For most people, Chris Anderson’s 2006 book The Long Tail marked a new way of thinking about selling goods on the Internet. Being free of the physical limits of shelf space, he predicted, would alter what people bought. For music, this would mean the most popular music titles would become less popular as consumers were able to tap into vast online catalogs. In most corners of the business world, and especially in the music industry, The Long Tail was controversial. Would consumers actually start to ignore the hits?

A Billboard analysis of Nielsen SoundScan data going back to 2004 shows Anderson wasn’t correct on all points. Hit digital albums have lost market share to far less popular titles. But hit digital tracks have gained market share over the years. The top 200 tracks accounted for 14.5% of sales in 2004 and rose to 15.8% in 2005, 17.1% in 2006 and 2007 and 17.2% in 2008. Through October 25, 2009, the top 200 tracks’ share stood at 18.7%.

The top 200 digital albums have shown an opposite trend in market share, steadily dropping to 21.9% in 2008 from 28.7% in 2004. At 22.1%, digital albums’ market share through October, 2009 is slightly better than 2008’s figure.

These two trends imply album and track purchase decisions may be driven by different factors. The most popular tracks may be benefitting from a herd effect due to the viral nature of the Internet. The awareness generated by that small number of songs could drown out less popular songs. Album buyers show they have more diverse tastes and take advantage of the vast catalogs at online retailers. So consumers may prefer to sample the depths of long tail through albums, not by individual songs.

Any discussion of Anderson’s book and theories should include how the record label’s role has changed. A popular sentiment of The Long Tail is that artists have all the tools they need to self-release digital music. That is true. Barriers to entry have been lowered to the point where the costs of recording and commercially releasing music are negligible. As Anderson explained in The Long Tail, cheaper tools of production and distribution have greatly increased the supply of music found online.

But acquiring distribution and getting a sale are two different things. People tend to underestimate the amount of competition faced in digital music. Over 100,000 albums were released in 2008 alone – and about half of those were digital-only releases. Not only does a title have to compete against other new releases, it has to compete against the tens of thousands of well known catalog titles that are available online. It takes resources – both money and expertise – to rise above the competition and achieve sales commensurate to what career-oriented artists need. Such resources are the domain of record labels, who can still find success in the digital world.

While The Long Tail was less explicit about record labels’ role in a changing digital marketplace, in July Anderson told The Times that record labels “are now the least important part” of the music industry. That is true for those with very low sales goals. These days a more established artist, or a mere hobbyist, can circumvent a contract with a record label by using inexpensive digital tools and outsourcing some record label functions. For the more ambitious and the less established, a record label is still by far the best way out of obscurity.

Summary of Billboard’s analysis:

• As more digital albums are released, the more popular titles lose market share to the less popular titles. In other words, demand has shifted from the hits to the niches. The head (what Anderson would call the top 5,000 titles) has lost market share to the tail (all other albums). The head accounted for 77% of digital album sales in 2005. By 2008, the head’s market share had steadily dropped to 65%.
• Sales of digital albums have become less hit-oriented while digital tracks have become slightly more hit-oriented. The top 200 digital albums have accounted for a smaller share of total digital album sales since 2004. In contrast, the top 200 digital tracks’ share of total sales has nudged upward during that time period.
• Sales of individual tracks (those purchased independently, not as part of an album) account for the majority of digital music purchased in the U.S. Individual tracks accounted for 57% of all digital music sold in 2008 (assuming 12 tracks per album).
• In any given week, the top 200 digital tracks account for nearly one in four track purchases. To put that in context, Amazon.com’s MP3 store currently lists 9.99 million tracks. So, the top 200 tracks represent only 0.002% of what a large download store stocks.
• Even titles in the tail (below #5,000) have lost some market share recently. In 2008, the top 8,000 digital albums lost market share to lower-ranked albums. But it wasn’t the best-selling albums that suffered the most. Albums ranked from #200 to #800 suffered the biggest drop in digital album market share from 2004 to 2008 – between 25% and 34%
• While lower ranks have gained market share over the years, any one title has not gained much. For example, an album ranked at #9,000 in 2008 sold about 1,050 digital albums. Less than 100 of those units can be attributed to gains in market share over the previous four years.

