadcast :30) than across media (that a cable :30 is equal to an

internet banner). A wealth of experience with media-mix optimizations

done in the 1970's showed that without comparability weights, or pre-

defined dollar allocations by medium, the plans produced were so

counter-intuitive, they were usually deep-sixed. This flags the importance

of adjusting CPM’s for media value before attempting to optimize a mix

of media.

Several kinds of CPM adjustments need to be considered before an opti-

mization program can produce an intelligent schedule.

• Probability of exposure to equalize ratings across media. Out-

of-home showings and traffic counts, for example, are far looser

measures of exposure than TV’s "average minute audience."

• Ad Exposure weights to equalize the probability of an ad being

seen. What percent of the viewers of Friends see the average

commercial? What percent of the readers of Time see the aver-

age ad page?

• Communication weights to equalize the probability of an ad

message communicating. For example, a magazine color page

EPHRON ON MEDIA 19


compared to a TV :30. It is generally what we mean if we say

"TV, with sight, sound and motion, is more effective than

Print."

• Frequency weights to establish the contribution of the first and

each successive exposure in obtaining a response. This is what

makes an optimizer value reach over frequency, or vice versa.

• Synergy weights to consider the value of exposures in different

combinations of media in obtaining a response. It is what we

mean when we say, "print is more effective after the TV has

run," or "Fifteens work better when they follow thirties."

Media synergies are an important reason to mix media.

Synergy values add a complication to frequency values, but they are es-

sential, because synergies appear to be an important reason to mix media.

In practice, the five weightings can be compacted into two groups: Expo-

sure, commercial and communication weights, which equalize the different

measures of audience, and frequency and synergy weights, which establish

the value of reach and repetition.

The greatest benefit of TV reach optimizers has been analytical. They

opened-up the Nielsen database for the first time and allowed everyone

to learn how TV’s various pieces work together to build reach. This led

agencies to abandon traditional day parts in optimizing schedules and as

EPHRON ON MEDIA 20


a result, TV buying changed. Cable and prime time benefited, daytime

lost.

Media-mix optimizers will do the same thing on a larger canvas. They

will lead us to combine media in complex ways to reach consumers more

cost-effectively. They will help us to think about and use media synergies.

They will improve media ROI. All of this will play-out in the market-

place. Media-mix optimizers will show advertisers how and why to move

dollars from TV to other media.

Advertisers can’t wait.

- February 28, 2000 -

Originally published in Ad Age

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GODZILLA GOES TO MARKET Is cross-platform selling the future of media?

____________________

Huge media companies. Viacom, AOL/Time

Warner, News Corp, Disney.

Custom packaging media with other proper-

ties. Television, publishing, radio, out-of -home,

the Internet, records, concerts, sporting events,

movies, theme parks, database.

A cutting-edge selling strategy called "Inte-

grated Marketing."

Each of the media companies listed has created an Integrated Marketing

Group dedicated to aggressively selling pooled assets to major advertis-

ers. The idea is a double-scooper. It increases revenues and freezes-out

the competition. Code name: Godzilla goes to market.

To work, integrated marketing must be more than just media.

But a lot of it is smoke. By common definition, Integrated Marketing is

the coordinated use of the elements of promotion (including advertising

and PR), packaging, pricing and distribution to achieve brand goals. The

"coordination" usually involves a central brand idea or creative theme.

That says integrated marketing needs to be more than media and promo-

tion. And that’s a problem. Most of the other elements that turn a media

EPHRON ON MEDIA 22


package into an integrated marketing program are best supplied by the

client (or the client’s creative agency), not the media company.

Even the media packaging part can be a problem. Often IM groups do not

have access to the very media assets they are supposed to be integrating.

Their toughest sell is internal. Multi-division programs that bring dollars

to the corporation are often at odds with single division goals. These can

be as basic as revenues, commission dollars and inventory control.

"I am not keen to cross negotiate a deal with six

corporate divisions."

MediaVest's Kevin Malloy explained the buyer’s discomfort with the de-

centralized deal-making common to integrated marketing proposals: "I

am not keen to sit in a room with six corporate divisions and cross-negotiate a

deal."

Unless the integrated marketing group has a mandate from above, it dif-

ficult for them to put together a substantial program. Few have this back-

ing. Today’s integrated marketing programs are captained by Turner and

ABC, not AOL/Time Warner and Disney.

The central role of the TV properties is not surprising. With minimum

dollar requirements in the mid-to-low seven figures, most integrated

marketing programs start and end with a value-added TV network buy.

It’s its easier to sell, easier to deliver and it produces the big dollars.

There’s a lot in integrated marketing for television networks. What’s in it

for advertisers? That question is best answered with another question.

What is the difference between integrated marketing and media packaging? The

answer is price.

EPHRON ON MEDIA 23


"When you buy a lot, Rupert thinks he should

charge more."

Last year News Corp’s Jon Nesvig explained pricing to the Association of

National Advertisers: "You think when you buy a lot, you should pay less,

Rupert thinks when you buy a lot, he should charge more." And it is Rupert-

like thinking that created integrated marketing.

These are not buy more, pay less propositions. None of the groups suggest

there are discounts. That would be media packaging. Integrated Market-

ing charges more by suggesting the value of the Sum is greater than the

cost of the Parts -- and indeed it must be for most of these deals to make

sense to the advertiser. The first thing a responsible agency does is decon-

struct the package to see if the individual pieces can be bought for less

elsewhere. And often they can.

For integrated marketing to be worth the money, the value of the media

exposures (which are usually the highest cost element in the package)

needs to be heightened by the strength of the marketing concept. That

does not often happen. "Complete brand solutions" (a CBS Plus phrase)

are difficult to craft. They are created with ideas, not just media, and Inte-

grated Marketing as currently practiced is long on media and short on

ideas.

