Category Archives: engagement

The false dichotomy of engagement vs. broadcast (or why Pepsi sales are down)

To understand why Pepsi has now fallen behind both Coke and Diet Coke in sales for the first time in decades, let’s examine the tradeoffs between two communication choices: inbound customer engagement and outbound advertising messaging.

We’ve explained the Information Ecosystem before, a simple model showing how information flows (inbound or outbound) to any group (of a few or many). Spend 10 seconds examining the model above and intuitively you’ll see that communicators — advertisers, marketers, organizations, husbands and wives, parents and children — have four tactics at hand. You can broadcast outbound to many; pull research in from many; personalize outbound messages to a few, or engage in inbound communication from a few. Four paths, four tactics, all with their own value given your objective and audience composition.

The biggest mistake marketers make is falling in love with only one tactic. In the 1950s, broadcast was king, in a world where only outbound advertising at scale was possible and communicating with small groups or individuals was too costly. In the 1990s, some companies embraced 1to1 personalization as the future of all communications, eschewing broadcast advertising empowered by new databases that could record preferences of individual customers. Today, in 2012, many companies buy in to social media gurus who shout engagement is the new panacea.

But is engagement really at odds with broadcast messaging? Of course not. Both play a different role on the same field:

The colored circles on the Information Ecosystem above show the debate that often occurs in marketing boardrooms. We must do one or the other, the arguments go. Some see a world where consumers still watch 5 hours of TV a day and commute in cars for 2 hours, so mass-media advertising must work. Others see the shift to Internet, laptops, text, smartphones, apps, social networks and tablets, and think digital-based engagement and word of mouth propagation are the solution.

The truth is, for most companies, both points of view are right — because the dynamics coexist with each other.

When to pick engagement or broadcast

Engagement is a valid tactic if a few members of your audience (say, consumers) have higher value to you or influence over their peers. This variance was called by Don Peppers in the 1990s a “customer value skew,” and the steeper this skew, or range in difference among customers, the more sense it makes to treat different customers differently.

In financial services and airline bookings, where some customers bring much more money to the table than others, engagement makes sense; but for commodity products, or services that appeal to broad swaths of consumers, engagement is a tactic best reserved for emergency situations, a “Motrin Moms” meltdown where a company must be ready to swoop in if negative attacks scale rapidly. If your customers are really different amongst themselves, or have potential to be wildly influential, engage away; if not, downplay this tactic.

On the other extreme, broadcast push such as advertising is best for companies trying to send a message out to masses of customers who all may need relatively the same thing. This doesn’t mean everyone will want your product; but it does mean that even if you are targeting 5% of the population, the needs within that group are similar enough that outbound broadcast can stimulate demand. Education, awareness, interest, consideration are all dynamics driven by advertising to the masses, and the seeds for downstream word of mouth. Like a spotlight, you can target the outbound communications to small groups and do so with efficiency; but there is nothing wrong with pushing messages out to the masses since it is one of four valid communication pathways in the overall Information Ecosystem. The Super Bowl and Academy Awards got lots of chatter among consumers in 2012, and the starting point for both was a major television broadcast.

The lesson of Pepsi

Finding the balance is difficult. In 2011, PepsiCo slashed outbound ad spending on its Pepsi brand in half, down to $20.1 million, focusing more on social media engagement. In March of 2012, news broke that the Pepsi brand had fallen from No. 2 to No. 3 in sales behind Diet Coke — a huge black eye for Pepsi, this being the first time in two decades it trails two Coke brands. Now Pepsi has said it will boost 2012 ad spending up by 30%. “We need television to make the big, bold statement,” Massimo d’Amore, chief of Pepsi Beverages Americas, told the Wall Street Journal.

This is not to say Pepsi’s move toward social-media engagement was wrong; but it did err in overweighting engagement and gutting broadcast for what is, at core, a commodity product in a highly competitive category. Pepsi failed in its judgment because it did not evaluate its customer base value skew accurately — most customers have similar value to Pepsi (we can only drink so much a year) and a similar need (we’re thirsty), and few have influence over their peers’ beverage consumption habits. For a carbonated soda pop, treating different customers differently makes little sense.

The tactics of engagement and broadcast are not opposed to each other, and can fit in the same organizational marketing plan easily, provided the role of each is understood to manage customers in the appropriate manner. There is no ROI on being invisible in a marketplace that needs education; there is also danger in not responding to the small groups of influencers or customers with the highest value, so engagement may be required as well.

Do you need to tell everyone about a new thing? Or is there a steep customer variance in your target base that, if managed, could turn the tide of your business? Answer those two questions, and you’ll have an initial cut at how to invest communication resources.

Ben Kunz is vice president of strategic planning at Mediassociates, an advertising media planning and buying agency, and co-founder of its digital trading desk eEffective.

YouTube’s 0.7% upload engagement rate

If you listen to the hyperbole, an hour of video is uploaded to YouTube every second. This sounds fantastic, and yes, that is a lot of video. However, that’s only a 0.7% daily user engagement rate. The world has not turned into video publishers yet.