An expanded version of this story first appeared at billboard.biz.

Is the Super Bowl the ultimate marketing ecosystem of paid and earned media? 2010 will be huge test, as the new reality of consumer expression and cross-platform integration create a powerful new dynamic hovering over the largest single-spot ad spend on record.

What marketers urgently need to understand is not only total ROI on that mega-media buy, but the full return on all the other activities triggered or reinforced by this paid media stimulus. How does paid media drive earned media? And to what degree does earned media halo future paid media efforts? These are critical questions that Marketers need answers to – along with a metric or common yardstick that quantifies the blending of the two.

Getting Real about Real-Time
In an more agile and flexible marketing environment, where there’s actually a chance of making real-time changes based on available data, marketers need to understand the real-time role they can play in making tactical interventions to grow earned media impressions and ultimately, increase odds of success.

Twitter brings a fresh dynamic and promise to Super Bowl media efficiency. The platform reached a reach tipping point in 2009 – so much so that marketers increasingly use it to fan the flames for events, interact with brand mavens or enthusiasts, and, in a growing number of cases, manage or sandbag tension points like customer disappointment or service shortfalls.

Tweets are also increasingly embedding themselves in Facebook feeds, blog entries, and Google search results, magnifying their long-term value. Translated to the Super Bowl, positive playback about Super Bowl ads can have a “latency” effect and provide brands with an almost endless annuity of “earned media.” The same dynamic will be at work with Facebook brand fan pages, which can see massive growth – hundreds of thousands – following a major ad campaign, offline or online.

Quantifying the Big Picture
In the end, Super Bowl spots today need to meet two distinct “torture” tests – one measurable based on traditional TV scoring, and another based on unique dynamics of cross-platform engagement, most notably word-of-mouth and conversation. On a pure TV-impression alone, one can argue that the Super Bowl has become such an unusual magnet for consumer attention and recall – the one day of the year that we “celebrate” advertising – that it is worth every penny. Indeed, curiosity, anticipation, guessing, nostalgia come into play big time before this festival of brand persuasion. Consumers, after all, want to see the ads, almost akin to seeing a movie.

The entertainment halo certainly matters. Over the last three years, Nielsen IAG research found Super Bowl spots achieved a 31% higher break-through and 93% higher likability than the typical ad on television. But it’s not that simple. Timing is also a factor. First and second quarter spots yield more yardage than second half spots, and 4th quarter spots are about comparable to a “normal” TV buy in terms of generating ad recall. The viewer’s ability to associate the correct brand with the ad, and reported likability levels similarly wane over the course of the game. Surprisingly, branded integration effectiveness shows an opposite trend. Recall and brand opinion are lowest pre-game, moderate during the game, and big gainers post game. For Marketers, the mix is clear: focus on ads early and branded integration efforts late. Lastly, the SuperBowl is a touchdown for brands generally: purchase consideration for the average ad the week after increases +13% versus the week prior.

So that’s the foundation of pure “paid” measurements. What about the “earned” side of the equation, which factors in free media, consumer conversation, participation, and the like? Clearly, the Super Bowl in particular shines light across a far more complicated mix of marketing activity and user-engagement. Great copy finds life in other places.

An engaging, even participatory Pepsi game spot, for instance, might trigger a site visit, a Google search, a tweet, retweet, fan-page sign-up, or DVR rewind. It might trigger a desire to share, forward, discuss, critique, rate, or review. It might bleed over into the social media stream of a New York Times or any media reporter (a growing number of whom leverage social media across all platforms.)

The good news is that this digital trail can be quantified with high levels of precision – by volume, reach, tone, source, or even depth of brand advocacy. And much of this can be delivered in real-time, empowering today’s brand manager to make real-time changes or adjustments to the site. Last year, for instance, a large percentage of brands buying spots on the Super Bowl made real-time adjustments to their websites or social media efforts based on pre-game variables.

