There is a hackneyed maxim, attributed to the late soap magnate and Unilever founder Lord Leverhulme, with which students of marketing are all too familiar. "I know half my advertising budget is wasted, but I'm not sure which half," Leverhulme is said to have observed early last century. The words summed up a conundrum for advertisers a hundred years ago, when the media landscape was a simpler place.
Since then direct marketers have comforted themselves with the thought that Leverhulme's words could never apply to them, but rather to untargeted and hugely expensive TV advertising. After all, direct is a most measurable set of channels, with devices such as promotional codes to assign a sale back to an insert, a door drop, a press ad or a piece of direct mail.
But then along came digital, and search in particular, to muddy the waters and claim the sale where once a direct mail pack or phone call did the job. The dominance of search, Google especially, has created a fog of complexity around media measurement, with accusations that digital is over-claiming sales that wouldn't have occurred if offline media had not driven consumers to the web.
For the direct and digital media specialists and clients attending this month's Think Tank, Leverhulme's words have acquired a curious Groundhog Day quality about them. As DM's role becomes increasingly about driving consumers to a specific website or search engine, how can direct stake a claim to sales in amongst the varied mix of media encouraging consumers to go online?
THE GOOGLE CONUNDRUM
Richard Wheaton, managing director of OgilvyOne's digital media agency, neo@ogilvy, recently talked about "the tyranny of Google" when considering this conundrum. His words inspired this Think Tank, but first he wants to set the record straight.
"When I said 'the tyranny of Google', what I meant was that clients' challenge is to take into account that anything you do offline, be it TV ads or inserts, will generate consumer searches," Wheaton says. "If you've done a TV ad and generated that interest, and you don't have a good search positioning, natural or paid, you could be driving that interest to your client. That's the tyranny."
The phrase could also reflect the fact that in many markets, Google is probably top of clients' media schedules, both on- and offline. Yet with some category-defining terms costing as much as £27 to £30 per click, brands are looking hard at search's return on investment, and whether they are double-paying for an online sale by spending on offline channels, too.
"A client of mine went on TV, and he also wanted to be number one on Google," says Andy Sloan, chief executive of All Response Media. "We advised him against it, but he insisted, and his spend on Google tripled, going from £100,000 to £300,000. His view now is that he's paid twice for Google search. We told him, you shouldn't overspend, but you also can't allow your competitors to see you advertising on TV and then take high positions and trade off your investment in offline."
Such overspend does not sit comfortably with Google, according to its head of financial services for the UK, Ian Morgan. "This might sound altruistic, but we'd rather advertisers get an attractive return on investment from search than overinvest, which is not good for anyone," he says.
Lloyds TSB recently evaluated a brand advertising campaign to ascertain how much online activity it was responsible for. "Channel attribution is a big issue when we're trying to optimise the distribution of budgets across media," says Justin Bell, head of marketing effectiveness at Lloyds TSB. "If you were mistakenly to attribute too much to one channel, that's not efficient. It's recognising the best combination of offline and online and how much should be devoted to search as part of the mix. We've done some early research regarding the value of online in offline sales, but we're not at the stage where we understand the dynamics of these different channels."
If the specialists from direct-heritage media agencies around the table believe they can help Lloyds TSB in its quest, they're not letting on at this stage. Morgan, a marketer at Barclays before he joined Google, says he understands the banks' dilemma, especially with high-commitment products such as mortgages, where a face-to-face conversation is desirable.
"How can the branch then attribute that sale to the TV ad that drove the customer to that branch, and the part that search played? There are technology solutions to that dilemma, as well as more human or cultural answers," Morgan says. "In terms of technology, consumers could start to fill in a form online, and the person in the branch can make that connection with the mortgage adviser. It also comes down to how the advisers are remunerated in the branch. There are ways of doing that in such a way that makes completing that link easier."
The compelling arguments for search, which are gaining momentum as the downturn bites, are that it is an immediate channel where clients only pay for actual clicks. Richard Davies, head of integration at Tri-Direct, explains the thought process. "If your TV deadline is four weeks out, or door drops six weeks, it's difficult when the financial guys running your client's business are saying, 'where are my sales this month?'. So you put some more money into Google and you benefit, but what Google can't do is measure how you got there."
So far, so complex. Does Google itself have the answer, or even believe it should? "It's not wholly our remit, but it's absolutely our remit to help our advertisers and media agencies paint a picture of what impact offline media have in driving search activity and what role search plays in researching product purchase," Gibbon says. "In terms of sales attribution, with some products where you generate online sales and fulfilment it's relatively simple to do that. But if the sale is ultimately achieved offline, say through a branch network, it's much more complicated."
There are nods around the table when Sloan says that much as direct metrics can help measure an 'unbroken journey' from start channel to the web, the internet has actually turned DM principles on their head, in that consumers delay their response to create the so-called 'broken journey'. "It's about understanding that lag in the internet space, compared with telephone or branch response with regards to attributing that response to the originating channel," Sloan says.
