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Friday, April 20, 2012

Commercial Avoidance Revisited and The Invisible Gorilla

In January 2009, when I was beginning this blog, an early post was entitled “The Elephant In All Our Offices.” The basic premise was that commercial avoidance was growing steadily and we all had to face up to it.

When I wrote that post DVR (time shifting devices) penetration was at about 28% of US TV households. Recently, Nielsen projected that DVR penetration is now at 41% and other sources peg it at 43-44% of the total household frame.

So, it would seem to be a good time to update the concept of commercial avoidance. A lot has happened in 39 months.

The big issue is the explosive growth of other video options. Netflix and Hulu have both grown nicely and You Tube usage is up as well.  You can visit sites of ESPN, CNBC, CNN and dozens of other channels and see streaming video of much of their programming with minimal commercial interruption.  Every hour that you spend with them means less exposure to traditional advertising messages. And, with DVR penetration up 46-50% in the last three years, it is clear that people are seeing fewer and fewer commercials.

A new study from Boston College has a few people rattled but not many wish to discuss it. In brief, they state that the majority of viewers are multi-tasking when they watch TV. They toggle back and forth between the TV and another device or two but are not really giving either undivided attention.  This is particularly true of young adults. So, they may be sending a text message, watching video on their I-phone or surfing the web during a two minute commercial break. They are underexposed to the advertising often as much as those who are zipping through the commercials in a recorded program.

As I have done for years, I continue to monitor the effectiveness of media weights. There appears to be a direct correlation between DVR penetration and TV advertising effectiveness. Seven years ago, with a tried and true promotion, 1100 rating points in a specific daypart configuration would be sure to move the sales needle for a specific product.  Now, that same promotion might need 1450 points to generate the same sales spike. Some people dismiss these findings by saying that the economy is still weak so people are not buying. That could be part of the reason but a big culprit has to be that many people are simply not seeing the message as in the past. People have been channel hopping for over 50 years since the remote came in to vogue. Now, it is rampant across most age groups. If you go to Hulu.com you see a lighter commercial load. If you go to Netflix, you can view commercial free.

And, what of top rated shows in the current environment?  Take a leading show such as ABC’s Modern Family. Besides being a Nielsen leader almost every week a new episode airs, it is also a leader in programs that are taped and viewed later. If you want to be in that program in either network or spot TV, the premium on a cost per rating point basis can be very large compared to other primetime fare. But, if 12-16% of the viewing is done days later, how many of people playing it back are seeing your spot? Is the premium still worth it? When I bring this up, people shrug or get silent. Some programs have to be getting somewhat overpriced in this scenario.

The whole issue of commercial avoidance strikes me as not getting nearly enough attention these days. A few panel members were candid with me. Some anonymous comments were: “I am two years from retirement. Why should I bring this up with my clients? It is a lose-lose for all of us. Where would I put the money? We can’t shift much more to social media now.  I still can’t prove that it works well. TV is a security blanket for many of our clients. Off the record, I think that you are correct about the gravity of this issue, but I am not going to stir the pot.”

Another said, “We are very busy and understaffed right now. I am not about to address your theoretical issue with my management or clients.”

I understand but I do not think that the issue is theoretical. Rather it is a cancer that is growing each day.

Why are people not facing up to commercial avoidance? There are many reasons but I believe one of the biggest is that my panel member is right when she says that people are busy. When people are busy they focus and focus hard on the issue that is directly in front of them. If you do that, you sometimes miss some big things.

A few years ago, Christopher Chabris and Daniel Simons published a book called THE INVISIBLE GORILLA. It is a fascinating look about how intense focusing can make people blind to the obvious. They actually made a brief film that made the point brilliantly. The movie short had two teams passing basketballs back and forth. One team had white shirts on while the other wore black. Viewers were asked to count the number of passes by the white shirted players but to ignore the black. Doing the task was completely absorbing. After a few minutes, a lady wearing a gorilla suit appeared, crossed the basketball court, beat her chest like a good gorilla, and then exited.  Thousand of people have seen the video but usually more than half do not notice the “gorilla”. The task of counting the passes and ignoring the black shirted players absorbs all of the attention and blinds them to the intrusive stimulus. The Nobel Prize winning Behavioral Economist Daniel Kahneman writes that the gorilla study illustrates that “we can be blind to the obvious and we are also blind to our blindness”.

The gorilla study to me is a very nice analogy for what is happening with commercial avoidance. The gorilla is crossing your screen daily and getting bigger and staying longer. But, media and marketing professionals are often so intent on the task in front of them that they are simply not seeing it. And, some, as Kahneman puts it, are actually “blind to our blindness.”

Television’s effectiveness as an advertising medium will not die overnight. But it is losing ground each month and too many are not preparing for the future by hedging their bets and testing alternatives. The gorilla is now 800 pounds. In three more years, he well may be a 1200-pound specimen. Regardless of how busy you are—admit to the problem and start looking at new platforms NOW.