This year, Frito-Lay’s Doritos brand sits on the extreme of early-adjustments, as the four spots they are running are sourced from user-participation events and contests. In this case, the “earned media” is stimulating the paid side of the equation. Then again, this can work in reverse. When P&G’s Tide brand ran a highly engaging “Talking Stain” spot two years ago, it triggered a user-generated contest that created an impressive annuity of online video that quickly reshaped the brand’s search results for the better. Three years ago, Nationwide insurance estimated that the “earned media” dividend from their Kevin Federline spot totaled over $20 million dollars.

So in the end, it’s just not as simple as “buying” high-reach media. The broader ecosystems truly matter. This year, Nielsen is putting its biggest effort into measuring and quantifying the full return of Super Bowl advertising, combining a comprehensive suite of paid media and earned media metrics into a total “engagement” score. And we don’t intend to stop at the Super Bowl. Over the course of 2010, we’ll be applying our new cross-platform engagement metrics across our work on the Winter Olympics, Academy Awards, and the World Cup.

Webinar: Learn more about Nielsen’s comprehensive approach to the Super Bowl. Join Pete Blackshaw and Randall Beard for a webinar Maximizing Advertising ROI in a Paid vs. Earned Media Environment on December 8 at 2:00PM EST.

Source: The Nielsen Company

Video Viewing on Facebook Continues to Grow
During the last year, Facebook’s online video viewing audience has experienced tremendous growth. Year-over-year, total time spent viewing video on Facebook increased 1,840 percent, from 34.9 million minutes in October 2008 to 677.0 million in October 2009. The number of unique viewers of video increased 548 percent and total streams grew 987 percent during the same time period.

“Facebook’s rapid growth in online video during the last year illustrates the site’s evolution from simply a communications focused tool to a media portal,” remarked Gibs. “Social networking sites are evolving from a venue for catching up with friends to a platform for personal expression, allowing consumers to share their experiences in the full variety of content formats available online.”
 

Source: The Nielsen Company

Although retailers have been thinking about the 2009 holiday season since last January, consumers are just starting to think about their holiday plans. As we do every year, Nielsen fielded its annual holiday retail survey at the beginning of this month to get an understanding of consumers’ holiday shopping plans.  While the economy appears to be improving at a snail’s pace, it’s apparent that many consumers intend to spend less and save more this holiday season. In fact, some 42 percent of respondents stated that compared to a year ago they were planning on spending less money on holiday gifts, compared with only 4 percent who intend to spend more.

An even more surprising trend is that of the money that consumers plan to spend this holiday season, a smaller percentage will be spent online: 63 percent of survey respondents said that they would do at least some holiday shopping online, down 10 points from two years ago. Meanwhile, 7 percent of respondents said they would not do any shopping online compared to just 1 percent in 2007.

Consumers Expect to Spend Less Money Online this Year

Among those that do plan to shop online this holiday season, many consumers expect to spend significantly less than last year. In 2008, 42 percent answered that they would spend more than $300 online during the holiday season. This year, that percentage has dropped to just 31 percent, while 22 percent of respondents said that they are going to spend less than $100 online.

So why do some consumers shop online? Interestingly, the main reason is not to save money, but for convenience. Respondents said the top reason they would shop online was the ability to shop whenever they wanted, followed closely by the ability to avoid the large crowds associated with holiday shopping.

While consumers appear to no longer view the Internet as a value channel, they still see it as a place to do comparison shopping, find coupons and do research. And it’s not just consumers coming from lower household incomes–shoppers of all ages and income levels rely on the Internet to inform their in-store purchases. In October 2009, over one-third of the U.S. online population visited at least one deal-oriented Web site.

Although many consumers don’t feel that they save money by making purchases online, they do view the Internet as a deal-seeking venue. When asked how they use the Internet before going shopping in physical stores, 55 percent of respondents said they use the Internet to compare prices across retailers and 49 percent answered that they use the Web to learn about sales and promotions available in physical stores.

