From the desk of Strategic Resources
For any query, discussion or feedback, please contact Pavan Chandra, Head of Strategic Resources at pchandra@zenithoptimediaindia.com, +91-124-4195100. Office Address: 10th Floor, Vatika Tower, Block-B, Sector 54 Gurgaon -122002, Haryana, India.

Volume: VIII

November, 2007

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In these hyper charged times where news comes in as fast as it becomes outdated, we need a source that can keep track of what matters to us. At ZenithOptimedia we have created Wavelength to apprise all of us of the happenings in three areas i.e. 1. Trends in Digital, Retail, OOH, BRIC, Consumers and the International Advertising 2. Media & Advertising Research 3. Environment

Also included here are innovations and news that ZenithOptimedia is making across its network globally, under three sections 1. ZO Zone 2. Fast Forward 3. Touchpoints.

Simply click on any of the sections on our snazzy control panel and you will have the latest updates at your fingertips. Wavelength will reach you in the first week of every month so that you have information that leads to insights.

Drop in a mail at pchandra@zenithoptimediaindia.com with your suggestions and comments.

Emerging Trends: Consumer

01. KidSense 2007: Survey by Walt Disney India and GroupM on kids’ media interaction and consumption habits – (Oct 16-23)

According to the Walt Disney India and GroupM survey ‘KidSense 2007’:

· For purchase decisions, Kids are most influenced by the television, followed by print and radio. As an emerging medium, the Internet scores high among boys, while radio and magazines score with girls. Kids also respond to outdoor mediums with data showing that 83% kids notice ads outside homes.

· Kids, now segmented into three categories – kids, tweens and teens – are increasingly being consulted by their parents because of their increased product awareness. Thereby going beyond merely influencing key purchase decisions.

Source: Exchange4media, Exchange4media

02. Indian Consumer Mindscapes – Oct 15

Highlights of the “Indian consumer Mindscapes” seminar by Technopak:

· Hard-pressed for time, an Indian consumer generally chooses one particular brand and sticks to it. They seek branded products and display brand loyalty. Hence, to attract them, marketers should launch or market products with strong brand identity by combining brand intelligence and brand personality. Repetitive marketing or advertising communication such as an adhoc logo or packaging changes with no unique selling propositions should be avoided.

· Marketers should aim to understand the Indian youth as they are considered consumption catalysts and want to be perceived as "cool", "fast", and "fashionable". They seek to stay connected through social sites and desire the latest gadgets. Yet, they are traditional in certain aspects. For example they generally prefer "Ghar ka Khana" (home-cooked food) over other options.

Source: Agencyfaqs, Agencyfaqs

Emerging Trends: Digital

03. Net access through PC shrinks with increasing mobile net usage – Oct 06

According to TRAI's performance indicator report, the total internet connections declined to 9.22 million in April-June from, 9.27 million in the previous quarter. Even though internet connections are falling, the number of people accessing the web through their cell phones increased by 7 million to cross the 38 million mark. This trend showcases the emergence of mobile phones as a medium for internet access.

Source: Economic Times

Emerging Trends: Retail

04. Online travel portals to open physical stores in Tier-II and Tier-III cities – Oct 11

Travel portals such as Yatra.com and Cleartrip.com, along with other players in the online travel space, are considering opening outlets in Tier-II and Tier-III cities. The purposes stated behind this expansion are customers’ need for direct interaction regarding various schemes, and the slow penetration of broadband and Internet in the country.

Source: Hindu Business Line

05. Indian employees to find abundant opportunities back home in retail – Oct 05

With the new world of opportunities, in terms of building new processes and systems from scratch, and the excitement of applying their experience in India’s $350 billion retail sector, the former ‘Indian’ employees of the retail chains abroad have already embraced the Indian retail chains. India is ranked number one in the AT Kearney Global Retail Index 2006. According to industry estimates, the organised retail market is expected to grow to $427 billion by 2010 and further to $637 billion by 2015.

