A Brief History of Flight

In the mid-1980s, the highly regulated airline industry was relatively unsophisticated about how to price its main product, seats, until Peoples Express burst onto the scene. Peoples’ low fares quickly gained customers and market share. The big airlines took notice and responded in two ways–one obvious and one less so.

American Airlines responded with deep discount “Supersaver” fares, essentially matching Peoples on key routes. This was the obvious response. The less obvious response was the introduction of “yield management,” which gradually brought a level of sophistication and a data-driven pricing model that yielded a 3-8% revenue improvement, according to industry analysts. Yield management quickly spread to the hotel, car rental and other industries.

Yield management is an approach to maximizing revenue when a business has a fixed, perishable resource and can segment customers into groups willing to pay different prices for the same resource. In airlines, a seat is “perishable” as the revenue potential disappears once the flight has flown.

Simply stated, the airlines want to sell the right seat to the right passenger at the right time at the right price. Doing so requires sophisticated algorithms which account for capacity utilization, route scheduling, fuel prices, competitive pricing and the like. All those yield management algorithms are what’s behind the minute-to-minute price changes happening every time you book a flight.

Yield Management… For Marketing?

From an advertiser perspective, yield management is the ideal model:  place the right ad in the right program against the right target at the right price. In concept, it’s the same as selling airline seats, but on the buy side.

Making it Work

What’s required for yield management to work for advertisers?

• Digital – Digital is more easily measurable and therefore more usable in a yield management model.
• Cross-Media Measurement – Marketers must be able to measure viewership across TV, web and mobile to optimize media allocations.
• New Measurement Tools – Marketers must be able to target viewers based on any segmentation dimension, buy media based on ad effectiveness by program, and measure ROI.
• Real Time Data – All three of the above are needed in real time – 24/7/365.
• Accountability – Advertisers must demand greater accountability for every media dollar spent.

For some, the surprising news is that all of the above are either in place or rapidly becoming so. The future is closer than you think.

New Measurement Tools

Two new measurement tools are critical to moving to a real-time Yield Management Marketing Model:

1. TV Program Engagement – TV Program Engagement is a measure of how involved consumers are in a TV program. Is it really a surprise that viewers are more involved in “Desperate Housewives” than “America’s Greatest TV Stars?” Who cares? Marketers should, because TV program engagement is highly positively correlated with ad recall. Higher engagement = higher recall. So, buying ads in high engagement shows instead of low ones is more effective.
2. Advertising Effectiveness – Ads are more relevant to consumers if the equity of the ad fits the TV program they sit within. Is it any doubt that an ad for SlimFast is more effective on the “The Biggest Loser” than a program with different content but similar audience size and demographics? Now advertisers can buy media based on their brands Purchase Intent by program or genre.

Barriers

The advertising and media industry has had decades to build systems and processes to support the traditional media model. The systems for planning, buying and allocating media for brands won’t change overnight. But the trends are there to see, and the Marketing organizations with the most foresight and vision will see that reengineering these will yield great benefits.

So… When Do We Take Off?

There’s no doubt — all of the Yield Management puzzle pieces are now in place. In the future, advertisers will be able to:

• Target the Right Audience – Targeting will move from simple demographics to more sophisticated psychographic and behavioral targeting. And Marketers will be able to drive these segmentation schemes thru most of their marketing contact points.
• Identify the Right Program – Viewership will be supplemented with TV Program Engagement data. Marketers will become more sophisticated in identifying high engagement / high ad recall programs to improve their ad recall effectiveness.
• Match the Right Ad – Marketers will care about and measure the impact of program fit with their brands. This will enable them to match ads to programs based on purchase intent data, for optimal impact.
• At the Right Time – Media planning will move from an annual, exception-driven exercise to a real-time, algorithm driven process, fueled by continuously updated effectiveness metrics.

All of this will be connected to purchase panel data. So all of the buying, planning and allocation decisions will be held to simple question: did I get an acceptable ROI?

This is the coming “seismic” shift in Marketing—real-time ROI Marketing. Those who don’t get on board will be grounded in the new economy.

The Nielsen IAG Top 10 Most Recalled In-Program Placements focuses on brand/product placements
occurring in new summer series on the broadcast networks during the July 13 to August 16 period.

The Recall Score is the percentage of television viewers who can recall within 24 hours the brand/
product of an In-Program placement they were exposed to during the normal course of viewing
new summer series. These scores are then indexed against the mean score for all placements
occurring in these programs during the time period (Recall Index). 100 equals average.

Note: For this analysis, In-Program placements were only considered if the occurrence had visual
elements (i.e., was “seen” on-screen) or both visual and auditory elements (i.e., was both “seen” and
“mentioned”). Only first-run episodes were considered. Both planned and incidental exposures were included.

