1. Media Consumption in Today’s World Don E. Schultz Agora, Inc., and Northwestern University Based on Data from BIGresearch SIMM Studies PMA Integrated Marketing Conference Chicago 24 March, 2010

2. The Topic in Your Program Is: “Media Consumption in Today’s World”

3. But, I’m Changing That! I’m Going to Talk About…..

4. “Confessions of a Failed Icon”

5. After 20 Years of Integration, IMC, IM and All the Other Versions and Visions….. We’re No Closer to Developing a Holistic, Customer-Focused, Marketing and Communication System Than Before

6. Marketing Sales Country C Region X CEO Organizations Still Look Like This…. Marketing Sales Human Resources Human Resources IT/Digital Operations Source: Adapted from Cranfield School of Management

7. Marketing and Promotion Still Look Like This….. Brand Marketing Sales Promotion Sales Promotion Events/ Sponsorships Events/ Sponsorships Direct Mail Direct Mail Public Relations Public Relations Media Advertising Media Advertising Consumers Attitudes Behaviors ? ?

8. And, Even the “New Media” Have Fallen into the Same Trap Brand Marketing Mobile Comm. Mobile Comm. Web Based Web Based Social Media Social Media Viral Marketing Viral Marketing Search Advertising Search Advertising Consumers Attitudes Behaviors ?

9. And, Even This Conference Still Follows the Same Old Rules…..  Promotional materials say: “Integrating the Tools, Techniques, Technologies and Talent”  And, only one session that purports to talk about the reason we are all here….. CUSTOMERS AND CONSUMERS!

10. Who’s to Blame?

11. Stan, Bob and I Wrote the Wrong Integration Script in the Beginning  All inside-out  Focused on only four elements: advertising, public relations, direct marketing and sales promotion  Trying to create “One Sight and One Sound”  Value to marketers, but, little to consumers

12. 20 Years Ago, Here’s How We Saw the World of Marketing Communication Agency → Media Organization → Sales Force Marketer Consumer/ Prospect Messages and Incentives Unique Products

13. “Influencing and Persuading Consumers” Source: Adapted from Lavidge and Steiner A Traditional “Outbound” View, With Marketers in Control ConvictionPreferenceKnowledge Attitudes/ Awareness Purchase Behavior One-Way Linear Marketing Communication

14. But, While We Icons Weren’t Looking, The World Changed!

15. Information Technology Has Given Consumers Control Consumer Internet – WiFi Mobile Telephony iPods/MP3 -- podcasts Social Networks Cable/satellite Blocking Systems - TIVO/DVRs/ Filters/Pop-up Blockers/etc.

16. And, Even If the Icons Were Paying Attention, They Were Playing “Follow the Weasel”…..

17. Tossing Old Media and Promotion Out, and Embracing New Technologies With Abandon

18. Trying to Find Ways to Break In to Consumer-Created Networks

19. Yet, Consumers Are Holistic…. They Integrate Everything for Themselves Product/Service Social Networks e-commerce e-commerce Advertising Catalogs DMTV Direct Mail Customer Service How People See BrandCommunication Press Coverage Packaging/Displays

20. Here’s the World Marketers and Consumers Inhabit…. Marketer Customers/ Prospects Competitors Messages and Incentives Products and Services Word-of-Mouth New Forms of Media Web Search Employees/Recommenders/Distributors/Influencers Agency  Media  Sales Force

21. Marketers Still Trying to Evaluate Outbound Promotion in a Totally New System Customer Brand Experiences Internet Systems Electronic Systems Brand Experiences Web sites Customer Service Tech support Retailers Distributors User communities Blogs RSS Influencers Recommenders AudiencesOrganization Agencies Messages

22. The Problem: All This Is About What We Do or Want to Do…… There’s Very Little About Customers and Prospects!

23. Yet, Consumers Are the Only Ones With Money

24. That’s What Has Led Me to Investigate What Customers Do….. Not What Marketers Do!

25. To Build Relevant Promotional Programs, Starting with Consumers

26. U.S. Simultaneous Media Usage Studies - SIMM  A method of understanding how consumers use and consume media today and the impact it has on them  Methodology  Conducted twice per year by BIGresearch in the USA since 2002 -- we provide analysis  14 separate waves (15th in analysis now)  200,000+ individual responses (17,000 more in Wave 15)  Drawn from on-line interactive base of 60 million individuals  Double opt-in methodology  Captures media usage, retailer preference, influence of media, past and future purchases, etc.  Includes 31 external media forms and 23 in-store promotional activities  Accuracy of.01 level  Benchmarked to non-online studies  Weighting/balancing of 14 US Census 2000 age-sex cells  System active in China. Testing in Mexico and other countries