Source: Business Standard

Emerging Trends: Others

06. Bluetooth advertising – a relatively new concept in India – Oct 24

Bluetooth Advertising, though not new globally, is a relatively new concept in India. TELiBrahma Convergent Communications, a mobile solutions provider, has entered into a partnership with Commercial Street, a shopping area in Bangalore, to introduce what it calls ‘Blue Genie’, or a Bluetooth advertising solution. The Commercial Street is to be converted into a Bluetooth zone, and consumers will receive multiple advertising offers using the technology. Bluetooth is a zero cost and advertiser as well as consumer-friendly application. The relevant advertising messages are passed on to consumers at the point where consumers are most likely to make a purchase decision, such as in a shopping area.

Source: Agencyfaqs

07. Phone user base reached the 250 million mark – Oct 23

According to The Telecom Regulatory Authority of India (TRAI), with nearly six million new subscribers being added every month, the December 2007 target of 250 million has been achieved in October. The telecom body further said that “the 500 million targets by 2010 is a reality”. The total wireless subscribers reached 209.08 million in September 2007, with an addition of 7.8 million subscribers in September compared to 8.31 million additions in August. From April to September of 2007, 42.8 million telephone subscribers have been added compared to 29.7 million during the corresponding period in the previous year.

Source: The Hindu Business Line

08. Advertisers coming up with new mobile advertising solutions – Oct 23

With regulatory restrictions on mobile-based marketing and advertising activity, advertisers are exploring fresh solutions to reach their target audience through mobile phones. Companies such as Reliance ADAG and Paymate, a Mumbai-based mobile commerce firm, are developing solutions to tap the potential of the mobile phone. Solutions such as selling advertising spaces on SMS’s, which provide customer related data, sent to consumers are coming up. According to Mahesh Prasad, president of applications, content and solutions group for Reliance Communications, "The biggest advantage of these solutions is that it allows the customer to opt out at any point of time.

Source: DNA - Daily News & Analysis

09. Telecom operators targeting rural audiences – Oct 16

With over 200 million mobile subscribers in India, the next mobile revolution is going to come from smaller towns and villages. Industry estimates show that 35-40% of mobile customers are from rural areas. Telecom operators and content providers are targeting the rural audiences, according to their rationale, with no access to the Internet, as the only way a rural person can get access to instant information is through a mobile handset. Companies such as Reliance Communications, Reuters and Ericsson have already started developing information-based mobile services.

Source: Agencyfaqs

10. MipCom 2007 – Oct (8 - 12)

At the MipCom 2007, the international audiovisual content trade show, held at Cannes, from Oct 8–12, the following insights regarding Indian audiovisual industry emerged:

· The key factors, which will make the Indian media industry global, are the future revenue models, the evolution in content, and the role of Indian media companies.

· FICCI and Ernst & Young unveiled their survey ‘Indian Content on the Move’, which revealed that most Indian companies allocate less marketing expenditure for overseas marketing, as they concentrate more on the Indian market. The Indian urban audience demands more innovative and unique film content than the one that existed till now. With digitization of content, media has been able to reach niche audiences without spending too much and even piracy has been controlled in a few platforms.

· Gaming and animation will be the future of the Indian audiovisual industry.

Source: Exchange4media; Exchange4media; Exchange4media

Emerging Trends: International

11. Media publishers tying up with bloggers for more revenue– Oct 23

According to Standard & Poor's Equity Research, major media publishers are tying up with bloggers to increase their readership and ad revenues. Blogs provide the advantage of capturing a niche audience with their particular voice and point of view, and increase the potential for implementing targeted advertising. It also helps in targeting younger generations as they prefer new media. Internet segment companies such as CNET, Google, IAC/InterActiveCorp (IACI) and Yahoo! are also planning to pursue blog-related opportunities via content, advertising and tools.

Source: Media Post Publications

12. Online ad market to grow – Oct 12

According to the "The U.S. Interactive Marketing Forecast" by Forrester Research, the online ad market will exceed $61 billion by 2012, with ad spend evenly distributed among various channels. Interactive marketing growth over the next five years will be driven by mainstream businesses that will use innovative interactive tools to engage customers in new ways. Social media, display ads, and e-mail marketing will play a significant role as the most used medium of marketing.