In short, value-message and recession-themed ads did not break through TV ad clutter at higher than ordinary rates.  In fact, ad recall of the 67 ads evaluated was at rates lower than historical averages for the 11 advertisers.  Packaged goods manufacturers saw no decline, while retailers registered minor declines.  Financial service, insurance, auto and telecom advertisers posted significant declines. 

Read more about value-themed ads, including case studies of those that were the most effective, in the new edition of Consumer Insight.

David Kaplan, SVP Research and Product Development, Nielsen IAG

SUMMARY: Spanish-language ad spending is on the rise—posting gains in just about every major product category in 2008. What is the best strategy to reach an audience whose language proficiencies and preferences range from Spanish-only through various degrees of bilingual skills to English-only? Language holds the key to success as a strong emotional link is forged with the Hispanic consumer when ads are rendered in their native language.

Even as the U.S. gears up for a formal census expected to validate the size and scope of its Hispanic population, advertisers are way ahead of the learning curve. While 2008 national TV advertising grew at a slower rate than prior years, the Spanish-language sector increased by 3%, posting gains across every major product category with the exception of automotive offerings.

Together, advertiser spending within the Top 10 Spanish-language product categories expanded by 8% over prior year results, reaching $2.9 billion in 2008. Leading the way on a dollar basis were pharmaceuticals at $663 million, followed by automotive (factory and dealer associations) at $530 million, wireless telephone services at $315 million, department stores at $307 million and quick service restaurants at $300 million.

The fastest growing segment reflects the rising digitization of the Hispanic population: satellite communication services increased their spend on Spanish-language TV stations by 124%, dwarfing the gains by runners-up auto insurance at 39% and pharmaceuticals at 32%.

And this dollar shift accompanies a rise in audience sizes for the Spanish-language networks in the 2008/09 television season. The two major Hispanic networks, Univision and Telemundo, garnered 11% more viewers overall last season, and reported a 6% increase in the coveted adult 18-49 primetime audience demographic (based on Live+7).

But audience size is only part of the story. As an advertiser trying to reach the burgeoning Latino market, it’s also critical to target Hispanics with a high-quality ad in an environment where they are most engaged and receptive to the commercial message. And to do that successfully, from both a media and creative perspective, all signs point to language.

Bilingual preferences
Nielsen IAG measures the impact of advertising among Hispanics of all acculturation segments across English- and Spanish-speaking primetime television every day. Much recent attention has been placed on the emerging segment of bilingual Hispanics, who can seamlessly switch from English to Spanish and surf from Criminal Minds on CBS to Cuidado con el Angel on Univision without losing much in translation. But as an advertiser, where can you more effectively communicate with this consumer?

Reach and cost considerations aside, research shows that viewer response is significantly stronger in general on the Spanish-language networks. Bilingual consumers report 30% higher recall rates for advertising creative executions and the advertised brand when commercials are seen on Spanish-language programming (on Univision and Telemundo) rather than English-language broadcast networks.

Language advantage
Part of the advertising performance advantage can likely be attributed to the unique characteristics of the Spanish-language networks that offer reduced ad clutter and increased ad exposure frequency, as well as Hispanic media consumption factors like lower DVR penetration.

But that doesn’t account for one of the most powerful points of difference: likeability, a key ad effectiveness measure. Ads on Spanish-language TV rated 62% on the likeability scale on average versus just 41% for spots featuring the same brand on English-language TV among bilingual consumers.

On the recall measure, Spanish-language TV ads achieved a 35% brand recall score versus 27% for English-language ads. In many cases, these substantial gaps were seen even for “translated” spots, where the ad executions mirrored the version airing on general market TV, suggesting that the difference lies in something other than the creative treatment or content.

Emotional connection
The performance differential points to a strong emotional link forged between the consumer and their native language. Spanish-language networks uniquely provide a “language outlet” for bicultural Hispanics—many of whom may be speaking English in their daily professional lives, but prefer Spanish in their private or family lives. The television viewing experience, when delivered in Spanish, allows viewers to connect with their culture, history and identity in a way that may not be readily available elsewhere. The translation for marketers: it appears that the bilingual consumer’s appreciation for in-language experiences results in a more favorable impression of those commercials which deliver them.

And the power of language becomes even more evident when evaluating creative-level differences. Ads created specifically for the Hispanic market on average outperform those that are merely lifted or translated from general market TV spots, earning 16% higher brand recall results and 22% better message recall. The factors behind improved performance appear to be culturally relevant cues embedded in the advertising such as Hispanic characters, music and themes.

