Thursday, 09 June 2016 02:35

The strategic value of business advertising research


There is no doubt that the world of business advertising has changed dramatically over the past few years. Strong evidence exists that more and more money is being spent on advertising in the business-to-business media, that more and more companies are participating in business advertising, and that more and more sales leads are being stimulated by business advertising in general.

The trend toward more business advertising can be seen in the latest statistics on business advertising spending among the top 100 largest advertisers. The publication Business Marketing reports that, for the period from 1980 to 1985, the advertising spending of the top 100 advertisers in measured business publications increased from a total of approximately $125 million to approximately $750 million. While media inflation accounts for some of this huge increase, these data confirm the importance of business advertising in the minds of many marketing and advertising managers.

But what's happening in business advertising research? Is there as much excitement about current developments in business advertising research as there is in business advertising? Are more and more companies using research to make sure that their business advertising budget is being spent wisely? Are there innovations in research methodologies that direct the development of advertising strategies better than before? Are advertising managers seeing the benefits of business advertising research in tangible terms?

Problems, opportunities

We believe that the answers to these questions would provide a great deal of insight into the current state of the art in business advertising research. But more importantly, we believe that the answers to these questions would provide insight into the current thinking about the problems and opportunities associated with business advertising research.

It is useful to have a better understanding of the role of research in the process of developing and evaluating business advertising. It was with this purpose in mind that we began the research project described here.

Our objective is to report some of the major findings of a research project that we conducted during the summer of 1987. In this study, we set out to contact and interview some of the top advertising research professionals in business advertising. We obtained information on several different aspects of business advertising research but we concentrated primarily in two areas: The use of research in the development of advertising strategy and the use of research in measuring advertising effectiveness. First we'll summarize the methodology that was used to collect the data.

"Key informant"

The methodology used in the study was based upon the "key informant” technique. Key informants, or the most knowledgeable individuals in the business advertising profession, were identified and interviewed in a 20 minute telephone conversation. The list of the 100 leading business-to-business advertisers from the July, 1986, edition of Business Marketing was used to identify companies that are the most active in business advertising. The Standard Directory of Advertisers was used to identify the individuals within these companies who have major responsibilities for advertising.

The list of key informants was qualified further by telephoning each individual's company to confirm that he/she was still employed with the company and, if so, to confirm his/her address and telephone number. We then sent a letter to each individual remaining on our list which explained the purpose of our study, requested their cooperation, and assured them that their responses would remain confidential. Forty letters were mailed.

Telephone calls were made to each individual on the list about 10 days after the letters were mailed, and several callbacks were made. In the interview, a structured outline that included questions on the role of business advertising research in two major situations was used: 1. The development of advertising strategy. 2. The measurement of advertising effectiveness.

Within both of these areas the following questions were asked:

What is the trend in business advertising research in your company during the past few years? Is there more research, less research, or about the same amount of research? Please explain.
What kind of methodology (or methodologies) do you use? What is its overall purpose? What variables are measured? What is the sample size? What other important aspects of the methodology are there?
What are the benefits of this research? In other words, what do you get for it?

How satisfied or dissatisfied are you with this type of research in assisting in developing good advertising at your company (or in evaluating the effectiveness of your company's business advertising)?
We found that the respondents were, for the most part, very willing to share this type of information with us and were quite interested in our study. We completed the interview with 20 key informants, for a response rate of 50%.

Obviously, the small number of respondents limits the generalizability of our results. But we felt that an exploratory study among the most knowledgeable professionals in the industry would give us the kind of information that would be most useful at this stage of our research.

Differing opinions

The results of the research provided the kind of insight we were looking for. We found that there are many differing opinions about the roles of business advertising research, the methodologies that are used, the benefits and problems associated with the research, and the levels of satisfaction with various research approaches.

Results of the study in each of the areas included in the study are:

1. Trends in business advertising research
The responses seemed fairly well divided between those respondents who believe that there is more research and those who believe that there is less research in their companies. It appears that there is a slight trend for more research in the area of strategy development and less research in the area of advertising effectiveness research during the past few years.

Responses were mixed, and it is quite difficult to discern any other trends. Representative comments from the respondents included:

"Very positive. Much more (research) than ever before."

"More interest, but only a little more actual testing. Parts of the company do more, some not so."

"More research is being used now than ever before. Some operating companies use more research; some do not. We try to influence them to do so."

"More research. More tracking research is being used to feed into the creative process."

"Research is not used at all. Campaigns are developed by gut feel based on discussions within the company and ad agency."

"There is less emphasis here (in advertising effectiveness research) than with strategy development research. It needs a champion."

"More research in our company. We now insist that divisions measure advertising effectiveness in terms of operational communications objectives."

"We do some research, but not much. Only in selected areas."

"More need now than ever before but less time, money, and people available to accomplish it."

"More competition with deregulation resulting in more advertising and measurement."

"No more 'seat of the pants.' There is more pressure to be cost-effective and segment selective."

"We're sadly deficient. We do almost no measurement."

