Today Ad Age reported that Best Buy is shifting more advertising dollars to TV this holiday season.
The consumer electronics giant wouldn’t give exact figures, but it is increasing its spending by a low double- digit percentage. In 2009, it spent $150 million on TV advertising, according to Kantar; network TV ads accounted for $65 million of that figure. To free up funds for TV, the retailer is pulling money away from inserts and trimming distribution in parts of the country where newspaper readership has suffered.
Quoting a Best Buy exec: “When you have big budgets like we do, a 5% to 10% improvement is a big deal.”
What’s Good For The Goose…
Believe it or not, as a digital strategist, I am actually thrilled to see this move and think it is wholeheartedly the right one – because it is supported by sophisticated media mix models that predict the impact and outcome of the media investments. Make no mistake about it – media mix econometric modeling is neither simple nor absolute, but more companies need to attempt to crack this nut. Unfortunately, today a lot of media investment is based on intuition and debate under the guise of collaborative channel planning, rather than a systematic approach to modeling a mix. And BTW – you don’t need a nine figure budget to take a deeper look at the way your media works together. You may not be able to develop the sophistication level of a comprehensive econometric model, but there are so many different ways to analyze your data. It starts with the desire to do so and a lack of aversion to walk outside of your comfort zone – because trust me, that’s where you’ll be very quickly.
Based on the model’s recommendations, Best Buy has also tweaked its digital spending, putting more money into display advertising. And it’s also considering putting more money into events. Mr. Panayiotou said that the model made other suggestions, which the retailer is still evaluating. His team is looking at everything from events to the loyalty program, digital to online search.
The fact of the matter is that all media spend, whether direct response or branding focused, has the same objective – to influence and sell product to consumers. The primary difference is where in the sales cycle you reach a consumer and how long it takes to influence the sale. This is extremely over simplified, but a fact nonetheless.
Media Investment Predictability
The beauty of the concept of GRP’s is that a historical level of media weight could somewhat reliably predict the business outcome in the market. One of the challenges of digital media for large brand advertisers is that, unlike traditional media, it’s hard to predict the outcome in the market as a result of ad spending. To a degree this is because of the small budget allocations to digital, but is also due to the differences in media currency and the lack of significant corollary research on investment impact. Many brands believe in the power of digital media, but most have yet to quantify the marginal increase to their businesses as media dollars get shifted between traditional and digital media. We can talk ad nauseum about how digital is an essential part of the mix (and it is!) – but as an industry we must do a better job at proving it.
Digital Media is Growing Up
Of course, within the digital ecosystem there is significant evolution all around us. The market is still dominated by direct response marketers – and supports these efforts at scale. Most DR marketers have yet to hit a point of diminishing returns and the market is evolving to push that point even further. Even within this space most agencies and marketers fail to use available tools like attribution reporting to properly model a digital mix and prevent duplicate tracking and over-crediting of activation channels like search and retargeting – a huge issue that plagues every multi-channel digital marketer, particularly retailers, whether they take the time to realize it or not.
As marketers get savvier about the word “accountability” not equating to “direct response”, we will see more branding dollars shifting to the web. But this won’t happen until every company has a champion to drive modeling that incorporates and measures digital in a more intelligent fashion than is happening today, where we use disconnected proxy metrics and great salesmanship to feed into brands’ (and often our own) desire to want to believe in digital. DO believe – digital media IS integral to your or your clients’ businesses. But take a systematic approach to how everything works together, because it’s only becoming more fragmented and complicated. CMO’s today have a tough job, and they are dropping like flies, with an average tenure being less than 2 years. Maybe the role of the CMO needs a fundamental shift. Maybe the transformation is underway already. Enter the era of the “Chief Modeling Officer”.
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