Integrated Marketing Study
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1 Integrated arketing Study Conducted for: Advertising Age October, 2003
2 ackground and ethodology Advertising Age commissioned Lightspeed Research to conduct a study among its own subscriber base, focusing upon issues surrounding corporate perceptions regarding Return On Investment (ROI) and Integrated arketing approaches. The survey was conducted online, via invitations to a selected audience of Advertising Age subscribers, from August 11 through September 21, A total of 222 marketing professionals participated in the study, providing a sampling tolerance for responses of ± 6.6% at a 95% confidence level. While reading the analysis, please keep in mind that many of the individual audience segments have small base sizes (under 50 participants), and the segment results should be viewed as directional in nature. Any significant results within the data will be indicated by the numbers in red font, and will be referenced in the descriptive text within the analysis.
3 Key Study Findings Four out of five professionals (84%) view the advertising and marketing functions as an investment for their company, while only 11% perceive the functions as a corporate expense. o The only segment where almost one in five professionals view the two functions as corporate expenses are those involved within the Consumer Products industry (19%). As an investment As an expense Some other view Company Industry Advertising/edia Financial Consultant Cons. Products Other % % % % % % While most respondents view the advertising and marketing functions as a corporate investment, this group is split on their perceptions of how their corporate CEO or CFO views those functions. 49% believe the functions are views as an expense, whereas 45% believe they are viewed as investments. o Of note is that individuals who report their current title is either CEO or CO are significantly more likely to perceive advertising and marketing as investments for their company. As an investment As an expense Some other view Current Job Title CEO CO arketing Director Other % % % % %
4 Among the various actions that would best define Return on Investment (ROI) to business professionals, three out of four professionals identify Sales Growth (76%) as the most likely action to identify ROI success to them. At least one-half of all respondents mentioned the other success factors: arket Share Growth (61%), Increased rand Awareness (55%) and Positive Shifts in rand Equity/Perceptions (51%). o Professionals from larger corporations (those with annual sales exceeding illion or with marketing budgets exceeding $10 illion) are significantly more likely than those from smaller corporations to identify Positive Shifts in rand Equity/Perceptions as a leading ROI success factor. Annual Sales Revenue arketing udget $1 <$10 < Sales Growth arket Share Growth Increased brand awareness Positive shifts in brand equity/perceptions The advertising and marketing functions are generally perceived as being held to the same level of accountability as other corporate functions by many professionals (43%). An equal number believe it is held to a higher level of accountability (30%) as believe it is held to a lower level of accountability (27%). o Professionals from smaller companies (those with under illion annual sales revenue) are the group most likely to feel that advertising and marketing are held to higher levels of accountability than other corporate functions. Held to same level Held to higher level Held to lower level Annual Sales Revenue arketing udget $1 <$10 <
5 Two out of three professionals (64%) do not involve purchasing agents or procurement officers with their advertising or marketing decision process. o However, professionals from larger companies ( illion or greater in annual sales revenue, or those with marketing budgets exceeding illion)) are more likely than their counterparts to involve those individuals within the decision making process, in order to ensure efficiencies. Yes, involve agents/officers No, do not involve agents/officers Annual Sales Revenue arketing udget $1 <$10 < Nearly nine out of ten professionals (89%) believe that the combination of advertising and marketing helps them in proving ROI to their management, with 40% believing the functions are extremely helpful in this manner. How does advertising/marketing help in proving ROI? Extremely/Somewhat helpful o Those involved in the Financial industry or as consultants are the two groups most likely to feel that these functions are not very helpful to them, in proving ROI. Company Industry Advertising/edia Financial Consultant Cons. Products Other % % % % % % Extremely helpful Somewhat helpful Not very/not at all helpful
6 While being general advocates for advertising and marketing functions to support ROI, two out of three professionals (67%) believe their current measurement tools are not adequate to meet their needs to determine ROI. Are current measurement tools adequate to determine ROI and marketplace results? o Professionals from larger companies are more likely than their smaller corporate counterparts to be dissatisfied with the current tools available to them. Annual Sales Revenue arketing udget $1 <$10 < Yes No There was a wide range of suggestions provided, in terms of tools and methods that these professionals identified as those that would better help them measure the relationship between advertising/marketing and overall marketplace results. any of the suggestions focused on the following general themes: o rand awareness/equity market research o Ongoing tracking data (sales, coupons, telemarketing, online, etc.) o Web-based analytics o ethods to assess lifetime value of customers o Segmentation methods (to identify, assess, and track specific audiences)
7 arketers are seen as the group most responsible for both measuring ROI (78%) as well as proving ROI to the corporation (70%) by the vast majority of professionals surveyed. ost responsible for easuring ROI o Of note is that professionals from smaller companies are significantly more likely to place emphasis upon both agencies and research firms, as the segments responsible for both measuring and proving ROI to their firms. Annual Sales Revenue arketing udget $1 <$10 < arketers Research Firms Agencies edia Sellers ost responsible for Proving ROI arketers Research Firms Agencies edia Sellers o CEO s, as a segment, appear significantly more likely than any other job title to feel that agencies are responsible for both measurement and proving ROI.