Media at its core is analytical. It uses structures and powerful systems to

handle millions of repetitive transactions, because at the end of the day

it’s pricing and inventory control. Media sellers are good at media.

EPHRON ON MEDIA 24


Integrated marketing programs add value

with ideas.

An authentic integrated marketing program is creative. It sifts through a

mosaic of possibilities to shape marketing opportunities that leverage the

brand’s persona. It adds value with ideas, as well as media assets. It is a

creative-cum-media package. Media sellers are not good at creative.

And that is the real clinker in Plan Godzilla. An Integrated Marketing

campaign is in fact a "campaign" much like an advertising campaign.

Ideas count. That makes it a difficult proposition and likely to remain so.

Good ideas are not plentiful.

The rapid growth of media agencies as compared to creative agencies il-

lustrates the principle. Superior media performance, because it is based

on systems, is scalable. Superior creative performance, because it is based

on talent, is not. Similarly, media packaging can be a very big business (as

the $8 billion upfront demonstrates), while Integrated Media programs

will likely remain a cottage industry.

So despite the client meetings to discuss goals and the client meetings to

plan strategies, most Integrated Media proposals are just media. Value-

added packages designed to sell network television at a higher price.

Which brings us back to media basics.

If the idea isn’t there, then price has to be the issue.

- November 1, 2000 -

Originally published in Myers Mediaenomics Report

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LET’S LEARN TO USE THE “F-WORD”

Database fusion gives us a better way to target television

___________________

It’s almost a species

imperative. Brands strive to

grow because big brands

survive and prosper. They are

the most profitable and the

easiest to sustain.

But it’s hard to have big brands without big media, and that need for big

media’s reach in the face of TV fragmentation, has pushed advertisers

towards media-mix.

It is more than a flow-chart strategy. Media-mix requires combining data

sources to estimate cross-media duplication and campaign reach and fre-

quency. Television and Print top the list of databases that need to be in-

tegrated for true media-mix planning. A monumental job.

Single-source

But the brass ring of media-mix information isn’t data integration, it’s

“single source,” a study accurately measuring many media and product-

use in a single national sample. The single-source studies we currently

use are a shadow of that promise. The glaring problem is the television

recall measurement they are forced to use.

EPHRON ON MEDIA 26


Today it is impossible to obtain accu-

rate TV information without using a

meter because fragmentation results

in shorter tuning intervals which nei-

ther the diary nor aided-recall can ac-

curately record.

The alternative route to single-source might be to start with a meter

panel, like the NTI Peoplemeter sample, and survey panel members for

the added information that would make it single-source. But that is not

an option. The burden of a lengthy MRI-type print, other media and prod-

uct usage survey would substantially reduce already low meter panel co-

operation rates, throwing into question the value of the TV data.

So we’re at an impasse. We don’t use single-source. We measure TV

with a Peoplemeter panel and measure most everything else in different

surveys. To do a mixed-media plan we use random duplication or MRI

cross-media duplication rates or we make things up.

An alternative is data fusion.

Data fusion

The fusion concept is simple. Database A is the magazine readership sur-

vey. Database B is the TV peoplemeter panel. Database A is ‘married’ to

Database B at the respondent level by ascribing the survey-measured be-

havior of its respondents to matched peoplemeter panel members.

When this is done, the fused peoplemeter database acts as if its respon-

dents had participated in the print survey and answered the magazine

reading and product use questions.

EPHRON ON MEDIA 27


That’s the theory. If this seems

spooky, you’re giving fusion too

much credit. The NTI panel mem-

ber’s ascribed reading will not be the

same as his or her actual reading, but

in aggregate the fused database will

produce the same numbers as appear

in the MRI readership survey and the

NTI respondent database TV viewing

will be unchanged.

The fusion match is usually limited to about a dozen characteristics col-

lected by both surveys. If the ascribed behaviors used in planning are

strongly associated with the links used to match respondents, the fusion

will “work.”1

In some cases, such as product categories where lifestyles rather than

demography determine usage, the fusion “hooks” will not be as relevant

and the fused data will not be as good.

But that usual question “how good is a fusion?” is the wrong question.

We should be asking “is using fusion better than what we are currently

doing?” Fusion works on the same statistical assumptions as when we

target Women 18-49 for shampoo commercials because, per-capita, that

group uses more shampoo. But the fusion match, ascribing shampoo use

to TV viewers is likely to be better because it uses more variables.

1 Today’s TV/Print fusions are limited by the absence of readership data in the TV database, but TV viewing data is usually collected in both.

EPHRON ON MEDIA 28


The MARS/NTI fusion

The first US example of a fusion

is the newly released MARS/NTI

database.

It is a special purpose database.

The MARS Pharmaceutical Reader-

ship Study is a national survey of

magazine reading and other me-

dia use in a sample carefully de-

signed to over-represent

consumers suffering from spe-

cific ailments.

The over-sampling is done to ob-

tain statistically reliable data for

the small population groups im-

portant to Direct-to-consumer

drug advertising.

In the fusion, individual respondent records from MARS are joined to the

individual respondent records of the Nielsen Peoplemeter panel based

upon characteristics the respondents have in common. The links include

age, sex, a number of household variables, geography, cable/non-cable

and volume of TV viewing.

The resulting fused MARS/NTI database reports national estimates of

magazine reading and TV viewing among the sufferers of specific ail-

ments as if they were collected by a single-source survey using the Niel-

EPHRON ON MEDIA 29


sen Peoplemeter to measure TV and the MARS frequency-of-reading

questionnaire to measure Print.