It is clear that while the majority of all purchases continue to take place offline, the Internet has an important role to play—deals found online impact holiday purchase decisions and drive purchases at brick and mortar locations.

For more information and insights on the 2009 holiday season, download our recent webinar,2009 Holiday Retail Season: What Consumers Have in Store for Retailers this Season.

“While our data does show that print newspaper readership is slowly declining, it also illustrates
that reports about the pending death of the newspaper industry are greatly exaggerated,” said
Gary Meo, Scarborough’s Senior Vice President of Print and Digital Media Services. “Given the
fragmentation of media choices, printed newspapers are holding onto their audiences relatively
well.”

According to the demographic data in the study, newspapers continue attract educated, affluent readers.
In an average week:

• 79% of white collar employed adults read a printed newspaper
• 82% of adults with household incomes of $100,000 or more read a printed newspaper
• 84% of adults who are college graduates or more read a printed newspaper

• Download a healthcare-focused whitepaper authored by Melissa Davies: Listening to Consumers 101, How Marketers Can Leverage Consumer-Generated Media

The launch of the Droid by Motorola–which runs Google’s Android 2.0 operating system–is the latest smartphone to be tagged “game changing iPhone killer.”  We prefer to view it as simply a quality choice in a growing line of smartphones rather than something that will stifle the competition. With only 10,000 applications available in the Android market and more than 100,000 available for the iPhone, the Droid–or any Android phone–won’t be killing the iPhone anytime soon. What the Droid will do is advance the use and adoption of web content to a connected device. Android’s integration with popular and widespread Google applications such as Gmail, Google Calendar and Google Voice is a big help as is its ability to run multiple applications (up to six on the Droid). Most users do this on their computers so being able to listen to music while browsing the web and sending email makes a multi-tasking smartphone an appealing option.

The Competition to The Competition

The mobile marketplace is not just a faceoff between the iPhone and Droid; over the next few months, there are at least six new devices on deck that will have large screens like the Droid, keyboards (the Droid has both a virtual and physical keyboard), and an ever-increasing number of applications.

Nielsen’s data from Q3 2009 suggests that if you buy an Android phone, you’ll likely use more of the data features more often than if using any other smartphone.

Also, for the first time in Q3, Nielsen saw more users accessing the Internet on smartphone than that of feature phone users. If this trend continues, we’ll see more than 80% of the devices accessing the Internet being these advanced phones.

The Mobile Universe is Expanding

In Q3 2009, historically the slowest phone sales quarter, more than 25% of all phones sold were smartphones. Expect Q4 to have more than 40% of the new phones sold be smart devices. This is important to watch as smartphones are on track to be the majority of phones in the U.S. by 2011. Projecting Nielsen data out through 2010, we see smartphones crossing 50% of the market by the middle of 2011, roughly equal to 150 million users. This shift could happen much faster with the right conditions such as continued competitive price points on devices, lower “all you can eat” data packages and the increasing consumer need to be connected anytime, anywhere.

By mid-2011, the U.S. should be just over 300 million mobile subscribers. If we assume that we will have over 150 millions uses of smartphones (based on our projections) and that 80% of these users will access the Internet and 60% will access video (given the current data trend these assumptions may actually be low), this means that over 120 million mobile users will be on the Internet and 90 million will be watching video. What we have typically called the “third screen” is quickly becoming an extension of the first and second screens (TV and desktop viewing) especially in some key demographics. Note how Hispanics and African-Americans over-index on Mobile Video and Internet Usage.

Overall, we see mobile media growth accelerating over the next year with more users paying for video and premium content. Remember,  the mobile phone is the one media device that is always within reach. The trend in the U.S. is more interaction, more consumption, and more connected devices. While not a competition killer, the Droid is the next logical step in a market with a wide array of rich media devices. As that trend continues, the battle for better smartphones with better access to content will wind up seeing the consumer as the clear winner.