8 Direct mail is perceived as the best medium for proving ROI (42%), by more than a 2-to-1 ratio over the next most preferred medium, the Internet (19%). No other media outlet is mentioned by more than one of ten professionals. o Professionals from smaller companies are generally more likely than those from larger companies to believe that the Internet is a good medium for proving ROI. One-half of professionals from very large companies ($1 billion or more) focus upon direct mail as the most preferred medium for proving ROI (52%). est edium for proving ROI Annual Sales Revenue arketing udget $1 <$10 < Direct ail Internet agazines Network TV Spot TV Cable TV Newspapers Radio The medium mentioned most often as doing the worst job of proving ROI is Network TV (32%), followed by Out of Home (14%). Worst edium for proving ROI % Network TV 32 Out of Home 14 Internet 8 Radio 8 Newspapers 7 agazines 7 Cable TV 5 Direct ail 4 Spot TV 3 Syndicated TV 2
9 The majority of professionals ( 59%) agree that Direct arketing is the marketing discipline that does the best job of proving ROI. This finding holds true, across all relevant audience segments. arketing Discipline doing best job of roving ROI % Direct arketing 59 edia Advertising 11 Coupons 10 Sales Promotion 8 Event arketing 3 Public Relations 3 In-Store Advertising 1 Product Placement/Integration 1 Custom Publishing 1 oth edia Advertising (26%) as well as Public Relations (25%) are equally mentioned as disciplines that do the worst job of proving ROI to professionals. These are followed by Product Placement/Integration (13%) and Event arketing (11%). arketing Discipline doing worst job of proving ROI o Event arketing is in substantial disfavor for proving ROI among professionals from larger companies. Annual Sales Revenue arketing udget $1 <$10 < edia Advertising Public Relations Product Placement/Integration Event arketing Custom Publishing In-Store Advertising Coupons Sales Promotion Direct arketing
10 Three out of four professionals (74%) believe that more experimental forms of advertising (such as long-form commercial content) should be help to the same ROI standards as more established forms of advertising. Should experimental forms of advertising be held to same ROI standards as established forms of advertising? o This perception is most strongly advocated among professionals from larger companies. Annual Sales Revenue arketing udget $1 <$10 < Yes No Professionals are somewhat split on their thoughts whether too much focus and reliance on ROI discourages advertising/marketing creativity and innovation, with 44% saying they believe this to be the case and 56% taking the opposite stance. Does too much reliance and focus on ROI discourage creativity and innovation in advertising and marketing? o Professionals from larger companies are more firmly on the side that ROI focus does not, in fact, stifle creativity and innovation (on average, more than 60% of this group feels this way) Annual Sales Revenue arketing udget $1 <$10 < Yes No
11 ost professionals (64%) do not believe that accountability is any less important for advertising and marketing functions, due to those disciplines being as much art as science (and based on the belief that instinct can be as important as data ). Accountability is less important for advertising and marketing, because it is as much an art as a science, and instinct can be as important as data % 19 Strongly/somewhat agree Neutral 17 Somewhat/strongly 64 disagree Seven of ten professionals believe that ROI focus is a long-term change in how business is generally conducted (rather than a short-term change that is predominantly recession-driven). Which statement best describes ROI focus? ROI focus is generally a long-term change in how business is conducted ROI focus is generally a short-term change and is recessiondriven % 70 30
12 While most professionals (62%) feel that a strong ROI focus does not impede a company s ability to build brand equity over the long-term, there is a small group among those with smaller companies who are more likely than their larger company counterparts to feel that ROI emphasis does, in fact, hurt corporate ability to brand-build over time. Does a strong focus on ROI impede the ability to do branding and build brand equity (and perceptions) over the longer term? Annual Sales Revenue arketing udget $1 <$10 < Yes No ore than four of five professionals (83%) do not compensate their agencies or marketing vendors based on ROI results that are tied directly back to the work conducted for their company. This finding is ubiquitous across all audience segments. Do you compensate your agencies and marketing vendors based on ROI results as related to their work? % Yes 17 No 83
13 Agencies (65%) and edia Sellers (64%) are perceived as being more resistant to being held accountable for their work (and subsequent results on their client s ROI) than are arketing Vendors (52%). Of note, though, is that business professionals believe all three groups are generally resistant of having their work product held up to the corporate ROI goals of their clients. o While the perceptions surround Agencies reluctance to be accountable is ubiquitous across audiences, there are specific groups who feel that either arketing Vendors or edia Sellers are willing to be accountable for their work: Professionals from companies with annual sales of $10 illion to under illion; Professionals from companies with marketing budgets between $10 illion to under illion. Agencies Resistant to being held accountable for their work (and subsequent results on ROI) Willing to be held accountable for their work (and subsequent results on ROI) edia Seller Resistant to being held accountable for their work (and subsequent results on ROI) Willing to be held accountable for their work (and subsequent results on ROI) Annual Sales Revenue arketing udget $1 <$10 < arketing Vendors Resistant to being held accountable for their work (and subsequent results on ROI) Willing to be held accountable for their work (and subsequent results on ROI)
14 General Profile of Study Participants (ASE) (222) Current Title % arketing Director 40 CO 12 CEO 12 Other 36 Company Industry Consumer Products 12 Financial 10 Advertising 10 Consulting 10 Publishing, Printing, edia 6 Food, everages, Restaurants 5 Entertainment 5 HealthCare/edical 4 Telecommunications/Utilities 4 Automotive 4 usiness Services 4 Computer Software 3 Travel & Hospitality 3 Computer/Electronic 3 Equipment Personal Services 1 Insurance 1 Legal Services 1 Other 14
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