User-match versus Demo-match

Up to now the industry has focused on the value of fusion in estimating

cross-media duplication for media-mix reach planning and optimization.

An equally important use of fusion is in targeting television.

TV planning and buying have always relied upon simple demo matching

to target potential buyers. This takes the prominent user age/sex demo-

graphic as reported by User Survey A and selects programs attracting

viewers in that demo from TV Survey B .The problem with this approach

is age/sex targets seldom define consumer markets. More often they just

show concentration of buyers. This results in

“targeting error” of two kinds.

Many in the demo target will not be product us-

ers (false positives) and many users of a product

will not be in the demo target (false negatives).

In DTC targeting where ailment incidence is of-

ten small, the targeting error can be large. For

example, according to MARS, 17% of adults suffer from Acid Reflux Dis-

ease, a more serious form of Heartburn. The TV target for acid reflux is

Adults 35+ because this group has the highest incidence of the ailment.

Close to 75 percent of acid reflux sufferers are over 35. But only 19 percent

EPHRON ON MEDIA 30


of adults over 35 suffer from acid reflux. That means that 81 percent of the

dollars spent targeting Adults 35+ are wasted.2

Furthermore it is likely that adding some other combination of factors

like marital status, lifestyle, geography, and income would help to better

predict the ailment. That’s what fusion provides.

Fusing MARS with NTI allows agencies to select TV networks, genres

and programs, based upon the ascribed viewing of acid reflux sufferers

rather than the simple age/sex demographic tendency of that sufferer

group. This in theory can produce a major improvement in TV planning

and buying.

Different Buying Decisions

Moving from theory to practice, it seems to work. Since the MARS re-

cords are fused to NTI, the TV planning and buying currency at the re-

spondent level, it is possible to run optimized schedules using the fused

database to compare the cost consequences of using the demo target in-

stead of the ailment. Here are the different solutions the Kantar X*Pert

TV optimizer produces. The targets compared are Acid Reflux Sufferers

and Adults 35+ (Table 1).

2 There is no way to reduce demo-targeting error. A more inclusive demo in-cludes more people who are not in the target, and a narrower demo excludes more people who are the target.

EPHRON ON MEDIA 31


TABLE 1 X*pert TV Optimization.

Adults 35+ versus Acid Reflux Sufferers 65 Reach Goal.

X*Pert shows a 65 reach of Adults 35+ requires 146 target points. The

fused database shows that schedule generates 153 GRP’s against Acid Re-

flux Sufferers and delivers a 67 reach. The higher numbers signal that tar-

geting the demo results in buying too much television.

To reach 65 percent of Acid Reflux Sufferers requires only 143 target points

distributed differently. This reduces the cost of a 65 reach from

$3,227,699 to $2,816,094, a saving of 13 percent. So in this case it seems

possible to buy a TV reach goal for less by using the ailment in place of

the demographic.

DAY PART Optimized on

Adults 35+ GRP’s

(translated to Acid Reflux Sufferers)

Optimized on Acid Reflux Sufferer

GRP’s Net A Prime Sitcoms 13.6 14 0

Net B Prime Sitcoms 11.6 12.9 15

Prime Law/Crime 34.9 33.2 36.2

Other Sitcoms 6.7 9.1 11.1

Cable Comedy 6.3 6.7 1.2

Cable Movies 7.9 8.7 6.4

Cable Selective 9.7 12.6 19.2

Cable News 11 10.7 7.9

Syndicated Talk 4 4.1 10.7

Other 50.5 40.6 36.4

Total TRP’s 146.2 152.6 143.4

Reach 65 67 65

Total Dollars $3,227,969 _ $2,816,094

EPHRON ON MEDIA 32


Sinus Sufferers

Another example. This comparison is between Adult Sinus Headache Suf-

ferers and Adults 18-49, the corresponding demo target (Table 2).

TABLE 2 X*pert TV Optimization.

Adults 18-to-49 Versus Sinus Headache Sufferers 65 Reach Goal.

X*Pert shows a 65 reach of Adults 18-49 requires 166 target points. But

this is overkill for Sinus Sufferers. The fused database shows it generates

190 Sinus Sufferer GRP’s, many more than needed which takes the plan

above the 65 reach goal to a 70.

DAY PART Optimized on

Adults 35+ GRP’s

(translated to Sinus Sufferers)

Optimized on Sinus Sufferers

GRP’s Net A Prime Sitcoms 8.3 8.0 0

Net B Prime Sitcoms 11.3 11.9 19.2

Prime Law/Crime 26.0 34.9 33.7

Other Sitcoms 20.6 17.3 13.8

Cable Comedy 3.2 3.4 9.2

Cable Movies 28.5 23.8 12.9

Cable Selective 13.1 12.6 19.2

Cable News 10.0 7.6 8.2

Network Sports 20.6 24.0 10.1

Other 48.1 71.4 24.1

Total TRP’s 165.6 189.9 150.4

Reach 65 70 65

Total Dollars $3,880,229 _ $2,959,056

EPHRON ON MEDIA 33


To reach 65% of Sinus Sufferers

requires only 150 target points

distributed differently. This costs

$2,959,056 instead of the original

$3,880,229 or 24% less than the

original plan.

Both examples suggest it is possible to buy TV target reach for less using

fused ailment data in place of demographics. The open question is “why

does this happen?” Should we be convinced by these results?

Some ailments increase TV viewing

I think the fusion is sound enough to use for planning in these cases be-

cause MARS internal data show ailments like Acid Reflux and Sinus Head-

ache correlate with viewing levels higher than those of the surrogate age

demos (Adults 35+ and Adults 18-49). And the MARS/NTI fusion uses

volume of viewing as a linking variable.