27. When you watch TV, do you simultaneously go online?

28. When you go online, do you simultaneously watch TV?

29. Clear Evidence of New Promotional Marketing Issues  What comprises an “audience”?  Consumers create “foreground and background” media for themselves and for the occasion  What is the impact of “conflicting messages/promotions” delivered at the same moment in time?  Simultaneous multi-media usage suggests all promotional audiences are likely “overstated” and “overpriced”

30. But, Understanding How Consumers Use Media and Promotional Activities, Change How Marketers Plan and Implement Their Programs

31. Four Critical Measures in Media Consumption  What media is accessed  Amount of time spent with each media form  Media combinations – what media used together and simultaneously  Which media form has the greatest influence on product purchase

32. How Much Time Consumers Spend With Each Media Form First Quarter, 2008 – BIGresearch Avg Minutes per Day Email131.3 TV129.6 Internet127.5 Radio 93.5 Direct 56.3 Magazines 49.1 Newspaper 44.8 IM 40.8 Games 36.6 Satellite 22.0 Web Radio 14.4 Blog 11.7 Measures #1 and #2

33. More Important: the Media Forms People Use Together… Their Media Combinations

34. US Media Combinations Primary Medium (When …,do you simultaneously ….) (Regularly only) Source: 1st Quarter, 2008 – BIGresearch OnlineTVMaga- zines News- papers Direct Mail Cell Phone Radio Online26.2 6.1 8.1 9.913.917.1 TV37.520.224.121.414.9 8.0 Magazines7.010.3 5.0 8.3 Newspaper10.311.6 4.711.3 Direct Mail21.014.2 6.710.7 Radio21.73.811.812.612.211.7 Measure #3

35. Media Combinations Are What Create Media Synergy… The Biggest Challenge in Promotional Planning Today!

36. Influence Media Form Has on Consumer Purchase Decisions U. S. Average* Influence by Media Form % Influence Word-of-Mouth36.2 Coupons28.4 Inserts21.5 TV20.8 Newspapers20.0 Read Article19.8 In-Store19.6 Direct19.1 Magazines17.0 Cable13.6 % Influence Radio13.1 Internet12.3 Email11.7 Outdoor 7.2 Yellow Pages 7.0 Blog 3.1 Satellite 3.1 IM 2.9 Web Radio 2.7 Picture Phone 2.2 *Across 8 product categories, Apparel/Clothing, Automobile, Eating Out, Electronics, Grocery, Home Improvement, Medicines, and Telecom/Wireless Source: 1st Quarter, 2008 – BIGresearch Measure #4

37. With Those Four Measures, Predictive Models Can be Built…. What Promotional Forms You Should be Using by Product Category

38. For Example, In the Computer Category, What Media Forms Do Consumers Prefer?  Do you plan to make any of the following major purchases within the next 6 months?  Example: Computer No84.81% Yes15.19% Total 100.00% SIMM, June, 2008

39. Purchase Intent and Media Influence Do you plan to make a computer purchase within the next 6 months by Media Influence NoYes Total Coupons26.831.027.4 Inserts20.625.021.3 Newspapers 19.824.720.5 TV 19.226.820.3 In-Store 18.323.319.1 Direct 18.223.118.9 Magazines15.622.716.7 Cable 12.319.313.3 Radio 11.718.512.7 Internet10.619.311.9 Email 10.416.811.4 Yellow Pages 6.510.5 7.1 Outdoor 6.311.0 7.0

40. What Would Be the Best Media Combination to Reach These Intended Computer Purchasers?

41. Pruned CHAID Tree Plan to Buy a Computer by Categories of Media Influence 15.19% (100.0%) 11.2% (60.9%) 14.9% (17.9%) 17.7% (6.4%) 17.6% (18.8%) 19.6% (12.6%) 15.2% (4.7%) 22.2% (7.9%) 23.3% (21.1%) 20.9% (12.1%) 26.6% (9.0%) 20.6% (3.0%) 29.5% (6.05) No InternetLow InternetHigh Internet Some Radio Some Email No CableSome Cable Low MagazineHigh Magazine Low EmailHigh Email Total Plan to Buy Computer