As with many of us who have spent our entire careers on the Internet, I have a bit of media establishment envy. Don’t get me wrong, I love the Internet; I’ve spent the past 10 years analyzing the Web and continue to believe the future is in truly interactive media. Sentiment aside, for the most part Internet professionals have spent much of our careers at the proverbial kids’ table. For far too long the Internet has been relegated to the “experimental” or “emerging media” categories.

Recent developments indicate the Internet is being taken more seriously. Case in point: NBC and Fox joining forces to create Hulu, if for no other reason than to solidify their participation in the increasingly important and transformative online video market. Google reaping ad-driven revenues that were once reserved only for the wilder fantasies of those working in print classifieds. Apple reshaping the entire music industry through innovation of the playback device, distribution and consumer experience. And the latest example of Facebook, transforming the way people congregate, communicate and navigate the Web today.

If the Internet has truly “arrived” and is being taken seriously, why have we not yet seen significant brand advertising dollars follow? Maybe it’s because we’re in the midst of one of the worst global recessions in history. Perhaps it’s because online creative units tend to replicate the print experience instead of redefining the consumer experience. Most likely is that the online ad industry has decided to remain independent—we speak our own, at times arcane, language; we use our own effectiveness measures reinforcing the belief that the Internet is a direct response media; and, we have yet to provide easy methods to help advertisers understand the role of the Internet in the entire marketing mix. In effect, we have made our lives, and potential livelihoods, very difficult.

The good news is there is hope. As a medium the Internet is quite the contender (and brand dollars are beginning to shift its way). To continue growing, the online ad world must take a hard look at itself as part of a broader, media industry-wide context and, as one prominent TV client put to me, “grow up.” The Internet does not exist in a vacuum and we’ve moved past the days when it is practical to operate like it does. Leading marketers look at media from a holistic perspective to reach today’s increasingly connected consumers. So too must anyone participating in the ad industry.

• For more about cross-media advertising, download the complete report: Integrated Measurement Solutions

SUMMARY: What a difference a year makes. Restaurant operators enjoyed a solid 2008, but by mid-year 2009, more than 4,000 had closed and the average guest check plunged more than 8%. Where did all the diners go? Grocery stores, supercenters and club stores—to pick up meat, seafood, produce, deli and bakery goods for a home-shared meal.

There is nothing like staying home for real comfort. – Jane Austen

Home. It’s our refuge when the world gets to be too much. The upside of a recession is that we come together around the kitchen table to share our meal and our day, taking comfort in the safe harbor of home. While that’s bad news for restaurants, from white table cloth to casual dining, it’s good news for retailers.

Through September 2009, Nielsen reported total store sales—which includes the Rx, perishables, center store grocery (UPC food & beverage), health & beauty care, and general merchandise departments—are expanding. The perishable department is growing faster than all retail sectors in the total market.

According to Nielsen, reported household deli spend for year ending September 2009 was $200—a 5% increase from last year. Bakery whipped up average annual household sales of $174 per year with a 3% increase. Fresh meat and seafood cooked up sales of $437 per year for a 4% gain, produce increased 3% based on annual average sales of $279 per household. Perishable departments are becoming one of the most productive departments at retail and channels outside of supermarkets are taking notice.

Recession reaction
What the recession has wrought, among other things, is a transfer of dollars away from dining out toward spending more on prepared meals at retail. A 2009 Nielsen survey finds that 46% of American households say they are eating out less. And the sales data supports that statement as value-priced prepared meals at retail are posting double digit increases in supermarkets, supercenters and club stores. Other recessionary strategies include reducing unnecessary spending (27%), driving less (14%), shopping for bargains (13%), using coupons (12%), combining shopping trips (8%), going out less for entertainment (6%) and purchasing more private label goods (5%).

Meaty matters
Supermarkets hold a dominant share position with perishables in the meat and seafood department with a 70% market share. More importantly, shoppers are spending more with grocers. Key factors fueling supermarket meat and seafood sales include promotions—51% of meat and seafood is purchased on sale—and prominent circular placement noted by 41% of shoppers.