Source: Media Post Publications

13. Neilsen survey on consumer attitudes toward various ad media – Oct 08

According to a global survey conducted by Neilsen, newspaper ads top the credibility index as 77% of the surveyed respondents trust the medium. Newspapers are followed by online comments (73%) posted by the peer users about the advertised product or service and television (65%). Only 24% believe in SMS ads, with three out of four persons rejecting mobile ads. Six of the top ten markets that rely most on recommendations from consumers are in Asia—showing that Asians are the top believers in the word of mouth. Hong Kong led the list with 93% saying they trusted what others said or thought of products, followed by Taiwan (91%), Indonesia (89%), India (87%), South Korea (87%) and Philippines (86%).

Source: Tmcnet.com

14. Deliverability to remain a key component in email marketing – Oct 04

Deliverability remains one of the hottest topics in email marketing. Marketers are still struggling with relevancy, list hygiene, and white lists and bounce management. To evaluate the success of major online retailers in managing their sender reputations—which is one of the keys to deliverability—the Email Experience Council examined sender addresses used by 95 retailers during the past 18 months. As per the result, a third of them used more than one email address to send their core marketing emails during the past 18 months. In 2007, 11% of the major online retailers sent welcome emails from a different email address. However, 75% of those retailers moved toward using a single sender address for all their core email marketing campaigns, including both welcome and regular emails.

Source: Media Post Publications

15. Shopper marketing to boost sales – Sep 28

According to a study by Advertising Age, the fastest-growing medium is not the internet, but shopper marketing, a new-age marketing discipline that aims at converting `shoppers into buyers' at the retail outlet. Among the 19 packaged-goods manufacturers surveyed, the share of shopper marketing in the overall marketing budgets grew from 3% in 2004 to 6% in 2007. Furthermore, the manufacturers expect the share to reach 8% of the marketing budgets by 2010.

Source: Adage

BRIC Zone - China

16. Growing middle and upper class income drives Chinese department store market growth– Oct 21

According to Erica Pon Werkun, head of China/Hong Kong consumer research, UBS, increasing consumption levels and growing middle- and upper-class incomes have resulted in growth in the department store market. There is aggressive expansion nationwide which is putting pressure on operators to offer favourable rates to concessionaires to attract brand names to new stores. Department stores are carrying aggressive promotion and marketing. According to Jessie Qian, regional consumer and media analyst, Macquarie Research, the market in top-tier cities is saturating and giving an opportunity to operators such as Parkson, a foreign-owned retailer, to grow further.

Source: South China Morning Post

17. China’s youth has an annual spending power of nearly $135 billion– Oct 17

According to a report titled "The Phoenix Generation: Insight into China's Youth" by Pearl Research, China's youth (age group 16-20 and 320 million in strength) has an annual spending power of nearly $135 billion and enjoys unparalleled access to electronic media and foreign consumer goods.

Source: Media Post Publications

18. Retail sales of consumer goods in China to reach approximately RMB 350 billion – Oct 09

In the National Day Golden Week, 7-day national holidays, the total retail sales of consumer goods were approximately RMB 350 billion, up 16% over 2006. The retail sales were boosted by the abundant supply of commodities as well as the robust consumer demand. However, according to the Ministry of Commerce, the prices of basic necessities remained stable.

Source: China Knowledge Press

19. China’s rural net users reach 37.41 million in H1'07 – Oct 06

According to the National Development and Reform Commission (NDRC), Internet use has expanded rapidly, with number of rural net users reaching 37.41 million by H1'07, approximately 5.1% of the total of rural population. Urban netizens have grown to 125 million, which is 21.6% of urban population. The rapidly improving telecommunications infrastructure in rural areas has facilitated the increase of net users. Young farmers and migrant workers are the primary net users in rural areas.