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com

Sunday, April 1, 2012

The Real American Consumer

A little over 20 years ago I was called in to a meeting. Agency staffers were reviewing work for an upcoming new business presentation. I was asked my opinion and said, “Two of the executions seem way too upscale for the target demographic.” The writer, took offense, and asked me to define the target. Briefly, I outlined what market and media research indicated. “Some 70% of the people who would buy this product live in households making less than $50,000 per year”. The young writer laughed in my face and said, “no one could live on that.” Trying to maintain my composure I responded that most people do. He dragged me in to see his boss who told me that something was wrong with my figures. I responded that they were not my figures and ticked off top line income estimates from the U.S. Census, Department of Labor, Merrill Lynch, Mediamark Research, Inc. and Simmons. The upscale executions were kept in the presentation and we did not get the business. I talked briefly at the pitch but my income data were not part of the slide show.

After this event, I turned my annoyance into action. I put together a presentation that I dubbed “The Real American Consumer” that tried to impress upon clients and prospects that everyone in the U.S (and now the world) does not live as all of us do. I update it every year and it holds up well.

The presentation is built on the premise that people who work in marketing, advertising, broadcasting, cable, and publishing tend to lead comfortable lives. As we get older, unless we have very bad habits or get married and divorced too often, we tend to become affluent and, a few, wealthy. Yet, as we grow in wealth, we get more detached from the people who have bought our products and gave us our pleasant lifestyles.

Each year, the Gallup organization does a survey of American opinion. And, the results almost always indicate that some 89% of Americans view themselves as middle class. That is fine but for a marketer it can be a deadly assumption. If senior executives see themselves as “everyman”, then some bad decisions are often made. Once a client rejected a creative campaign because he said that his golf buddies at the club did not like the storyboards that he presented. Another client, a fast food maven worth millions with many stores owned outright, told me that my media buy was no good because he was “not seeing the commercials.” I told him that was good as he was not the target. His response was that he was just a regular guy and he should see his spots. He did admit that sales were up nicely but felt something was wrong.

Well. The moral here is not to lose contact with your target audience and respect them as well. According to the latest government data, the median household income in the US is $51,914. Remember what a median is? Statistically, it is the 50th percentile so approximately half of America earns below that benchmark and the other half above it.

Here are some other quick facts that show how far you may be from the average American:

22% of Americans have a passport. Well, then 78% do not. I bet virtually all of you and your friends have a valid passport.

30% of Americans have no credit card

18% are completely unbanked

17% are functionally illiterate

8% live in mobile homes. In some counties, the figure is 26%

3% use a library each year even though the library has free books and movies

20% at the bottom have an effective net worth of zero. The next 20% are worth about $15,000

Can you, as a marketer, relate to all this? If you want to be effective as a marketer, you do not have to live as your customers do, but you need to know a lot about them.

Sam Walton was the most successful retailer of the 20th century. Shortly before his death and suffering from bone cancer, Mr. Sam, as he liked to be called by associates, would still fly in for every new Wal-Mart store opening. When he met with the manager just prior to the ribbon cutting, it was not uncommon for him to observe that he had visited the grocery store down the street and that Wal-Mart was charging 2 cents more for a half gallon of milk. The smile would disappear as he told the manager to get the price below the competition. Walton, by then a billionaire, was said to live on $200 a day, wear clothes sold at Wal-Mart and spent his free time tooling around Bentonville, Arkansas in an aging pickup truck. How much of that is truth or folklore is irrelevant. What he did do was constantly talk to and LISTEN to his customers. He may have been the wealthiest man on earth for a few months in the late 1980’s but he never forgot who put him there.

Several years ago, my CEO told all of us to visit one of our client’s retail locations every couple of weeks at a minimum. Few did it but I was a good soldier and always complied. Once, I entered the fast food restaurant on a Sunday, bought a cup of coffee, and sat in the back of the dining area and watched and listened. I was reading a copy of the New York Times Book Review but kept the cover page concealed. At one point, I saw a lady arrive with three children. As they were eating she raised her voice to one of the children and said, “Finish your sandwich. If you don’t, next month we are going to McDonald’s.” What a wake-up call that was for me. This was a special and expensive treat in her eyes. The next day I told a few colleagues about it. Most got the point, one’s eyes filled up, but one young fellow said, “Who cares about those people.”

Tonight when many of you open a nice bottle of cabernet or pour yourself a single malt scotch, remember who is giving you that pleasant lifestyle. They buy fast food, beer, Coke and Pepsi, cigarettes, pickup trucks, soap, razor blades, and Kraft macaroni and cheese while you grill the swordfish. Don’t lose touch with the Real American Consumer. They deserve your respect and understanding.

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com