Character counts
But more than any other element, the inclusion of a Spanish-speaking character(s) in the ad appears to be the driving critical success factor. Consistently, these types of ads resonate more with viewers, receiving higher brand recall and message communication scores than those without such characters. The finding holds for both Hispanic original spots (+29% higher brand recall) and translation spots (+37% higher brand recall), underscoring the benefit of incorporating more relatable talent who speaks the language in the ad.

Creating a specific spot from scratch for the Hispanic market, which incorporates culturally relevant themes and Spanish-speaking characters, generally results in stronger impact, but may not always be practical given production costs and timing considerations. As an alternative, utilizing bilingual actors in ads that are merely “re-purposed” from the general market appear to have some benefit. In this scenario, the creative content and narrative plays out identically to the English-language version (with cultural adaptations where necessary), but the script is verbalized in Spanish. In other words, in the absence of any other cultural cues, an ad where the characters are at least speaking in one’s native language is more likely to grab the viewer’s attention and drive brand impact—regardless of whether it was designed exclusively for the Hispanic market.

Screen scene
Hispanic consumers have become a force to be reckoned with across screens large and small, fixed and mobile. According to Nielsen May 2009 universe estimates, 82% of Hispanics have cable plus (expanded cable package that does not require a cable box)—a usage level which has risen by 12 percentage points from just four years ago and significantly narrowed the gap with non-Hispanics (89%). One-third of Hispanics have wired digital cable, another 33% have direct broadcast satellite subscriptions, 21% are DVR owners and 88% have DVD players.

Two-thirds of Hispanic households have personal computers, with six in ten also signed up for Internet access at home. Nearly seven in ten of those Hispanic Internet households have high speed broadband access—almost identical to the general population percentage. While all Internet users average 28.5 minutes online per day, Hispanic households log slightly less time at 21 online minutes per day.

Nielsen reports that Latinos who are online are more likely to download music than the general Internet population—32% of Hispanics download music online versus 24% of all Internet users. The same pattern holds true for video downloads, with 17% of online Hispanic households pulling video off the web, versus 14% of all Internet users; 9% of online Hispanics downloading movies versus 6% of the general Internet population; and 8% of Hispanics accessing TV shows online versus 7% of all Internet users.

Wired Hispanics trail the general Internet population when it comes to online shopping. While 70% of Internet users shop online, spending approximately $861 per year, just 62% of Hispanics purchase products on the web and spend $762 annually.

Dialing in
Mobile phones have made tremendous inroads in the Hispanic community, which trails only the African-American segment in number of minutes per month (783 minutes versus 811 minutes respectively). Although Latinos don’t spend as much time on the phone, they receive or make more phone calls per day (14) than any other ethnic group, and have the phone bills to prove it—$94 per month compared to African Americans $89, Asians $82 and Whites $80. Roughly two-thirds of Hispanics used text messaging services in the last 30 days, about one-fourth utilized mobile Internet, and the same percentage sent an email in the past month.

What’s clear is that Hispanics represent a viable and growing segment in the electronic marketplace. Their increasing “three screen” media consumption as well as their favorable predisposition to advertising make them an audience that can be harnessed on new platforms to boost brand impact.

That’s not to say every ad in the category was unmemorable. An ad for Claritin featuring Nascar’s Carl Edwards was judged slightly more memorable than last year’s top ad for the category featuring the Nasonex bee. Still, the Claritin ad failed to motivate customers to consider Claritin to the same degree as the Nasonex ad.

Why didn’t this year’s ads leave a strong impression? They just weren’t as good, said Fariba Zamaniyan, senior vice president at Nielsen IAG, Healthcare. “This collectively weaker performance suggests that the creative strength of the advertising is not as strong as it used to be” she said. “In these economic times especially, if you’re going to advertise on TV it has to be memorable. In a high-clutter category like allergy, you can’t afford to miss. Being average isn’t good enough.”

There were more advertisers overall this year (nine, up from seven a year ago) but fewer ads (20 this season, down from 24 a year ago). Ad spending for traditional media within the category from January to April declined 17 percent from a year ago, according to Nielsen Monitor Plus data. That’s about in line with spending declines in other categories, Zamaniyan said. At the same time, allergy advertisers sought the efficiencies they perceived cable TV programming could provide. Nielsen said the allocation to cable ad spending during the January-April period increased 20 percent from a year ago.

The most-recalled ad this year among allergy sufferers aged 25-54 was Claritin’s 15-second “Carl Edwards interview.” No. 2 was Zyrtec’s 30-second “bicycle” ad, which showed a woman taking her bicycle out of storage for a ride now that her allergy symptoms had abated. A year ago, the Nasonex “Bee next to a bottle” was No. 1, followed by Sudafed’s “Teacher head balloon,” which showed a woman’s head blowing up like a balloon as her congestion increased.