Source: The Press Trust Of India Limited

20. 2008 Beijing Olympic Games accelerating internet and mobile advertising in China – (Sep 28 – Oct 11)

With the approaching 2008 Beijing Olympic Games and the country’s increasing focus on network and mobile advertising, the total revenue from the Internet industry is expected to increase by 53.07% in 2007, approximately 1% higher than the initial forecast of 52.2% in January 2007. In addition, China's mobile advertising industry is expected to achieve over RMB 1.3 billion ($173.11 million) in revenues during 2008, which, in turn, will help in raising total industry revenues by 66.7%.

Source: China Knowledge Press; China Business Newswire

BRIC Zone - Brazil

21. Brazil Sep ’07 supermarket sales rise 5.37% year-on-year – Oct 25

According to supermarket sector association Abras, Brazilian supermarket sales increased by 5.37% year-on-year in real terms during September 2007. In nominal terms, Brazil's supermarket sales increased 0.72% month-on-month and 9.74% year-on-year. In the nine months ended September 2007, supermarket sales in the country grew by 6.46% year-on-year in real terms and by 10.11% year-on-year in nominal terms.

Source: Latin America News Digest

22. Internet advertising to reach R$470 million in 2007 – Oct 01

According to the IAB (Interactive Advertising Bureau), Internet advertising has expanded 40.16% in H1’07 to reach R$221mil, compared to the same period in 2006. The increase in internet advertising is supported by growth in PC sales and Internet user base, which is expected to reach 40 million by the end of 2007.

Source: IT Digest

BRIC Zone - Russia

23. Retail sales in Russia on the upswing – Oct 19

According to the Russian Federal State Statistics Service, Russia's retail sales grew 15.4% to $37.8 billion (RUR 940.1 billion) in September 2007. Between January and September, retail sales increased 14.8% to $301 billion (RUR 7.511 trillion), compared to the same period in 2006.

Source: RosBusinessConsultings

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Media & Advertising Research Watch

24. Television – the preferred medium for media firms – Oct 23

According to TAM Media Research Pvt. Ltd, a Mumbai-based media agency, print and television accounted for nearly 90% of the advertising revenues in 2006, which amounted to Rs.16,300 crore. For broadcasters, newspapers and publication houses, television is the preferred medium to advertise. Another emerging platform considered to be more cost-effective than print is radio.

Source: Mint

25. Small towns driving internet boom – Oct 22

According to an internet usage survey, conducted by the e-technology group of IMRB International, Internet usage in India has grown more than 11 times over the last seven years. The growth is driven by smaller and non-metro towns, where the number of users has risen 69 times and 33 times, respectively since 2000.

Source: The Times of India

26. Print media – the preferred medium for advertisers – Oct 18

Print media continues to be considered the most effective medium in India and is highly preferred by advertisers. According to an Assocham report 'Emerging Advertisement Patterns of 10 Leading Sectors', in the period Jan-Sep 2007, the real estate, education and automobile sectors were the leading print advertisers. In 2006, print media topped the chart with a 49% share in a total ad spend of Rs.19, 000 crore.

Source: PTI

27. IRS 2007 R-2– Oct (17 – 19)

According to the Indian Readership Survey 2007 Round 2:

· Business publications have witnessed a further loss in readership.

· Dainik Jagaran continues to be the leader with a readership of 16,502,000, followed by Dainik Bhaskar.

· Magazine readership in India has declined. The readership for English magazines has declined by 8%, while Hindi and Marathi magazine readerships have slipped by 5% and 27%, respectively. However, South Indian magazines have registered an average growth of 10.5% in readership.

· The Times of India (TOI) continues to lead in Delhi and Mumbai.

Source: Exchange4media; exchange4media; exchange4media.com; exchange4media

28. Airtel ad tops the first JuxtConsult's Ad Box Office study in August – Oct 13

According to the first study by the JuxtConsult's Ad Box Office, a monthly ad effectiveness monitor, Airtel’s ad was the most effective ad with an Ad Connect Quotient (ACQ) of 59.7, followed by Nokia’s ad with an ACQ of 45.5. The ACQ is measured through a combination of three factors – ad appeal index, message connect index and brand impact index.