Differential viewing rates support the idea that it is possible to achieve a

reach goal of ailment sufferers with fewer GRP’s. MARS shows that Acid

Reflux Sufferer viewing indexes at 110 compared to all adults, while the

demo target (Adults 35+) indexes at 102. MARS also reports that adults

suffering from acid reflux, who are in the demo group, have a viewing

index of 113.

The same pattern holds for a large number of ailments like backache, de-

pression, insomnia and obesity, where the sufferer is perhaps less active

than his or her demo counterpart because of the ailment itself (Table 3).

EPHRON ON MEDIA 34


TABLE 3 TV Viewing Rates

Ailment versus TV Planning Demo

Demo Ailment Ailment/Demo

Acid Reflux (A 35+) 102 110 113

Sinus (A 18-49) 98 107 104

Backache (A18-49) 98 106 106

Depression (W 18-49) 100 107 102

Insomnia (A 18+) 100 109 109

Obesity (W 18-64) 101 110 110

MARS 2002

Targeting Error is the issue

The usual question “how good is a fusion?” is the wrong question. We

should be asking “is using the fusion better than what we are currently

doing?” The yardstick “better” and the problem of “Targeting error” are

key to understanding the value of fusion. As the Acid Reflux and Sinus

examples make clear, in cases where TV viewing is increased by the ail-

ment, the benefits of fusion seem pretty obvious. They make the consid-

erable point that age/sex targeting may waste a lot of DTC dollars.3

One suspects that tighter targeting through fusion could help a wider

range of advertised products. Especially those where use correlates with

more or less TV viewing.

EPHRON ON MEDIA 35


Conclusion

Up to now the industry has focused on the

value of fusion in estimating cross-media du-

plication for media-mix reach planning and

optimization. An equally important use of

fusion is in targeting television.

Many planners, including the author, have

been skeptical of the value of planning TV

based on usage data because television does not target user groups very

well. But it now seems obvious that where usage correlates with TV

viewing, the value of user targeting can be enormous.

- September 10, 2002 -

3 There will certainly be cases where the user group views less than the surro-gate demo and requires more dollars than the plan assumes.

EPHRON ON MEDIA 37


THE CURSE OF SUPERMIDAS New Approach Could Unleash

a Whirlwind of Changes.

____________________

Optimization is a simple idea which grows in

complication as soon as we think through its

effects on the total TV planning and buying

process. This paper looks at the root question

"What should we optimize?" and discusses op-

timization’s impending collisions with current practice. Among them,

CPM planning, day parts, brand allocation, posting, guarantees and the func-

tional separation of planning and buying.

"Optimization" is from the Latin. It means, "to make best or most favor-

able." Super Midas, on the other hand, is from the Greek. At least the Mi-

das part is. Super sounds like advertising. Midas is a remarkable name for

a media optimizer, because it frames the problem perfectly.

The Midas Problem.

Myth has it that Midas was a CPM-buyer from Phrygia who was granted

one wish by the optimizer God (actually Bacchus, the God of Drunken-

ness). Everything he touched would turn into the lowest cost-per-reach-

point. The story takes a nasty turn when Midas discovers his golden touch

transforms everything, including food and family, leaving him hungry and

alone. The media moral of Midas is "be careful what you try to optimize, be-

cause you may be successful."

EPHRON ON MEDIA 38


The fundamental question is "What to optimize?"

Indeed the fundamental question is "What to optimize?" The brave answer

is "sales." The purpose of media planning and buying is to enhance adver-

tising’s positive effects on sales. It does this by allocating dollars to place

ad messages in media vehicles across time. John Philip Jones’ big contri-

bution to the common good is evidence that a strong message can affect

sales, directly and immediately.

So we might ask of the perfect optimizer "Take this $10 million media budget

and spend it in a way that will ultimately produce the most sales for my brand."

But the perfect optimizer—not being stupid—might ask back, "Okay, but

first you need to tell me how advertising works to produce sales so that I may

translate that goal into a media strategy for achieving it." And that is where

we need to start.

How do we think advertising works to produce sales? My answer is "By

influencing the brand selection of consumers who are ready to buy the product

(recency)." Recency theory says optimize reach. But it’s not that simple.

The winning reach optimization strategy has more than one reach im-

perative.

• Maximize one-week reach of consumers who are ready-to-

buy—to expand penetration and encourage repurchase. This is

helped by shortening the reach planning period to a week or less.

• Maximize monthly, quarterly and full-year reach of purchasers

across the campaign to build a pool of consumers to whom the

brand is known and salient. These are the longer-term reach ob-

jectives.

EPHRON ON MEDIA 39


The goals might be a >35 weekly reach, a >65 4-week reach, a >80 13-

week reach. The selection criteria for plans achieving these goals are the

highest total of weekly, 4-week, 13-week week target reach points.

Should all reach points be given equal value?

The second serious question for recency optimization is "Should all reach

points be given equal value." The answer is a resounding "No." Reach points

need to be given different values relating to viewing quintile composition

(i.e., the lower the probability of reaching the viewer the higher the value)

and probability of the target viewer seeing the commercial.

The optimization process itself—driven by "lowest-cost-per-incremental-

reach-point"—eliminates the need for explicit quintile weighting, since it

will assign a higher value to spots that increase reach above moderate

levels (i.e., attract lighter viewers).

Optimization will show that dispersion buys reach. Advanced optimiza-

tion will ultimately reject day part planning to work simultaneously with

all TV inventory—Day, prime, EAM, broadcast, syndication, cable, un-

wireds— which may then be grouped by day part for the convenience of

buying.

This is a fundamental change because day part planning assumes a range

of exposure values — e.g., a prime target exposure is worth more than a

day target exposure —but since current reach optimization simply com-

pares incremental-cost-per-reach-point, that distinction is lost in the price

comparison, making CPM target the principal driver.