Creative quality also is taking the blame for this year’s ads doing less to motivate allergy sufferers to seek remedies. Nielsen IAG found intent to ask the doctor about the prescription brand advertised was down 40 percent from a year ago. Purchase interest declined nearly 20 percent. “Weaker creative which limits the ads’ potential to be recalled has ultimately resulted in lower call to action levels this season,” Zamaniyan said. “Again, the number of ads on air is consistent vs. year ago so, we can’t blame it on clutter – it’s the creative.” She discounted the notion that the down economy could be totally to blame. “It may be one of the factors,” Zamaniyan said. “Advertisers and their agencies often blame the economy, but the takeaway here is that before the advertiser can influence behavior, it has to break through.” As the number of brands advertising increased, she said, that becomes critical. “If the ad is not a unique execution that stands out from the rest and connects with the viewer, then the ability to drive purchase interest or doctor contact is suppressed no matter how recognizable the brand name is,” she said.

Q: An article in the latest BusinessWeek explains how program engagement and advertising effectiveness measurements are changing the way companies place their ads. How is Nielsen helping to change the game of TV advertising?
Lois Miller: Nielsen’s TV ratings have always been – and still are – an important tool in measuring how many people are watching any particular show. But those numbers alone can’t measure how engaged an audience is with that show, or more importantly, with the commercials. Understanding a need for these measurements, Nielsen’s IAG product has emerged as an industry leader for measuring program engagement and advertising effectiveness. This has helped advertisers target buys where the spots are most likely to be recalled by the audience. We’re essentially changing the currency for how ads are bought and sold.

Q: How exactly does your data help advertisers target their buys?
LM: Let’s say there are competing shows on Network A and Network B. Both have similar ratings and both cost the same. But our data indicates that the audience engagement with the program is 30% higher on Network A than Network B. Because there is a strong link between how closely viewers watch the program and their recall of the ad, airing an ad in the show with higher audience engagement will help ensure higher ad recall. In this scenario, that’s going to tip the advertiser’s purse strings toward Network A.

Q: Can’t networks use the data to their advantage to boost ad sales, too?
LM: Of course they can. While the IAG product was initially designed with the advertisers’ interests in mind, this new currency of ad data has helped to level the playing field for the networks. If a show or network might be struggling with lower ratings, it can point to our effectiveness data and argue that its audience has a strong base of attentive viewers. The network can also offer guarantees that its audience will be engaged with the show at a particular level. Not only does this help the network but is also ensures the advertiser will have attentive viewers that are more likely to recall their ads.

Q: You’re the President of IAG Automotive. How important are these effectiveness metrics for car and truck advertisers?
LM: In a time when the auto industry is under tremendous pressure, it’s more important than ever. Car companies need to make every dollar count and that’s exactly what makes our metrics so useful. If a company can spend less money on a spot that they know will be seen by a more engaged audience, then it’s an efficient use of its ad budget.

Our data can also help these car companies develop compelling and memorable ad campaigns. In 2008, for example, we saw 50% more airings for car and truck sales event ads than the previous year. That leads to a lot of ad clutter on a viewer’s TV screen and it can make it hard for that viewer to remember which automaker is offering what. That’s when effectiveness becomes the name of the game. Advertisers can use our data to see which creatives were most effective in connecting with the audience.

Just last month, Lois Miller presented the 3rd annual Nielsen IAG Automotive Ad Awards at the New York International Auto Show. A video recap of the awards can be seen here.

The lists cover only new ads airing between March 30 through April 26, 2009.

The Likeability Score is the percentage of TV viewers who report to like “a lot” an ad they were exposed to during the normal course of viewing TV (among those recalling the brand of the ad). These scores are then indexed against the mean score for all new ads during the period (Likeability Index). 100 equals average. For example, with a Likeability Index of 177, the top ranked American Cancer Society spot has proven to be 77% better-liked than the average new commercial during the past four-week period.

The Recall Score is the percentage of TV viewers who can recall within 24 hours the brand of an ad they were exposed to during the normal course of viewing TV.

The automaker took home the prize for Most Effective Auto Ad of the Year for its spot featuring several real-life women test-driving a Ford Focus for the first time. Other winners included Lexus for Most Effective Green Ad of the Year and Volkswagen for Most Effective Sales Event Campaign of the Year.

Winning ads were determined by results from Nielsen IAG’s 2.5+ million viewer panel measuring the recall and likeability of the ads.