For Lloyds TSB's Bell, the broken journey issue is about assessing the willingness of consumers to receive communications offline and then go online to fulfil. "Consumers will think, 'I'll ditch that mailer now, but later I will put in that word into search and hope I can find it again'. Quantifying that process accurately is the hard bit."
MAKING THE LINK
There are sharp intakes of breath at the suggestion that a link between direct mail or inserts and search is difficult to establish. "Not true! Consumers will get their car insurance renewal notice, log on and renew," says Sloan. But if there was evidence that people typed URLs into Google, this would surely constitute proof of direct channels' role in creating a sale. Consumers aren't always that conscientious, however.
"We've recently done some research into the correlation between brand and generic, paid and natural search," says Google's Morgan. "It was borne out across a number of industry sectors that there was a multiplier effect of being top of brand, generic and natural and paid with regards to the effect on click-through, with each combination having a different effect. But you need to have a coherent search strategy, and then it's about test and learn, seeing what works. That's the beauty of digital."
Wheaton believes this is why search plays to the direct marketing agencies' expertise. "The direct skills base is about making slight tweaks in copy and doing what works," he says. "That's what we're good at."
The effect of DRTV on search is more easy to discern, says Lucy Stafford, managing director of MindShare Direct. "I can't count the number of clients who have turned off TV, only to see online response crashing," she explains.
Stafford says there are efforts under way to quantify the impact direct media channels are having online, and that a number of the media agencies around the table are taking part in DMA research looking at the role inserts play in online sales. The DMA Inserts Council has negotiated free media space with local newspapers and is producing an insert with a bespoke URL and phone number for a client with which it has partnered.
"We've narrowed down particular offers for certain consumers so that when they get the inserts, they have bespoke phone numbers and landing pages from which we can measure response," Stafford explains. "Once we come out with a robust statistic early next year - for argument's sake, it might be that 30 per cent of insert response goes online - I'm hoping the other media channels, such as direct mail, will demand that too."
Researching the phenomenon of the broken journey is tricky and has led to the emergence of econometrics modelling and other sophisticated metrics as a source of competition between media agencies. "We send out source codes, landing pages and match back in real time, from channel and postcode, to a dataset, and ask whether we expected them to come from there," says Davies. "If there's a spike or a trough, you go and investigate, which is where econometrics and consumer insight come in."
Stafford is doubtful that such a technique could pinpoint the source of search. "You're never going to know where the journey started. That consumer could be watching TV, getting direct mail next morning and reading the Metro on the way to work," she says.
AN INTRICATE WEB
What is clear is that this complex interdependency of channels is testing the skills of direct media specialists as never before. Econometrics involves blending past media spend with variables such as seasonality, to forecast the most efficient media choices. Though he studied econometrics at university, Sloan believes that "a lot of bullshit" is written about the discipline, which needs to be approached cautiously because of the number of assumptions being made in any econometrics model. It is an expensive skill for any agency to have in-house, given the salaries of sought-after econometricians.
For Bell, the issue with econometrics is that it uses data from the past to predict the future. He argues that measurement must be done holistically. "The different channels have their different metrics," he says. "If you look at just one channel or one online metric, you're not going to plot the journey. It has to be a combination of those metrics."
Agencies and their clients with access to what Bell calls "the triangulation of data sources", such as brand tracking, econometrics and web analytics, are closer to finding the silver bullet of media measurement. "All good direct marketing agencies can ascertain which channel delivered that response," says Stafford. "But they struggle to provide the qualitative and quantitative research and the econometrics, which you need because absolutely key to this issue is understanding consumer behaviour on an individual basis."
What's encouraging about this discussion is evidence of the forensic efforts being applied to tracking broken and unbroken journeys, intelligence that is becoming more vital as clients grapple with understanding the return on investment of different channels.
It is surprising, too, to hear of the collaboration, as well as the competition, between the parties in the debate. As Think Tank winds down, Google's Morgan reveals that the search giant is working with MindShare on financial services to augment the agency's econometric modelling with SEO and paid search data. "One would hope that a better understanding of optimal media mix will emerge, because no one player - agencies, clients, search agencies and search engines - can find the solution in isolation," Morgan says.
- Justin Bell has been head of marketing effectiveness at Lloyds TSB since 2007, joining from TMW.
- Richard Davies is head of integration at Tri-Direct. He was planning and board director at Zed. The head of financial services at Google UK is Ian Morgan. He was previously head of e-strategy and development at Barclays.
- Andy Sloan is CEO of All Response Media, the agency he founded in 1995.
- Lucy Stafford is managing director of MindShare Direct. She is a member of the DMA advisroy committee.
- Richard Wheaton is managing director of Neo@ogilvy, looking after clients such as IBM, British Airways, Sony and American Express.
BATTLE OF THE CHANNELS
UK channel spend Jan-June 07 versus Jan-June 08
Jan-June 07 Jan-June 08 % CHANGE
Direct mail (1) £570.5m £481m -15.7%
Door drops (1) £721.3m £616m -14.6%
Inserts (2) £38.9m £29.9m -28%
Paid search (3) £762.3m £981m 28.7%
Sources: (1) Billetts Media Consultancy (2) Nielsen Media Reseach (3)
Internet Advertising Bureau.