There are 3,600 seconds in an hour, so every second 3,600 people on average are concurrently uploading videos (to get 1 hour posted every second). YouTube has 790 million monthly unique visitors. So in any given second, that’s 0.00046% of its entire potential audience actively engaged in contributing content.

Let’s assume it takes 2 minutes to upload a video, so we can get through 720 cycles of uploads each day. Our (0.00046% of uploaders at any time) * (720 cycles of uploaders per day) = a per-day user upload engagement rate of 0.33%. You could play with this math further assuming faster upload rates equal a faster group upload cycle per second, so perhaps the engagement rate is 0.7%. You could also cut this number back by assuming some people are frequent uploaders, sharing more than one video a day, which would slash 0.7% to a fraction of engaged producers. I’ll be generous and leave it at 0.7%. However you count it, the world comprises more watchers than doers.

Ben Kunz is vice president of strategic planning at Mediassociates, an advertising media planning and buying agency, and co-founder of its digital trading desk eEffective.

Originally posted on G+.

A debate on engagement, the fuzzy metric

Owen Lee, who is embarking on an ad career at Starcom MediaVest in London, has an intelligent post about the fuzzy metric of engagement. First he articulates what “engagement” is:

Think of the last brilliant dramatic film you went to see. One where all of a sudden you realise that your eyes hurt from watching the screen so intently. Now that’s engagement. That’s engagement to a point of personal immersion. Whilst this isn’t achievable (yet) at a campaign level, this example serves to show the extent of what a fully engaging experience can do to you. This is what the goal should be. Not the eye-watering part, but that feeling of unbiased personal connectivity to the previously unknown content put in front of you.

And then notes that while it now is difficult to measure this true immersion, current digital metrics on clicks and conversions aren’t enough:

Judging whether a user achieved this connectivity through examining whether or not they entered their details or clicked through is clearly insufficient…

To ask for performance metrics to be used on what’s been briefed as a solely branding campaign makes achieving communications goals tricky to say the least. Not only does it make digital teams less likely to choose more “engaging” rich media over its more ROI-friendly brothers of standard display, but it causes a lack of creativity.

I responded:

This is well done. I agree with the first half; however, not that current engagement metrics are preferable to CTR and CPA. Current engagement metrics are extraordinarily weak — “likes” and “retweets” etc. have little connection with user intent, as you allude to in the top of this.

The problem, as I see it, is we are trying to measure two paths:

1. Direct response: Impression > Click > Sale
2. Brand engagement: Impression > Interaction > Engagement > Rise in brand awareness or intent > Eventual sale

The first doesn’t work, because it neglects the huge additional value digital campaigns have in building brand engagement.

The second doesn’t work, because the steps from interaction to engagement (from retweet to really engaging) and from brand awareness to sale are both extraordinarily hard to parse.

So we’re stuck for now with direct response metrics that tell a portion of the story, and a brand engagement path that currently can’t be measured.

I think all smart marketers realize the overall pattern. And some of this can be parsed out via broader tools such as regression analysis, which look at overall lift from the entire digital prong as a variable against all other communication components.

It’s a thorny problem. If you can solve (2) above, you’d have a nice service, indeed.

Owen’s best point is an online campaign measured solely by digital response metrics removes creativity — the interactive and viral design elements that might make the message break through. Banner ads have become a commodity. Response rates are down. Not playing with the channel, format, or engagement structure means you’re likely to achieve only subpar, average response performance. That is the saddest part of this current marketing dilemma; if we focus too much on what we can measure, we may not do the things that truly drive results.

Ben Kunz is vice president of strategic planning at Mediassociates, an advertising media planning and buying agency, and co-founder of its digital trading desk eEffective.

P&G to pay media based on ‘engagement’

Engagement is a fuzzy word tossed about by ad gurus in black T-shirts to describe consumers who have interacted with or, better yet, begun spreading news about your brand.

Procter & Gamble put some teeth behind the engagement concept this week with a media brief issued to online publishers in the UK. P&G announced it will pay publishers more money for “engaged” users as tracked by specific metrics — for example, consumers who sign up for newsletters or watch videos after the initial ad impression. The move is really a pay-for-performance play, focused on the conversions of people to action and not the oft-fictitious CPMs or fraud-laden CTRs.

P&G has serious clout; it is the world’s No. 1 advertiser, dropping more than $9 billion annually to push brands such as Crest, Tide and Pampers. But not everyone believes the model will stick. Nick Suckley, co-founder of media shop Agenda21, told New Media Age he thought cost-per-engagement online ad models may be slow to take off in the absence of hard, consistent metrics across the industry. “The point is how can you measure the real effect of someone engaging?” he said. “It’s impossible.” We expect publishers to push back as well; charging only for the ads that truly work will expose marquee web sites as having a boatload of ad inventory that often doesn’t work well at all.

Via Branislav Peric. Image: Auzigog