EPHRON ON MEDIA 40


Some kind of exposure value weighting is necessary for true optimiza-

tion, because there is substantial variation in "sees-commercial-per-rating-

point" across different kinds of television. This relates to time of day,

commercial clutter, program and viewing circumstance. If we optimize

on ratings-reach alone—which is largely CPM-driven—it is certain we

will not optimize on sees-message reach.

That is "the Midas problem" — turning everything into CPM.

All media price on qualities which are independent

of audience size.

As an industry, we have always been ambivalent about exposure values.

We act as if they exist in selecting day parts and programs, but since

they’ve never been measured rigorously, we find them hard to defend.

All media price on qualities which are independent of audience size, for

example objective characteristics like the "sight, sound and motion" of TV.

These non-media attributes are often more important than audience in

selecting media types. They are one reason why TV dollars do not shift to

other media in spite of rising TV costs.

There are also softer qualities like "involvement" — which can be "sort-of

measured" and used to differentiate vehicles within television. These are

often called "halo" qualities because the case is made that they carry-over

from the program to the commercial and increase its effectiveness.

Program Liking

An intuitively appealing halo quality is "program liking." The classic study

of Lloyd and Clancy (1991) and the more recent analysis by David Pol-

EPHRON ON MEDIA 41


track (1997), suggests a "liking" measure -- similar to a TvQ score -- can

identify those program environments, which improve commercial effec-

tiveness.

This work is suggestive, but far from convincing and has had little influ-

ence on TV planning or buying. One important reason is the presumed

carry-over effects of program environment hit the brick-wall of schedul-

ing practice — the "podding" of TV commercials. With close to eight se-

quential spots-per-break, the lead-in to a commercial is most often another

commercial.

Dial-switching

In the late 1980's the television networks offered dial-switching as a behav-

ioral surrogate for probability of commercial exposure. The reasoning was

dial-switchers are less involved in the program tuned and less involved

viewers are less likely to see the commercial.

But a little thought suggests dial switching is not one-dimensional. On the

one-hand, it suggests less involvement with what’s on the screen, on the

other hand, it demonstrates a keen awareness of what’s on the screen. You

don’t change channels if you’re not looking at the set.

Early morning TV, which functions like radio for many of us, has one of

the lowest dial-switching rates in television. For these, and other reasons,

dial-switching data has not has an important role in TV planning.

Attention as a measure of TV value.

"Attention" is a more sensible mediator of message effect. Viewer atten-

tion to what’s on the screen has a direct bearing on commercial percep-

tion and communication.

EPHRON ON MEDIA 42


The idea of degrees of attention reflects a major change in our understand-

ing of the way people use television. In the 1970’s when television was an

attraction and commercials were fewer, viewer attention was taken for

granted.

Today, TV is commonplace—a habit and a household environment. The

average home has more TV sets than adults -- in different rooms used by

different people, in different combinations, at different times with vary-

ing attention. Even prime time family television is not necessarily atten-

tive viewing. More than seventy percent of it is accompanied by other

activities like talking, eating or reading.

In this active setting, "degree of attention" as measured by "eyes-on/ears-open

to the screen" is a function of many objective things, such as day part,

presence of children, location of the set, coincident activities, number of

persons in the room, type of program and who selected it.

For example, SMART data shows (or suggests) the following illustrative

patterns:

Solitary viewing gets greater than average attention. Daytime viewing with a

child present gets lower than average attention. Early morning co-viewing to a

talk program on a kitchen set with a child present gets far lower than average

attention.

I believe the real TV value issue is attention not dial-switching, involvement

or liking. And fortunately, attention, as a measure of probability of seeing

the message, can be modeled from ratings information collected right

now.

EPHRON ON MEDIA 43


Our goal should be to use attention data to produce a "sees-message" rat-

ing for each telecast. And we are almost there. The viewing circumstance

of each respondent (Day part, program, who else is present, which set is being

used, etc. ) is now recorded by the ratings process. The next step would use

these data to model the probability of that respondent seeing the commercial mes-

sages contained in that telecast. The sees-message rating is the summation of

respondent-level attention-weighted probabilities.

To demonstrate how attention-weighting might be used to modify cur-

rent OTS ratings, I have worked-out a prototype using the variables and

values derived from SMART data and common sense. Because the

SMART data shows distinct patterns, but not a large range in attention, I

have arbitrarily limited the potential effect of each factor to 30% or less of

the raw exposure value. By applying these factors to familiar programs in

different viewing situations, we can see their effects and judge if the ap-

proach makes sense (see table on following page.).

EPHRON ON MEDIA 44


EXHIBIT A MODELING "PROBABILITY OF SEEING A

MESSAGE" FROM RESPONDENT-LEVEL DATA

Percent discount or premium applied to viewing. Weights are additive.

SET LOCATION (0 TO-20) VIEWERS PRESENT (0 TO - 20)

Family room 0 one 0

Bedroom 0 two -10

Kitchen -20 three or more / or child -20

DAYPART (0 TO -20) PROGRAM TYPE (0 TO -20)

EAM Magazine -20 Drama 0

Day serial -15 Comedy -2

Day other -20 Prime news -5

News -5 Talk -10

Prime (8-9 PM) -3 CAPTIVE VIEWING* -30

Prime 9-11 PM) 0 APPOINTMENT VIEWING +15

Late nite (11:30-1:00 PM) 0 3 of 4 telecasts +15

RATING LEVEL (+5) CLUTTER (-15)

Top 10 +5 > 9 min-per-hour) -10 * Male viewing to predominantly female programming (day soaps, Oprah) and female viewing to predominantly male programming (football, hockey, etc.).