Source: Exchange4media

29. RocSearch Study on change in Indian advertising spends – Oct 11

According to a study by RocSearch, a UK-based, business research and analytics firm, below-the-line (BTL) activity is growing faster than above-the-line (ATL) advertising. Print and TV form the two largest media in terms of advertising revenues. The share of radio and online advertising in the total advertising pie is growing at a rate faster than the industry growth rate (10-12%).

Source: Openpr.com

30. Consumer e-commerce survey by IAMAI & IMRB – Oct 10

According to the consumer e-commerce survey conducted by Internet and Mobile Association of India (IAMAI) and IMRB, the consumer Internet market will reach an estimated Rs. 9,210 crore by the end of FY 2007-08. At the end of FY 2006-07, the market size of this segment was estimated to be Rs. 7,080 crore and the average growth rate for the year 2007-08 was projected to be 30%. The segments covered in the study are online travel (Rs. 5,500 crore), e-tailing (Rs. 850 crore), classifieds (Rs. 540 crore), paid content subscription and digital downloads (Rs. 190 crore).

Source: Exchange4media

31. Television ads to impact car buying decisions – Oct 05

According to 2007 Syndicated Market Contact Audit study conducted by TNS Automotive, television advertisements have the greatest impact on car buying decisions. The shopping experience at dealer outlets and test drives also matter, but it is what they see on TV that drives customers to buy a particular car. Television, followed by print, is still the most effective advertising medium to reach target consumers in India. In terms of value, auto sector has been the second biggest advertiser in the country, from 2004-07. According to MindShare, in 2006, ad spends by auto companies added up to Rs655 crore or approximately 4% of the entire advertising spend.

Source: Mint

32. Lodestar Universal Study Analysis – Oct 05

· The Lodestar universal study revealed that India is at the third position, after China and Pakistan, for having one of the highest global average (more than five times a day) mobile usage. Lodestar COO, Nandini Dias says that the mobile medium has potential to become the next OOH medium. With mobile user base (200 million) much larger than the combined viewers (140 million) of STAR Plus, Zee TV and Sony, huge opportunities already exist for advertisers and marketers to exploit the potential of this medium.

· The Lodestar study also revealed the growing demand for devices that deliver all-in-one solutions, which include mobile, camera, gaming, music and video applications. India ranked fourth, as 70% of the users agreed with the statement that they like the idea of one portable device that fulfils all these needs.

Source: Agencyfaqs, Agencyfaqs

AdEx Findings

33. Instant Foods/Meals Industry

Print ad volumes of the Instant Foods/Meals Industry reduced by 36% during Jan-Aug '07 over those in Jan-Aug '06. However, TV advertising by this industry increased by 19% in the same period.

Source: Exchange4media; indiantelevision.com

34. Two-wheeler Industry

Print ad volumes by the two-wheeler industry declined by 36% during Jan-Aug '07 over those in Jan-Aug '06. However, TV advertising of two-wheelers grew by 52% y-o-y.

Source: Indiantelevision.com; Exchange4media

35. Internet Portal Industry

Print advertising of Internet websites fell by 30% during Jan-Aug '07, over Jan-Aug'06. However, TV advertising of Internet Portals showed an extraordinary growth of 190%, during Jan-Aug ’07 compared to Jan-Aug ’06.

Source: Exchange4media, Indiantelevision.com

36. Domestic Airlines

In Jan-Aug ’07, ad volumes of Indian domestic airlines dropped by 8% and 64% in print and TV respectively, over Jan-Aug ’06.

