- March 11, 2011

A Retrospective View of 50 Years of Advertising Research

This year, the Advertising Research Foundation (ARF) is celebrating its 75 year anniversary. Founded in 1936 by the Association of National Advertisers and the American Association of Advertising Agencies, the ARF leads key industry learning initiatives that increase the contribution of research to better marketing, more effective advertising and profitable organic growth. At the upcoming ARF conference March 21 – 23, I’ll be participating on a panel that will review the past 50 years of advertising and advertising research. The ARF asked me to answer a few relevant questions in advance of the conference (which they have published on the ARF web site) and I thought I’d share those with you here.

What do you see as the most important changes and breakthroughs the advertising industry has undergone in the last 50 years?Technology has been the catalyst for many of the major breakthroughs we’ve seen in the advertising industry over the past 50 years. The introduction of new technologies has not only dramatically changed the way advertising messages can be communicated but also how marketers can measure the impact of their advertising campaigns.

In the 1980s, for example, the availability of point-of-sale scanner data provided a much-needed solution for Consumer Packaged Goods (CPG) and other industries. For the first time, marketers had the tools needed to quickly and accurately measure the impact of price, promotions and print / TV advertising on brand sales, develop sophisticated market mix models, and link sales lift to various promotional and advertising levers. Prior to scanner data, marketers relied on manual store audits and consumer purchase diaries that were considerably less accurate and timely. During this same period, the People Meter was introduced, providing a much improved solution relative to viewing diaries for measuring people’s TV viewing behavior. All of this undoubtedly had a significant impact on the advertising industry, helping marketers better understand TV audiences as well as the advertising effectiveness of the channel. Ironically, at least in the CPG industry, with the availability of more granular and timely measurement of short term sales response, we also saw the emergence of a far greater reliance on price and promotion spending at the expense of investments in branding advertising.

Finally, and perhaps most importantly, the rise in popularity of the Internet throughout the most recent decade provides yet another example of a technologically-driven change driver in the advertising industry. From the development of sophisticated algorithms that paved the way for the massive search ad market to the ever-evolving display advertising eco-system and powerful targeting capabilities, the Internet has impacted all facets of the advertising industry.

More recently, we’ve seen disruptive technologies pave the way for Internet usage via an array of sophisticated mobile devices, providing yet another compelling new avenue for marketers to communicate with consumers

Which challenges have still not been resolved?
A concern I have for the future of the advertising industry relates to the increasing focus on short term sales via direct response tactics and messaging centered on price and promotion versus longer-term brand building advertising strategies. When it comes to digital advertising, for example, the Internet has certainly proven to be an efficient means of communicating with consumers, but it’s clear that this has come at the expense of strong creative and branding advertising. Many times, display ads will communicate only price-oriented messages, and while this can certainly help to generate immediate sales, one has to wonder at what cost in terms of brand value? Do these short-term tactics simply train consumers to buy on the basis of price alone? This problem is compounded by the continued use of inappropriate metrics such as the click on an ad. While relevant for search advertising, the click on a display ad has been proven to be at best an incomplete, and at worst, a misleading metric. However, the click is fast, easy and inexpensive to compute and, unfortunately, its use persists.

Sadly, the rise of the Internet has also seriously damaged certain media channels -- such as print -- as consumers’ media consumption shifted to online. The future of newspapers and magazines, both of which rely heavily on ad revenue that has seen catastrophic declines, is very uncertain.

What do you see as the most critical topics advertising research will be concerned with in the future?
With the fragmentation of media channels, come increased challenges for measuring multi-media audiences and the effectiveness of advertising across channels. While it is true that the research community has done a good job of figuring out how to measure the separate impact of advertising on TV, on radio, on the Internet and in print, it has yet to fully understand how to measure the combined benefits of advertising across all of these channels. As the industry becomes ever more fragmented, the challenge of doing this accurately and cost-effectively only becomes greater. Undoubtedly of paramount importance is the need to measure TV, Internet and Mobile media consumption on a “single source” basis.

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