Shoppers are trading down, up and side-ways as less expensive non-red-meat and seafood protein options such as turkey, chicken and pork sourced primarily from beef department sales. This trade down is occurring in both fresh and fully cooked product categories. Retailers should offer shoppers ideas to enhance the dinner menu with add-ons such as marinades, sauces and seasonings, which are posting double digit increases on both a dollar and unit basis.

Alternative channels are also making a strong push for this business. Supercenters have done a super job with new perishable formats, growing both the purchase size (up 2% to $11.80) and frequency of perishable purchases (from 18.4 to 18.7 trips per year). This holds true in particular for the meat and seafood departments, where supercenters snagged a 0.6 share point change.

Produce picks
Supermarkets hold an even stronger share of produce with more than 72% of the business and growing, posting a 0.3 share increase versus year ago. Supercenters are turning the competition green with envy capturing 12% of the market. Club stores are still underdeveloped in produce (7.9% share) versus comparable department share levels.

In the produce aisle, shoppers appear to be sticking with core vegetables as tomatoes, potatoes and corn are among the few leading categories posting dollar and unit growth. The same holds true for fruits—shoppers are less likely to experiment these days as specialty and stone fruits are down in favor of tasty favorites such as berries, cherries, grapes and avocados.

Retailers have a unique opportunity via their produce department to build their health and wellness equity and market position. The Natural Marketing Institute has identified 25% of the population as “Well Being” shoppers that are health and wellness focused, do the best job of eating right and use quality as their purchase barometer, not price or brand image. Indeed, the Nielsen sales data affirms these results as these shoppers buy 25% more produce than any other perishable sector and prefer random weight items at their freshness peak.

Deli delights
In deli, where supermarkets hold 50% of the business, all major departments are posting strong growth. Deli cold cuts and cheese are up 7% and prepared foods are up almost 5% versus year ago. Notably, supermarket dollar share erosion has been more severe than other perimeter sectors in this broad but expanding market. However, smaller formats (convenience stores, delicatessens, etc.) that offer shoppers “in and out” convenience are posing the biggest threat to supermarkets. Some of the hottest selling prepared deli items include turkey entrees, pot pies and chicken salad. At the service counter, shoppers are buying American as pre-sliced cheese is posting double-digit unit and dollar sales increases.

Retailers exploring ways to differentiate their brand should turn to the deli department, where service counts, personality shines and the area is generally underdeveloped as a driver of retail brand equity. Adopting an “alternative to eating out” strategy has paid off big time for retailers like Wegmans, which scored well in a 2009 study as a top choice for prepared meals, as well as for offering a wide range of fruits and vegetables, high-quality fresh food, well presented displays and a broad assortment of fresh meat and seafood.

Bakery boom
Retailers should not forget to finish off their meal planning strategies with dessert options. The bakery department is posting the most significant growth of any perishable sector for grocers. And just as Clemenza famously says in The Godfather; “leave the gun, take the cannoli”, that is exactly what shoppers are doing as cannolis are posting strong growth within the cakes, cookies and specialty desserts department. Supercenters are the primary threat to grocery as they have almost 16% share of this market—more than any other perishable department. Similar to deli, club stores are not a major competitor in the service-driven bakery sector, capturing about 7% of the market.

Meal planning
Everybody cooks, but in today’s world, meal planning is maturing on both web-based resources for recipes and TV chefs for inspiration and technique. Nielsen discovered that more than one million viewers watched the Food Network during prime time in 2009—a 16% increase over full-year 2008. Furthermore, meal planning is one of the largest and fastest growing online activities, with the average browser spending roughly 10 minutes online planning meals. Retailers like Meijer have developed special iPhone applications that let shoppers check specials, locate recipes, consider wine pairings, even search from their smart phones for special needs like fat free, dairy free, gluten free and high fiber.