Instance 1.

An adult woman viewing Good Morning America.

High value: Bedroom set viewing alone. Exposure factor 0.70.

Calculation: Daypart/ program -20, rating level (0), Clutter -10 Weighted ex-posure value 1.0-.30 + 0.70

Low value: Kitchen set with husband and child present in the room. Exposure factor 0.30.

Calculation: Daypart (-20), child present (-20), kitchen set (-20), rating level (0). Clutter -.10 Weighted exposure value 1.0-.70 = .30

EPHRON ON MEDIA 45


___________________

Instance 2.

Adult male Seinfeld exposure.

High value: Living room set alone. Exposure value 1.03.

Calculation:Daypart (0), Comedy (-2), family room (0), other viewers (0), rat-ing (+5). Weighted value 1.0 + .03 = 1.03

Low value: Kitchen set, 2 adults present. Exposure value 0.68.

Calculation: Daypart (0), Comedy (-2), kitchen (-20), 2 adults (-10), rating (+5). Weighted value 1.0 - .27 = 0.73

___________________

Instance 3.

Adult female General Hospital exposure on kitchen set, alone. Exposure value 0.65.

Calculation: Daypart (-15), Kitchen set (-20), alone (0). Weighted value 1.0-.35 = 0 .65. Same exposure, Family set = .85)

___________________

The exposure-weighted audience for each spot would be the sum of the

projections of the attention-weighted respondent exposures — expressed

as a rating and projected as a whole number for CPMs. Reach calculations

would use the attention-weighted probabilities.

I am not arguing for the precise numeric values, which are largely un-

supported, but rather for the idea of using respondent-level attention

weighting, based upon circumstance of viewing combined with better

attention level research to provide the weightings for reach optimization.

Because unless we can solve the Midas Problem, we will surely be optimiz-

ing the wrong thing.

EPHRON ON MEDIA 46


Should the Planning Unit be Reach not TRP’s?

Since the optimization is on reach and the spot selector is cost-per-

incremental reach-point, the planning unit for optimization should be

target reach points and not target rating points. A $20 million brand plan

should be written as 42 weeks at >38 weekly reach, >67 monthly reach, >

85 quarterly reach and >92 52-week reach—with no daypart distribution,

weekly TRPs or total TRPs indicated. Since several plans might accom-

plish this at the budget, the plan selector would be the highest total of

weekly, monthly, quarterly and campaign reach points.

Optimization and allocation.

Optimization is by brand, TV buying is by corporation. Individual brand

optimizations have to be combined for corporate buying and then the

corporate package has to be re-allocated to each brand. The goal of alloca-

tion is to achieve each brand’s plan at the average brand cost-per-weekly-

reach-point. (Since weekly reach is the optimization goal, cost-per-weekly-

reach-point should be the allocation standard.) This is quite different

from the current target-point allocation model.

Handling Volatile Pricing.

Since the reach value of a spot is in large part a function of its cost, market

price is a critical driver. The wild card of pricing can be dealt-with by

running several different optimizations at different, day part price rela-

tives and moving to the best-fit scenario when the market happens. But I

think "real time" optimization using actual market pricing makes more

sense.

In today’s TV markets, what you buy has a greater bearing on cost-

effectiveness than how well you buy it. This means buying should drive

EPHRON ON MEDIA 47


planning—the opposite of happens now. The current practice of building

next year’s TV plan with this year’s cost-experience is bad practice. As the buy is

being negotiated, changes in day part pricing must be allowed to change the op-

timum schedule mix. This will require nothing less than a redefinition of

planning and buying leading to a merging of the functions.

Enactment

Optimization forces attention to another issue — what I call Enactment —

the translation of a computer solution into an actual brand schedule appearing

on television. With optimization, enactment is hyper-critical, because in-

cremental-reach-point planning — the stuff of optimization — requires

specific spots to run in specific weeks. The tolerance for substitution or

delay is far smaller than in traditional gross-target-point planning where

any of a wide array of spots will do and there is an average 4-week reach

window. With weekly reach optimization, liberties in execution will per-

ceptibly reduce weekly reach, losing much of what optimization pro-

grams have been introduced to achieve.

The enactment problem has been ignored in conventional TV planning

and buying, because of the guarantee system. In exchange for reduced

risk, buyers have been willing to accept wholesale substitutions and less

precise timing of TRP delivery. Optimization will make these practices

unacceptable.

The Most Critical Issue of Timing

The recency model makes the precise timing of message delivery urgent.

Monitoring enactment is very different from current stewardship practice.

A weekly reach goal magnifies the importance of weight-as-scheduled,

since both over- and under-delivery result in waste (sub-optimization).

EPHRON ON MEDIA 48


For example, a 40 reach-points a week schedule (80 TRP) has far less

value delivered as 40 TRPs week one, 50 TRPs week two, 150 points week

three. Weeks one and two do not achieve the 40 reach goal, week three

wastes 70 points on excess frequency.

Dynamic posting—the continuous prompt comparison of weekly weight

as run to weekly weight as ordered is essential for executing a recency-

reach optimization. It allows the AOR to take timely action. This is critical

in broadcast network, where chronic ratings under-delivery is made good

with additional units, not according to plan, but at the seller’s conven-

ience—and equally acute in syndication where "cash back" needs to be re-

spent immediately to maintain plan reach.

Learning

Optimization programs are not new. They followed the introduction of

the computer into agency operations. In the late 1960's BBDO introduced

Linear Programming. In the 1970's Compton had Compass, Y&R, the High

Assay Model and MIT’s Lodish and Little developed Mediac.

These primitive systems were invaluable. They made us think-through

the media process for the first time and fundamentally changed media

planning by championing ideas like targeting, reach/frequency, media-mix

and exposure value. But the programs were cumbersome, produced no tac-

tical break-throughs and were soon abandoned.