Source: Indiantelevision.com, Exchange4media

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Environment Watch: Advertising & Media

Television

37. Pay-TV ads to reach $1.8 billion in 2010 – Oct 02

According to a study by the Cable & Satellite Broadcasting Association of Asia (CASBAA), India is set to become the largest pay-TV advertising market, with total ad spends on pay-TV channels reaching $1.8 billion (Rs7,146 crore) by 2010. However, according to the experts, broadcasters will not benefit from this because the number of such channels would significantly increase. The growth will result from the emergence of several new distribution platforms such as direct-to-home (DTH), conditional access system (CAS) and Internet Protocol television (IPTV). By 2010, India will have over 77 million pay-TV subscribers, up from 46 million in 2006.

Source: Mint

Print

38. Government to advertise more in small and regional newspapers – Oct 03

The government has revised the Directorate of Audio and Visual Publicity (DAVP) policy to encourage small and medium newspapers, and regional language newspapers. It is planning to move more of its advertisements to papers with smaller circulation to increase their revenues. These papers will now see a 50% increase in government advertisements, whereas large mainstream papers, which have so far been receiving 60% of the government’s spend on advertisement, will lose a sixth of that revenue to medium and small papers.

Source: Hindu Business Line

39. Images Group set to launch ‘GO’ magazine for young professionals in India – Sep 26

On September 26, 2007, Images Group announced the launch of its second international title ‘GO’ in India. Targeted at young professionals, GO is scheduled to hit the market in October, 2007. GO is being brought to India through a licensing arrangement with Chris Fodor, the magazine’s founder. Sporting a tagline ‘Management Made Simple’, GO brings forth insights, case studies and learning’s from the world of marketing, finance, operations and general management. GO promises to foster career development as well by improving the readers’ knowledge of recent business and management developments and enriching their skill set.

Source: Exchange4media

Radio

40. TAM Media set to roll out its global diary method of radio audience measurement (RAM) – Oct 06

TAM Media Research Pvt. Ltd, a joint venture between ACNielsen and Kantar Media Research/IMRB International, is expanding from monitoring television viewership to radio audience research. The firm has conducted the Radio Establishment Study across Mumbai, New Delhi and Bangalore, involving 3,000 individuals from each city to determine the audience profile in these metros. TAM Media will be rolling out its global diary method of radio audience measurement from October 2007. It has also announced that, by the end of 2008, it will bring in Nielsen Media’s electronic meters for radio audience measurement. The electronic meters for radio audience measurement are already undergoing test runs in markets such as Australia.

Source: Mint

41. AROI forms advisory committee to create a self-regulatory content code – Oct 01

On October 1, 2007, the Association of Radio Operators of India (AROI) announced the formation of an advisory committee to create a self-regulatory content code for private FM broadcasting. AROI’s draft guidelines for the self-regulatory content code represent the collective interests of radio broadcasters in India. While formulating the report on the content code to the central government, the guidelines are to be presented to the committee instituted by the Ministry of Information & Broadcasting (I&B).

Source: India Radio Bulletin

Others

42. Railways in talks for launching perfumed tickets – Oct 12

The Ministry of Railways, Government of India, is considering dispensing perfumed tickets. It has proposed to initially introduce this initiative for monthly tickets, followed by other categories. In addition, earlier this year the Railways have also introduced policies for advertising on tickets and reservation charts to augment its revenue.

Source: Indian Business Insight

43. Out-of-home (OOH) companies unite under Indian Outdoor Advertising Association (IOAA) – Sep 29

Out-of-home (OOH) companies have come together under a single roof to form the Indian Outdoor Advertising Association (IOAA). Selvel Advertising, Jagran Engage, Times Innovative Media Ltd, Clear Channel, Prakash Arts and Laqshya Media are the founding members of the industry body. IOAA has been registered as a ‘not-for-profit’ company. The objectives of the body include lobbying with the local government to create a uniform regulation to safeguard the interests of its constituents; playing a consultative role to prevent adhoc decisions taken by local or state government bodies; acting as a facilitator between local government bodies and the outdoor industry; and creating a friendly environment to solve various issues and hindrances.

Source: Exchange4media

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Touch Points

Touchpoints is a unique tool for ZenithOptimedia clients that provide clear actionable metrics for all contact points used in marketing products and services.