The lead position
What does it take to succeed with perishables? Retail perishable sales leaders share a set of characteristics including heavy penetration across one or more perimeter sectors. The average department penetration among the Top 25 retailers scored 83% for produce, 80% for bakery, 79% for meat and seafood and 65% for deli. Prepared foods represent an area of under-developed potential because of high-growth rates, strong drivers like working parents on tight schedules, and the fact that fewer than one-third of the Top 25 retailers’ customers currently buy prepared items.

Service remains key to succeeding in areas like deli and bakery, where sales outpace meat, seafood and produce. Across the store, the produce section affords the best climate for delivering health and wellness messaging. Even aside from absolute sales potential, prepared foods are unique in their ability to serve as an avenue for differentiating the retail banner. For a playbook on doing it right, turn to trend-setting retailers that have set both the delivery standard and consumer expectations for high-quality prepared meals and the multi-media formula for promoting them.

Free Webinar: The Consumer Returns to the Home

Register Now

Date: November 19, 2009 – Time: 12 pm EST/11 am CST

Today’s consumer is realizing that the home is their best resource to stretch a dollar in a difficult economy. The “trade down” from casual dining to home meals has created tremendous growth and brand messaging opportunities in perishable departments and specific center store categories for both retailers and manufacturers. In this session, Nielsen will reveal:

• Who are the new and emerging channel competitors and where are the category opportunities in the meat, produce, deli and bakery departments.
• Which center-store categories create more merchandising synergy with the perimeter.
• Why it is critical that brand advertising strategies stretch beyond the store into the emerging food preparation space.

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Chris Adrien, Vice President, Product Development, Nielsen BASES
Rob Mooth, Vice President, Client Consulting, Nielsen BASES

SUMMARY: Much has changed in the world of innovation and successfully launching new products has become more challenging. For many marketers, current metrics and action standards to gauge in-market acceptance are not quite enough to guarantee success today. Nielsen BASES has evaluated 500+ recent in-market cases globally to understand what it takes to win in an ever-changing marketplace—and has developed the next generation success models that address all facets of the consumer adoption process.

It has become increasingly challenging to bring new products to market. Over the past decade, significant changes have occurred—consumers are more sophisticated, the value equation is shifting, retailers are more powerful and the communication models have been revolutionized. Additionally, product development time is now shorter, competition is fiercer than ever, and there is continued fragmentation at the shelf. Despite these changes, many new product development processes and metrics have not been adapted.

Game changing metrics
It is no secret that most new products fall short of expectations for a variety of reasons. The ones that achieve in-market success do three fundamental tasks really well:

1. Master the Trial Build Chain: Successful new products must have strong consumer appeal and be supported through quality distribution and awareness.
2. Ensure Strong Ongoing Volume: Successful new products deliver on their consumer promise, with strong performance and on-going marketing support.
3. Maximize Franchise Incrementality: Successful new products attract new triers or generate new usage occasions in order to minimize cannibalization of established franchises.

While these fundamentals have not changed, the media and retail landscape has, and the current metrics and action standards used in the past are no longer enough to guarantee success today. To gain a fresh understanding for new product dynamics in the context of current marketplace conditions, Nielsen BASES analyzed 1,900+ recent product launches globally and examined how each initiative did in the marketplace against its goals. The net result was a compilation of 500+ cases of in-market launches that were used to develop the next generation success models, providing a strategic framework for how to win in today’s marketplace.

Success is multifaceted
There are many ways to define success. From achieving volume goals and hitting strategic targets to averting risks and surviving in the marketplace, performance can be measured in a number of ways. While current pre-market performance metrics typically compare a product’s overall performance relative to the competition, the next generation success models analyze the entire adoption process by isolating areas of weakness or readiness for every key measure of success. In this way, you move beyond just measuring how a product compares relative to the competition by overlaying whether this comparison is likely to be meaningful to ultimate success. This adds important new power to competitive comparisons and allows you to focus on issues that will truly make a difference in the outcome.