This second age of optimization is different. It has both the Pentium Proc-

essor and an urgency born of fragmentation. We need an optimizer to

help us buy TV today, because we have so many TV options that just sort-

ing through the inventory is beyond our current systems. And history

will repeat itself.

EPHRON ON MEDIA 49


What we learn by optimizing will fundamentally change the way we plan

and buy media.

- February 9, 1998 -


EPHRON ON MEDIA 51


RESPONSE NOT READERSHIP IS PRINT’S PROBLEM. The Failure of Print Planning.

____________________

(This paper is dedicated to my friend and long-time colleague,

the late Timothy Joyce.)

Bankruptcy Court In London is on Carey

Street. UK Publishers are fond of saying,

"The way to Carey Street is paved with broken

rate cards."

Not true in the US. Here publishers don’t

need a stainless steel rate card to make it.

They need at least two. The real one for

the P&L and the public one for the discounting.

The Death Wish

Magazines seem to have a death wish and agencies are the Dr. Kervorki-

ans. Print has been maneuvered into price negotiation—like television—

without the limited inventories or strong demand that makes negotiated

pricing work for television. Magazine inventories are plastic because they

can add or delete pages. Demand is sluggish because print does not com-

pete for the bulk of advertising dollars reserved for television. With CPM-

readers the only accepted standard of value, magazines spend their ener-

gies bad-mouthing, price-cutting and bitching about under-counts of

readers. It is the worst of possible worlds.

EPHRON ON MEDIA 52


Magazines need a tonic— convincing proof that print advertising, like TV

advertising—can have an immediate effect on brand sales. This would

help magazines compete for TV dollars. It may be a tired argument, but it

has a diamond logic. Price-competition works best when more buyers are

buying.

Print Has Not Done Well

Despite brave talk, print has not done well this decade. In 1986, national

advertisers spent $16.2 billion in television, $5.6 billion in magazines. A

three-to-one ratio. The magazine share of the $22 billion TV/magazine

pie was 26%. In 1996, the pie was up to $38 billion. The magazine share

was down to 24%. It is significant that print’s share decreased even as the

media case for TV weakened. Network prime time ratings are down 40%

since 1986 and CPMs are up 70%. Advertisers know they are getting far

less for their TV dollars than they did a few years back.

In contrast major magazine readership, according to MRI, is down only

2% since 1986. And CPM increases have been nominal. Remember maga-

zine price-negotiation began in earnest in 1987 and worked its way

through he pricing system over the next several years.

As to performance, Magazines are beating TV programs at their own rat-

ings game. Today, magazines are unquestionably the high reach media

vehicles. If they qualified, along with TV programs, for the Nielsen Adult

"Top 10" list, only ER and Seinfeld would make the cut, placing eighth and

tenth. The top eight would be Parade, Reader’s Digest, TV Guide, People,

USA Weekend, BH&G, National Geographic and Good Housekeeping.

EPHRON ON MEDIA 53


The cost-value relationship is shifting to print.

The job of a medium is to deliver audience to message and there is con-

siderable evidence that the cost-value balance in doing this is shifting

from TV to print. But dollars have not followed, simply because advertis-

ers do not believe magazines can substitute for TV in producing a sales

response.

Their perception is magazines work slowly to build brand awareness.

This is based on many years of experience with television and print—and

yet it may be quite wrong. The problem may be the way we measure and

plan print.

• We plan TV for reach. Magazines for continuity. A cheap way to fill-in the

spaces between flights of TV.

• Because of rate card discounts and negotiation, we use many insertions in

few magazines. Six times in a monthly, 13-times in a weekly. When fewer in-

sertions in more magazines is the way to buy reach.

• We show R&F’s for the total schedule not the average week, even though we

know there is a significant difference.

• We flow-chart insertions by publication interval. A monthly fills-in a whole

month, a weekly fills-in a week. The graphic message of our print flow-charts

is many weeks of concentrated message-weight, which isn’t true.

Everything we do tends to exaggerate the strength of magazine sched-

ules. If we approached TV the way we do print, we’d be flow-charting

3,000 spots for an average schedule.

EPHRON ON MEDIA 54


The new Recency planning reveals the weakness of print plans. Recency

says advertising works mostly with consumers who are ready-to-buy.

This focuses us on running enough TV weight each week to build signifi-

cant levels of reach each week. There is a minimum weight threshold in

TV -- about 60-80 target points.

We know from experience it takes at least 50 points-a-week in TV to see

sales effects in-market. A heavy magazine schedule delivers 20 points a

week. Twenty-points won’t work with TV either.

Print at TV weight produces response.

The few recent cases where print was used at TV weight-levels in the US

are tantalizing. In 1991 Family Circle tracked magazine and product pur-

chase using the CitiCorp consumer scanner panel, showed magazine ad-

vertising can immediately increase short term sales.

It also demonstrates the importance of higher TRP levels. Since the "test"

ads were exposed in actual magazine schedules running in several

women's magazines—and the Family Circle purchaser is a heavy maga-

zine reader—the Family Circle purchaser households, (the test group in

which brand purchase was measured), received considerably more print

advertising weight than the brand plan called for.

The research design had the effect of tripling the print weight received by

the test group to TV weight-levels.

It worked.

• Duncan Hines Frosting, for example. Sales were up 29 per cent as a result of

print advertising. The brand ran 94 W18+TRP’s in Family Circle, but the

EPHRON ON MEDIA 55


test group women actually received closer to 262 points when other maga-

zines carrying the campaign were included in the analysis. Those are TV

weight-levels.