For a detailed presentation on Touchpoints contact Mr. Pavan Chandra at pchandra@zenithoptimediaindia.com or call at +91-9899-3767-68

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ZO Zone

Viewership Analysis of Hindi Movie Channels for 4 weeks for the period of 7th October 2007 – 3rd November 2007

Top 2 Programs Across Hindi Movie Channels

Source: TAM

Period: 7th Oct – 3rd Nov 2007
Market: HSM
TG: 25-44, Sec – ABC, MF, CS

Movements In Hindi Movie Channel Share (2007 vs. 2006)

Source: TAM

Period: 7th October – 3rd Nov 2006
7th October – 3rd Nov 2007
Market: HSM
TG: 25-44, Sec – ABC, MF, CS

Top 5 Program Ratings Across Various Target Audiences

Source: TAM

Period: 7th Oct – 3rd Nov 2007
Market: HSM
TG: 25-44, Sec – ABC, MF, CS

Advertising Spend Analysis for Toothpaste category for the Year 2005 & 2006

Toothpaste

Toothpaste Category – Monthly Media Expenditure

Source: TAM

Toothpaste Category – Brandwise spends

Source: TAM

Toothpaste Category – Medium Breakup

Source: TAM

Toothpaste Category – Genre Breakup

Source: TAM

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Fast Forward

Metric Madness – New Challenges and Opportunities

By Steve Latham

Introduction

Most savvy marketers know that the Web is a “must-have” component of every company’s advertising, marketing and communications strategy. In today’s climate, ROI and measurability are lparamount. Compared to traditional media such as print, radio and television, the Web defines a new standard for measurability. This is one of the reasons why online ad spending grew more than 30% in 2006. The paradox is that those of us in the interactive marketing world are at risk of becoming victims of our own success. If we aren’t measuring the right things (and doing it correctly), we are missing the target for measuring ROI, as well as the opportunity to generate meaningful growth in sales and brand awareness through strategic online marketing programs.

The evolution of metrics

Long, long ago, in the early days of the Web (circa late ‘90s) the universal metric for measuring Web site activity was “hits” which was often mistakenly used as a proxy for visits. Then we started looking at other metrics that might help us glean insights into visitor behavior and site performance and focused on unique visitors, page views, returning visits, referring URLs and search keywords. Then things became very exciting when we started measuring conversions (e.g. sales or registrations) and tracing them back to their source (e.g. which search engine and/or keyword initiated the visit which resulted in a sale).

Armed with this data we were able to create beautiful charts with eye-popping stats that clearly showed how online ads generated clicks that converted to revenue. For many advertisers, these metrics changed the how they would view marketing and advertising going forward. Measurement became a “must-have” and ROI became the most important metric. Then we learned something new; something that would yet again require us to change the way we measured and analyzed campaign performance.

We learned that consumers were becoming smarter and more deliberate in their online research and/or shopping habits. We learned that… brace itsself… customers like to do research before making a purchase, requesting information or taking a desired action online. We also learned that visitors might take a wide range of paths when returning to a Web site.

Given that consumers often make several visits before taking action, the Web analytics community has had to take a step back and re-evaluate what we measure and how we do it. If we are to calculate a true ROI from our advertising campaigns, we need to measure not only the most recent source of the visit, but others before it as well. Yet, most popular tracking software applications were designed to capture only the last source of the visit (referring link or URL) and measure what happens during the visit. If something good happens (e.g. a sale) it then assigns that action to the apparent source of that visit (the last link the visitor clicked before landing on the site). No credit for action is given to the ad that generated previous visits. Even worse, it’s common that the last ad clicked on (often a search ad) gets the credit for the sale. If this is how we continue to measure ROI, we’re missing the bigger picture and we may end up allocating all of our dollars to the lead source which is only valuable after awareness has already been created.

While it is no trivial task to determine what to measure, how to get the data, and how to glean insights from the data, when done right, it can provide invaluable insights into customer preferences, buying behavior and critical success factors for interactive engagement.

Case Study: Tyrell Inc.