42. Now, The Decision Is Now Based on Consumers and Consumer Preferences, Not on Media Distribution, Coverage, CPM or Other Traditional Planning Factors

43. All Fine So Far, But, That Still Doesn’t Determine How Much Money We Should Invest!

44. How an Integrated Model Works in Autos Millions of DollarsPercent Magazines$10,80117.6 Newspapers7,20911.8 Outdoor1,0381.7 TV34,82656.8 Radio3,2265.3 Internet4,1846.8 Measured Media$61,283100.0 2007 Top 100 Advertiser Media Spending Advertising Age – TNS

45. Spending by the Top Seven Automobile Brands Millions of DollarsPercent Magazines$1,50718.4 Newspapers5386.6 Outdoor1191.5 TV5,20663.6 Radio2523.1 Internet5586.8 Measured Media$8,180100.0 2007 Auto Advertisers (Top Seven) Among Top 100 Media Spending -- Advertising Age – TNS

46. Adding Purchase Intentions from SIMM Reports *2007 TNS based on the seven manufacturers **Includes all brands for each manufacturer and excludes other manufacturers brands, SIMM June ‘08 2007 Auto Share of Voice* and Reported First Choice in Next 6 months** SOV %1 st Choice %Ratio General Motors Corp 24.226.21.08 Ford Motor Co.20.317.9.88 Toyota Motor Corp.14.118.01.27 Chrysler14.013.30.95 Nissan Motor Co.11.47.00.62 Honda Motor Co.10.714.91.40 Hyundai Motor Co.5.22.60.49

47. Calculating the Cost Weighted by Influence CPMInfluenceInfluence Points/$100 0 Magazines$12.6817.0513.45 Inserts16.0021.4913.43 Outdoor7.357.289.88 Radio14.4313.089.06 Internet15.3312.338.04 TV26.8420.897.78 Newspapers33.1819.986.02 E-Mail20.0011.735.87 Blogs9.003.173.52 Satellite9.003.133.48 Product Placement70.009.101.30

48. But, All This Stuff Only Matters If You’re in the Market for an Auto Planning to Purchasing a Car or Truck in Next 6 Months June 2007 Plan to Purchase (Planners) 11.4% Don’t Plan to Purchase88.6%

49. Determine Media Form Influence on the Target Market All Auto Influence Planner Influence UsageCPM TV21.431.0139.026.84 Newspapers19.629.254.133.18 Magazines16.125.858.412.68 Radio14.222.9102.014.43 Internet10.718.5147.315.33 Outdoor10.317.214.47.35

50. Then, Calculate Optimal Allocation Among Planned Purchasers Optimal Dollar Allocation for Car and Truck Purchase Planners (June 2007)

51. Compare Present or Past Car Advertising Allocation to Optimal Investment – Identify Changes Comparison of Car and Truck Manufacturer Advertising* and the Optimal Allocation 2007$** *Top 7 auto advertisers from top 100 list **Millions 2007 $$**%Optimal $ %Change $ Internet5586.82,07925.41,521 Radio2523.11.89123.11,639 TV5,20663.61,87422.9-3,332 Magazines1,50718.41,38616.9-121 Newspapers5386.65566.818 Outdoor1191.53934.8274

52. With This Type of Data, You Now Know Not Only What Percentage to Various Activities, But, How Many Dollars!

53. If This Sounds Like a Fictional Tale…..It’s Not! The Same Approach Can be Used in Nine Product Categories Today  Apparel/Clothing  Automotive  Eating Out  Electronics  Financial  Groceries  Home Improvement  Medicines  Telecommunication

54. Do I Feel Badly About Being a Failed Icon? No More Than Peter Drucker, Who Was Hired by General Motors to Bring Modern Management to That Firm in 1943!

55. GM Ignored Drucker’s Advice and It Only Took Them 66 Years to Enter Bankruptcy

56. So, I’ve Still Got Some Time Left!

57. Available from amazon.com These Lessons and More Are in This New Media and Promotional Planning Book

58. If You Have Questions, I Will Answer or Avoid Them Now!

59. Don E. Schultz, Ph.D. dschultz@northwestern.edu