• Nabisco Harvest Crisps. Sales were up 39 per cent as a result of print adver-

tising. Test group women received 225 TRPs over a few weeks.

Those are TV weight-levels.

Fifteen test brands showed sales increases as the result of print advertis-

ing. The average test-group print weight was 185 TRPs a month. That is

equal to a light, but acceptable, television schedule.

Another celebrated example. The "Milk Mustache" campaign, out of

Bozell. Magazine advertising alone increased sales in the billion dollar

whole milk category. The 1995 introduction spent $39 million in 48 maga-

zines, delivering Sixty weeks at 95 TRP’s. The average weekly reach was a

40. Those are TV-weight levels.

Advertiser certainly don’t think magazine effects are strong or rapid

enough to introduce a new product. For that you need television. Not al-

ways. In 1992, Coty launched Vanilla Fields A new product introduction

using magazines exclusively. 13-weeks of advertising at 65 target-points a

week. By the end of the holiday season, Vanilla Fields was the number one

mass fragrance brand.

No One Seems Anxious To Optimize Print.

There is agreement that the primary purpose of advertising in mature

markets is to protect and increase share. The usual reason it does, or

doesn’t, is the strength of the message and the reach of the schedule.

EPHRON ON MEDIA 56


Scanner data clearly show the selling-effects of strong messages widely

delivered are immediate and evident. This means advertisers can know

whether a campaign is working before all the money is spent.

The use of short-term sales effects to predict long-term success is redefin-

ing the traditional advertiser/agency relationship. Sophisticated pack-

aged-goods advertisers are using scanner panel data to evaluate

campaign performance in-market, quickly.

Giant advertisers in highly competitive categories—McDonald’s, Miller,

Coke—are giving creative assignments to competing agencies in the hope

of getting campaigns that "work." But these innovations focus entirely on

television. Magazines do not seem relevant when short-term sales re-

sponse is the goal. Today Optimization is the rage. No one seems anxious

to optimize print.

Magazines need to focus on measuring response, not just readership, to

get the attention of advertisers. Print effectiveness is not a parochial issue.

The perception that print works slowly is bad for magazines and worse

for advertising.

Television audiences will continue to fragment and costs will continue to

increase. Advertisers must find effective new ways to reach consumers. A

more intelligent and robust use of print should be the early option.

(This was voted "Best Conference Paper" at the Worldwide Readership

Symposium 8 held in Vancouver in 1997.)


EPHRON ON MEDIA 57


TEACHING TAP TO THE ELEPHANT

Media Planners Have Fewer Options Than They Think.

____________________

Media theorists are naive. Like Captain Picard, we assume if we think it

we can make it so. We are choreographers, who do not understand the

limits imposed by nature. Why else would we try to teach the elephant to

tap dance?

In this parable, the elephant is television,

the tap dance is scheduling.

It begins with the simple idea that advertis-

ing works by informing and reminding. We

look to brand experience and communica-

tion theory to help us find the best message

pattern to inform and remind. The key question is “are we better off

reaching fewer people, more times or more people fewer times with our

message?” It’s the familiar choice between reach and frequency.

In the following example we’ve decided a low level of repetition works

best for the brand. For convenience, we’ve expressed that pattern as a set

of numbers called a “response function”. It shows the value of each expo-

sure.

EPHRON ON MEDIA 58


A Response Function Frequency

Group

Response

Value

Total

Value

1 0.25 0.25

2 0.60 0.85

3 0.10 0.95

4+ 0.05 1.00

In this example the first exposure has a value of 0.25, the second has a

value of 0.60, the third has a value of 0.10 and additional exposures, past

three, have little value. Translated into media terms, this response func-

tion calls for a weekly frequency of two (shaded), because that is the fre-

quency group with the highest value. In fact, a frequency of two is

usually the recommended level in what we call “effective frequency”

planning.

The paradox is we cannot buy a frequency of two cost-effectively, because

that frequency group exists only as part of a larger frequency distribution.

And the shape of that distribution is dictated by television viewing, not

by planning goals.

The Heavy Viewer Problem

Since 25 percent of TV viewers do more than half of all TV viewing, a

schedule bought to reach many viewers twice will waste most of its im-

pressions reaching heavier viewers four, five and six times.

The dominance of heavy viewers also means the familiar formula Reach x

Frequency equals GRP’s is terribly misleading. It suggests Reach/ Fre-

EPHRON ON MEDIA 59


quency is a zero-sum game. It isn’t. As reach increases, frequency must

increase also. One hundred GRP’s can buy a 50 reach at an average fre-

quency of 2.0. But it can’t buy a 70 reach at a frequency of 1.3, because

television doesn’t work that way. A 70 reach will usually require a fre-

quency closer to 3.0 and more than 200 GRP’s.

It is the co-dependent relationship between reach and frequency that

makes our old approach to planning flawed. We consider reach more

valuable than frequency (a principle of recency planning), but we often

act as if high reach goals carry no penalty. They do. And that severely

limits our scheduling options.

Planning for either a high reach or a minimum frequency invariably costs

more than it’s worth. Both goals build very high frequency among heavy

viewer groups, which adds little communication value, and both burn

GRP’s fast, which results in far fewer weeks of advertising.

It is this loss of continuity and concentration of message weight that pro-

duces less cost-effective schedules. As a result, the best scheduling solu-

tion for any brand is more weeks of advertising at moderate weekly reach

goals, regardless of the presumed value of frequency.

As Scotty might say to Picard. “Sorry Captain. The old girl just can’t tap.”

(For a fuller analysis of TV scheduling options, see “Teaching Tap to the

Elephant,” in the Technical Papers archive at www.EphonOnMedia.com.)

- August 1, 2001 -

Documents

From Recency to Fusion - October 2002