Market Research in Advertising

1. Market Research in Advertising Team members Boshao Zhang Deepa Vijayakumar K T Chen Vijayakumar Vijayan Yiren Ren

2. Agenda • What is Advertising • Ad Effectiveness Studies • Advertising Testing Approach • Types of Advertising • Types of Stimulus • Measures of Ad Effectiveness • Testing Methodologies • Qualitative • Quantitative • Measurement Limitations • Summary and Conclusion

3. Advertising • Advertising is a paid form of communicating a message by the use of various media. • It is persuasive, informative and designed to influence purchasing behavior and thought patterns.

4. Advertising Effects Pyramid 5% regular use 20% Trial 25% Preference 40% of Liking 70% Knowledge / comprehension 90% of Awareness

5. Testing, Tracking and Evaluation Advertising Decision Process Positioning Advertising Strategy Develop Ad and Copy Testing

6. Ad Effectiveness Studies • Copy testing • Pre-testing ads before they are introduced in the marketplace • Market testing and tracking • Assessment of ads currently used in the marketplace

7. Advertising Testing Approach • The testing approach depends on: • Type of advertising (TV, Print ad etc.) • Type of stimulus you want to test (storyboards, roughs, etc.) • Measures of effectiveness you want to capture

8. Type of Advertising • TV Commercials • predominant type of ad testing • Newspaper, Magazines • Radio ads, Billboards, Website banner ads • less predominant More expensive the ad, more testing needed

9. Type of Stimulus in Ad Testing • Ad testing requires some stimulus • Validity and accuracy of response depends on stimulus • Types of stimulus • Storyboards • Roughs • Finished ads

10. Type of Stimulus in Ad Testing

11. Measures of Ad Effectiveness • Recall • Measures number of viewers able to spontaneously recall the ad when questioned • Provides recall score for the commercial • Highly influenced by brand name • Recognition • Ad shown later and asked if they remember seeing it earlier • Assumes memory of an ad is an important predictor of effectiveness

12. Measures of Ad Effectiveness • Narrative Playback • Recall the narrative or storyline • Attitudes Toward the ad • Measure how people felt about the ad viewed • Measures include – likeability, stimulation, relevance, uniqueness, believability • Persuasion • Gauge actual persuasion of ad (motivation to buy)

13. Which measures are best? • Advertising Research Foundation (ARF) found that “Likeability” of ad had a higher probability of post-ad purchase of a brand

14. Testing Methodologies • Qualitative tests • Focus groups • Sample of individual personal interviews • Advantage • Inexpensive • Yield diagnostic information • Disadvantage • Bias due to group effect (Focus groups) • Of limited value in ad testing

15. Testing Methodologies • Quantitative tests • One-on-One / Personal Interviews • Consumers shown an ad stimulus in personal interview • Interviewed in malls or their home • Ad shown in “Clutter Reel” among other ads or test ad alone • P&G refers as “C&R tests” (comprehension and reaction) • Does viewer understand what is going on in the commercial? • What feelings and attitudes does the ad generate in this “forced-viewing” situation?

16. Testing Methodologies • Theatre Testing • Large number of people (50-250) attend 2-3 hour research session • Exposed to number of test commercials during TV show • Fill out questionnaire measuring the recall of ads • Adv: Less artificial as ads are within a TV show • Disadv: Respondents are aware of the study hence respond as “Professional Respondents”

17. Testing Methodologies • In-Home testing • Ad prototypes shown at home with regular TV-viewing • Fill out questionnaire measuring the recall of ads • Adv: Most realistic • Disadv: TV program the ad appeared has an effect on recall scores

18. Date Network Location Rating Share NO. of Homes NO. of Viewers 7/9/2002 FOX Milwaukee 9.5 17 10,046,000 14,653,000 Neilsen TV Rating • Objective: Determine the size and composition of the viewing audience • Sample of 5,000 households with 13,000 viewers countrywide • Audimeter/Peoplemeter instruments attached to the TVs in these households • Information regarding usage pattern and the viewers watching the program sent to central computers periodically Example: Major League Baseball All Star Game

19. Superbowl Advertising Rating: a percent of the universe that is being measured, most commonly discussed as a percent of all television households. Share: the percent of households or persons using television at the time the program is aired and who are watching a particular program.

20. Net Ratings • Major Players • Nielsen-Net ratings • Com Score Media Metrix • Top Advertisers Using Online More • Two years ago top 100 advertisers share - 15% • In 2002, top 100 advertisers share - 30% • 82% of auto consumers research their purchase online first. • Ford Increased its ad impressions by 34% • Online advertising still 2% of ad budget (on the rise)

21. Net Ratings example Percentage of searches done by US web surfers at different websites owned by companies shown in May 2003

22. Measurement Limitations • Norms • Ad test results are compared to a standard or ‘norm’ • Is the present norm fair or too high? • Single vs. Multiple exposures • Most ad tests involve only single exposure • Can this motivate someone to buy a brand? • Is this sufficient to gauge people’s reaction? • In real world, ads are seen multiple times • Sample composition • Broad sample definition • In real world, advertising targets specific segments

23. Summary • Ad testing is critical given the amount of investment made in advertisements • The testing approach is influenced by: • Type of advertising (TV, Print Media, etc) • Type of stimulus (Storyboards, Roughs, Finished Ad) • Measures Used (Recall, Recognition, etc) • Quantitative tests provide more reliable results • There are some inherent limitations to be considered while interpreting these results

24. Conclusion • Ad testing is as much art as it is science • Results should be an aid to decision, rather than being the final word.

25. Questions & Answers