Five new secrets of innovation
By applying new key measures of success and action standards, BASES in-market test cases demonstrate the potential to improve your success rate. The way to bring stronger products to market is by following five new rules of the road.

1. What worked yesterday might not be good enough for tomorrow.
Make new product development decisions based on the most up-to-date, multifaceted models of in-market success. Relying on the performance standards from the past without adjusting for current market conditions is likely to result in blind spots that can get in the way of success. The current models will help you anticipate issues more effectively and bring more sound propositions to market.

2. Consumer adoption may be complex, but the steps of the process are clear.
Measure and optimize all that matters to success by covering the entire consumer adoption process. The current key measures of success—such as purchase intent, units per purchase and frequency of purchase—continue to be critically important and are key to accurate estimations of volume potential. But there are a host of new factors—such as breaking through clutter, generating buzz and offering true innovation—that also need to be considered.

The consumer adoption process can be broken down into five key factors on which winning products excel:

• Being salient—the ability to stand out. Winning new products catch consumers’ attention and/or offer a distinct consumer benefit.
• Successfully communicating—get the message out. The message needs to be understandable, focused and translatable into memorable ad copy.
• Generating consumer attraction—generate interest. Provide a unique solution to a substantial need/desire, be credible and be free of barriers.
• Converting attraction at the point of purchase—find it in the right store, on the right shelf and at an acceptable cost.
• Delivering an enduring product—achieve lasting consumer adoption with strong repurchase strength.

For each factor, traditional and new performance measures are evaluated to pinpoint and isolate areas of strength and weakness.

3. What it takes to be ready for a successful launch varies at each step in the adoption process.
How does your product perform relative to the competition? Because each step of the adoption process—salience, communication, attraction, point of purchase and endurance—may have different ranges of in-market readiness, each evaluative measure should be benchmarked separately using a four-tier scale: Strength, Ready, Not Ready and Weakness. In doing so, performance is linked to success for every key measure.

Put another way, not all measures are created equal. For some measures, being “average” may be good enough for in-market readiness and improvements may have limited returns on the potential for success. For other measures, it may be more important to perform better than competition, as this could represent an area of real competitive advantage. Moving beyond a simple competitive comparison and adapting launch criteria with this understanding makes for a more robust decision-making platform.

4. Success is about doing most everything well enough, not about really excelling at one facet.
In-market success is not about doing one thing really well. Rather, it is about doing everything you need to do—covering every touch-point in the consumer adoption process—sufficiently. The initiative that does everything enough, but isn’t a star at any one thing is likely to be a success. A single fatal flaw can derail even the otherwise strongest of initiatives—think “weakest link”. Many marketers fall into a trap of focusing only on the one or two areas that a new product does really well, but ignoring areas that represent barriers to success.

Each consumer adoption touch-point has a limited ability to compensate for the failure of another. Take a holistic approach to vetting innovations, making sure that every consumer adoption step is satisfied and optimized. This doesn’t mean that a winning initiative has to excel on everything. A winning proposition will have mostly green “ready” bars, perhaps with a few blue “strength” bars, and no yellow “not ready” or red “weakness” bars.

5. Measure what matters, when it matters.
Set action standards for every new product development stage based on the relevant consumer touch-points. And the earlier you start in the new product development process, the better. Even at the earliest stages, you can understand an idea’s ability to stand out, catch attention, and meet a relevant need. As the idea progresses into a more developed concept and branding, features, and pricing are built in, more elements of the communication and point of purchase dynamics can be folded in. The key is to build on a consistent framework that puts the relevant touch-points into the context of in-market readiness along the way.

Putting the plan into practice
For every stage in the new product development process, set action standards based on readiness for in-market success. For the final test of the concept and product prior to launch, look for “green (ready) or higher” for every touch-point. Seek competitive advantage in the touch-points that are specific to the initiative’s strategy. Only allow initiatives with “yellow” (not-ready) touch-points to move ahead to the next phase if improvement seems likely and monitor these issues closely as the launch proceeds.