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Saturday, November 25, 2006

Why is ad recall no longer a good ad effectiveness metric? - Nov 24-06

MarketingRx # 160 for Nov 24, 2006
By Dr Ned Roberto & Ardy Roberto


“Why is ad recall no longer a good ad effectiveness metric?”


Q: In a recent marketing conference, we heard that you were more than critical of advertisers who are using advertising recall as an ad effectiveness metric. Our marketing director who was in that conference emailed us after and instructed us that from now on we should drop ad recall in our ad effectiveness study. He said he doesn’t want to see anymore the ad recall score of our TV ad when we’re presenting our research on our TV campaign’s post launch effectiveness.

We are not at all clear about this rejection of ad recall as a good ad effectiveness metric. We remember attending your advertising research seminar way back in 1998-1999. You basically endorsed ad recall as a useful ad effectiveness indicator. In fact, you told us then, that ad recall is a measure of “the quality of ad awareness,” suggesting that it’s a better ad effectiveness measure than ad awareness. We also remember your telling us that ad recall is P&G’s favorite ad effectiveness indicator. You even called it “P&G’s philosophy of a good advertisement.” It was on the basis of this proposition from you that since then, we’ve never missed including ad recall in our post launch ad effectiveness study.

So to start with, please tell us if you actually said what our marketing director told us you said about ad recall. If you did reject ad recall, then please help us understand why. If 8 years ago, it was a good effectiveness measure why is it no longer good now?

A: Your first question is easily answered. It’s correct that I suggested that in today’s media world and landscape, ad recall is no longer a good ad effectiveness metric. What your marketing director missed telling you though is that I suggested a replacement that’s more suitable to the current times. That’s brand recall which leads us your second question.

You have to admit that in today’s full blown digital world, 8 years is a long time. That’s nearly a decade. And many things can change in 8 years. The generalized version of Moore’s Law tells us that in the digital world, the speed of change doubles every 18 months. Metcalf’s Law adds the other dimension of scope to speed. It says that we are getting interconnected “in direct proportion to the square” of our networkings. Moore is Gordon Moore of Intel while Metcalf is Robert Metcalf, founder of 3Com.

In marketing, one of the things that have changed rather dramatically is advertising: its role in the marketing mix, its significance as a communication tool, and its credibility among TV viewers, radio listeners, newspaper and magazine readers and other ad media audiences. In the marketing mix, advertising has become inseparable from promotion: the A&P. The use “&” has a normative implication. If you are to advertise your brand, make sure you also promote it so you’ll motivate your buyers to buy now and not later. And if you are to promote, then make sure you advertise your promotion so you’ll get many consumers to learn about your promotion and thereby generate a larger base of promo participants. Over the years, the A&P budget has tilted in favor of more promo than advertising. This has prompted many marketers to now talk about P&A rather than A&P.

If you now look over today’s communication landscape, advertising has increasingly lost its prominence. PR, publicity, events, sponsorship, product placement in movies and TV shows, and direct response advertising via the internet and mobile phone have been sharing the limelight that tri-media advertising used to dominate. More and more share of communication voice and communication investments is leaving advertising in favor of PR, publicity, events, and the like.

Advertising, PR or Word of Mouth?
Most importantly, consumer credibility is also quickly exiting advertising and entering PR, publicity, and in particular word of mouth. In fact, Al Ries predicts that PR will take over advertising because advertising is speedily losing its remaining consumer credibility. Actually, if you read Al Ries carefully, you will discover that he’s talking of PR not in its traditional form but in its word-of-mouth and/or word-of-mouse versions.

Before, or back in the 70s and even 80s, it was reasonable to say and there was enough consumer behavior reality to believe that “consumers buy a brand because of what they recall from (say) the TV commercial for that brand.” But today, advertising has lost its premier consumer persuader position in favor of promotion in the marketing mix. In communication, it similarly lost its significance to PR, publicity, events, and other non-tri-media channels. And most importantly, advertising’s credibility has suffered from a reversed Moore’s and Metcalf’s laws: its credibility loss has been accelerating at the speed of Moore’s law, and the scope of its credibility loss has been widening at the expansion rate of Metcalf’s law.

“Nature abhors a vacuum. Sooner than later, something else fills that vacuum.” And so it is in the advertising world. The vacuum in ad effectiveness that ad recall has been creating with its accelerating loss in consumer credibility is being filled by something else that consumers are using as basis and reason for buying a brand. That something else is brand recall.

Consumer behavior research is telling us the following about brand recall. In many more cases and occasions, consumers buy because of what they have learned and appreciated about a brand more than because of what they recall about what its advertisement said. So more and more because of brand recall than ad recall.

In our research, we measure brand recall by asking consumers everything they know about a brand but without relating this to the source of their brand knowledge. This is important because you can always argue that brand recall came from the ad recall. Control this source of metric contamination by explicitly deleting it from your questionnaire.

So do we completely throw away ad recall? No, not really. If we don’t, what then do we do with it?

Drivers of ad recall
In our research, we draw on its usefulness and function as a “bridge” or “gate” to discovering and measuring potential and actual consumer buzzing. (In consumer research language, it’s our screening question to probing on consumer word-of-mouth behavior toward ad recall.) That’s basically the word-of-mouth value of the ad recall. Our research calls this “the ad recall buzzing effectiveness metric.” It’s the percent of "ad recallers" who either: (1) told others about the recalled ad message, (2) discussed with others the recalled ad message, or (3) asked others if they heard the recalled message. Those “others” can be a family or household member, a friend, a neighbor, an officemate, and the like.

Increasingly, our research data are showing that in 7 to 8 out of ten successful TV ads, it is not just the TV exposure alone that was the driver of success (measured as increased brand sales, consumer usage, trial purchase, or repeat purchase). It was the word-of-mouth extension of the ad recall that was a co-driver. In fact, in more cases of the 7 to 8, it was the word-of-mouth that was the multiplier driver (especially if your ad gets posted on YouTube). TV was just the additive driver.

Some of our readers who are interested in learning more about word-of-mouth may have missed our several columns on word-of-mouth advertising and word-of-mouth as an ad media. To request for soft copies of those columns email us at the address below.

Keep your questions coming. Send them to us at MarketingRx@pldtDSL.net. God bless!