"Less research. There is more scrutiny now than ever before with emphasis on profits as to where we spend our money."

Overall, it appears that there are more questions being asked by management that should be answered by research. But there does not seem to be strong evidence that more research is being conducted, however.

2. Methodologies being used

A. Strategy development research

It is very clear that there is little agreement as to what methodologies should be used to provide the best input into the strategy development process. Responses were all over the board with every major research technique being represented. The responses included: Focus groups, personal interviews, telephone studies, copy testing, and tracking research used to feedback into the creative process.

Some respondents use only one of these techniques, while other respondents use a combination of methods. One rather unexpected finding was the extent to which tracking studies, typically conducted by telephone, are used in the strategy development process (as well as in the measurement of advertising effectiveness). In some firms, tracking studies are supplemented by focus groups and other methods.

Sample sizes vary all over the lot depending upon the size of the market being targeted. The sample sizes range from 10-1,500.

In the area of copy testing, by far the most widely used method is the Starch method.

It was also interesting to find out that special, proprietary techniques are not being used. The only exception to this was that one respondent reported using claims matrix mapping exclusively. He is an eager proponent of this method for use in product positioning in business advertising.

Methodologies used

Representative comments regarding the methodologies being used include the following:

"Focus groups, tracking research (used to feed back into the creative process)."

"One-on-one qualitative research with individuals in the financial community. They are asked to comment on our ads and our competitors."

"Telephone study: Attribute testing (for both customers and non? customers). Mail study; concept testing where stickers are allocated."

"We start with a small scale qualitative study and we end with concept boards with short copy."

"All types of methods. Whatever is needed; focus groups, tracking, Starch."

B. Advertising effectiveness research

In the area of advertising effectiveness research, the most commonly used technique, as we expected, is the tracking study. Most of the tracking research is conducted by telephone, although tracking via mail questionnaires is used as well. The typical tracking study research measures variables such as company awareness, advertising awareness, and attitudes or perceptions about the company as well as about several other firms. These other firms used for comparison that are typically included in the research are either competitors or other large, highly visible firms. Examples of the latter group includes IBM, AT&T, Dow Chemical, GE, 3M, Du Pont, and Xerox. Very often, tracking research is conducted by market audience across several markets served by the firm. We also found that these results are often broken down by current customers and potential customers as well as by different market segments.

In addition to tracking studies, several other methods are being used by the top business advertisers. These include:

Copy testing, especially Starch;
Focus groups;
Personal interviews;
Publishers' audience data (although a great deal of skepticism exists regarding the validity of these data);
Miscellaneous techniques such as coupon response, calls to a toll-free number, and informal client feedback.

Representative comments that we received include the following:

"Tracking study conducted by telephone. The study uses a sample size of 1,500 broken down by target markets. Measures ad awareness, company awareness, perceptions of the company, and impressions of the company," "A qualitative study consisting of three open-ended questions related to 'What does the advertising make you think about."'

"We do an annual study against several target audiences measuring awareness, attitudes, and perceptions using a sample size of 150 per cell. Copy testing is also used; ASI and Starch."

"We use a combination of focus groups and story boards. We measure awareness, attitudes, and corporate identity."

"A tracking study at the corporate level, and some tracking at the operations levels as well. In the corporate level, we focus on two broad audiences: 1. Business. 2. Financial and security analysts."

"Wall Street Journal" readership studies. We monitor coupon returns from our WSJ advertising. Informal client feedback."

"In-depth telephone interviews with sample size of 1,000+. We measure company awareness, advertising awareness, attitudes vis-a-vis competitors, and other specific issues of concern."

"We measure coupon response and calls to our toll-free number."

"We plot Starch data over time."

3. Benefits received

Perhaps the most interesting result from the research was in the area of benefits received. In the vast majority of cases, the respondents were able to provide two or three substantial benefits that they saw in business advertising research. Although the range of responses seems great, there appears to be some consistent themes running through the responses.

A. Strategy development research

The most common response received to the question "What are the benefits of strategy development research?" deals with the positive nature of the feedback to the creative process. The usefulness of research in copy development is quite obvious from our research. Respondents seemed to be in fairly close agreement that strategy development research enabled them to get a better grip on their buyers' needs and to identify the types of information that would be helpful in the buyers' decision-making process. This result was especially important for those respondents who carry out advertising campaigns to several different target audiences.

Closely related to the ability of strategy development research in adding to the creative process were responses related to providing assistance in spending the advertising budget more wisely and providing an "objective" look at what should be done.

Another major benefit from strategy development research exists in an organizational sense. Here, business advertising research is being used as a tool to aid in convincing management that advertising dollars are being spent in the most productive way possible and to justify the need for budget and staff. We believe that this use of business advertising research may be one of the most important findings in our study. The ability of advertising managers to use research to convince skeptical top management that "advertising monies are not being wasted" and "we are getting something in return for our budget" are major reasons to conduct the research. This defensive position was mentioned by several respondents as being a crucial benefit of advertising research.

Objective measure

In the area of strategy development research, representative comments include the following:

"Helps in spending money wisely under conditions of tight budgets.”