Tyrell, Inc. is the maker of the award-winning “Zeno” skin clearing device, a revolutionary consumer instrument that uses heat to kill the bacteria that causes pimples. In scientific studies, 90% of pimples disappeared within 24 hours (to learn more visit www.MyZeno.com).

Zeno is marketed through multiple channels including thousands of physicians, high-end retailers such as Nordstrom and, as of late, every Walgreens in the United States. Like many innovative products that seem too good to be true, Zeno has generated a lot of buzz, which has translated into substantial online traffic at MyZeno.com. In addition to using the site to educate consumers and help them find a licensed practitioner (physician) near them, MyZeno.com sells Zeno directly to consumers. With the goal of optimizing sales and maximizing ROI from its advertising dollars (both online and offline), Spur Digital monitors and analyzes traffic and sales on a daily basis.

When analyzing visitor behavior and consumer engagement, we learned several interesting things:

1. Most purchases take place on repeat visits. Of those that purchase Zeno online, only 1 in 3 purchases took place during their first visit. Most purchases take place during visits 2-6, with some sales taking place on subsequent visits.

2. Repeat visitors often rely on search engines vs. bookmarks. One would assume that after visiting MyZeno.com, most would simply type in the URL to return to the site. The data tells a different story: 50% of those making their second visit and 40% of those making their third visit to MyZeno.com used a search engine to find their way back to the site. Search is a powerful channel, even after the initial visit.

3. Consumers do a lot of research before making a purchase. The average visitor views 6.5 pages and stays more than 5 minutes per visit. We also found a significant percentage sign up to receive Tyrell’s newsletter. Together, these facts provided a strong indication that educational content (about Zeno, how it works, testimonials, FDA test results) is an important component of the purchasing cycle.

4. There is a two-week lag between advertising and sales. After we learned that the majority of sales take place during visits #2-6, we analyzed the purchase data and found there was a two-week lag between the initial visit from an online ad, and the online purchase of the product. The two-week lag correlation (0.90) provided valuable insight into consumer buying cycles and is now being used for media planning and forecasting.

This case is significant for two reasons:

1. It demonstrates the value of analyzing the right metrics. If we looked solely at clicks-to-conversions, we’d miss out on a lot of important information relating to customer behavior, sales cycles and use of online media. By understanding these issues, we can plan and forecast with greater confidence and precision.

2. It proves that measuring session-based conversions is no longer sufficient. Given that consumers are increasingly using the Web to do homework before a considered purchase, the initial visit is not likely to produce a desired action. If a visitor originally found the site by clicking on a banner ad, and later returned to the site by doing a Google search for “zeno” before making a purchase, most tracking systems would incorrectly credit Google as the source for this sale. While Google should get the “assist” on the sale, the original source for the lead was the display ad. To properly optimize campaigns, it is critical that some credit for the result is assigned to the advertisement from which the initial visit originated.

The Tyrell case is more common than not. Using cookie-based tracking systems, we can track many of these heretofore untraceable activities. But even with sophisticated systems, reliance on cookies has its downside. Cookies are susceptible to expiring, being disallowed by browsers, and being routinely deleted. Consequently, we still don’t get a complete picture from analyzing daily or monthly site activity.

Considering the influence of the Web on offline purchases, the problem becomes even more complex. Numerous reports state that 20-25% of offline retail sales are impacted by online interaction. I believe that in some industries such as travel, electronics and other considered purchases, the real impact is much greater.

There are numerous other examples that demonstrate how pinpointing the true impact of the Web on customer awareness and intent is almost impossible. While we (the interactive marketing community) have made significant strides in quantifying the impact of online marketing efforts, we realize that even though the proverbial haystack is smaller, it’s still hard to find the golden needle.

Realizing there is no magic bullet for measuring the true impact of media on sales and brand loyalty, we must take a broader view of customer interaction. To properly measure and analyze that interaction (now referred to as Engagement, or the interaction that takes place between the advertiser and the consumer), we must expand the set of metrics we measure, and equip ourselves with the tools needed to measure them.

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