"Helps to direct message to different target markets."

"Identifies areas of weakness and mis-perception relative to the audience. Helps focus the advertising on the audience target."

"Identifies the kind of information that the financial community looks for. Identifies problems with corporate image. Provides clear, concise information with graphics. Organizationally, the research has been very helpful."

Here, more of the same kinds of comments were made by the respondents. It quickly became clear that there are widely acknowledged benefits stemming from advertising effectiveness research.

Representative comments from those who participated in the research include:

"Measures image. Research has led to improvements in our image. It has led to direct increase in the sales of one product line."

"Tells us weak spots, strong spots, where we are. Allows us to look at advertising from the point of view of total communication."

"Provides us with feedback on the direction of the campaign and where we are heading. Provides us with creative strategy input."

"Provides a measure of how well we spent our money. Provides guidance on where to spend our money. Provides an indication of the relative merits of different media vehicles. Helps to keep up the morale of the sales force. Keeps the channel of communication open to the sales force."

Spending wisely

In summary, the respondents who participated in our studies feel that the benefits of advertising effectiveness research fall into three major categories:

1. Assistance is provided with the development of messages targeted to the needs of the intended audience. Copy strategy and execution are improved due to the feedback from previous advertising.

2. The advertising budget is spent more wisely, and the advertising expenditures are held accountable for achieving certain results. In the "results oriented" environment of many businesses today, advertising effectiveness research is an important indicator of success.

3. Skeptical top management personnel can be convinced that they are receiving some return on their advertising dollars.

4. Degree of satisfaction and problems encountered

Most of the responses we received to the questions related to the degree of satisfaction were positive. At the same time, almost all of the respondents noted that there are some problems that need to be dealt with in order to make the research process more useful.

The problems mentioned by the respondents vary widely. They deal with issues such as:

The weaknesses associated with various techniques (such as the subjectivity and non-projectability of focus groups and low response rates in telephone interviewing);

The difficulties in reaching the right individual to include in the research;

Small sample size;

Measurement error;
The expense involved in the research process, and
The length of time it takes to generate research results.
Another major problem is the need to do a better job of "getting management on board" in supporting the research as well as the advertising itself.

Improved methods needed

Some of the comments were received that reflect these concerns are as follows:

"Adequate. Methods are needed that are more applicable and affordable. Our methods are awfully subjective and non-projectable."

"Very satisfied. But we're always looking for improved methods. Care is needed in using focus groups due to certain people dominating the session."

"Satisfied. The methods are there. The problem is in convincing management and in making the process work internally."

"Moderately satisfied but leaves a lot lacking. Sample size is a problem; it is hard to identify and talk with them."

"We are frustrated. We think that we are doing the right thing, but the research tools are expensive and vague. Getting to the right person is difficult due to the sensitive nature of the information (in defense?related industries). Our refusal rate is 90%. Trying to link results to a particular campaign is difficult. We tried perceptual mapping and found that it didn't work. We are skeptical about other sophisticated techniques."

"Very satisfied. Changing questions is difficult. Sample size is a problem. We can't extend the research to as many target industries as we would like due to the expense of the research."

Research use varies

This study has provided insight into the use of research among business advertising professionals. The responses obtained from some of the largest business advertisers were quite helpful in understanding the role of research in the advertising process, the types of techniques that have been found to be most useful, the benefits of this research, and the levels of satisfaction with business advertising research.

The results of the study indicate that some of the largest business advertisers are quite active in their use of research. They use research on a regular basis and see its role becoming increasingly important. They use methodologies such as focus groups, personal interviews, telephone surveys, and copy testing to attempt to improve the quality of their creative product and to evaluate the effectiveness of it as well. They see several benefits stemming from the process of advertising research, and they indicate that they are generally satisfied with the research they use.

On the other hand, a relatively large number of the business advertising professionals interviewed are far less satisfied with business advertising research than was expected. Responses such as, "Research is not used at all," and "We do almost no research at all" were surprising given the significant budget levels devoted to advertising in the business media by the companies comprising the sample. Evidently, these companies see little or no value associated with the research process.

Given that research techniques are currently available that are effective in guiding the development of advertising strategy and improving advertising effectiveness, we found these results to be discouraging. It was disheartening to find that so many of the top 100 business advertisers in our sample did not perceive more "value added" by advertising research. We also were surprised to find that advertising research is being used so frequently for the purpose of convincing skeptical management that advertising really works.

Needing more education

Based on our experiences in discussing business advertising research with 20 key informants in the industry, we believe that there is a strong need for further education on the benefits of advertising research. Educational programs directed at top management and other personnel would be useful in demonstrating the value of business advertising research. In some companies, however, it is clear that this educational task is likely to be a long and difficult one.

But despite the discouraging results obtained from several respondents, other companies are definitely providing leadership in the area of business advertising research. Their leadership will no doubt continue into the future as they find new ways to maximize the impact of advertising through research. We are optimistic that our plans for further research using larger, more representative samples will continue to uncover novel and effective uses for business advertising research.


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