July 24, 2013

1996: Matched Market Testing of TV Ads

Here's five popular songs from 1996:
  • "Macarena", by Los Del Rio.
  • "One Sweet Day", by Mariah Carey.
  • "Because You Loved Me", by Celine Dion.
  • "Nobody Knows", by Tony Rich Project.
  • "Always Be My Baby", by Mariah Carey.
While listening to those songs in 1996 at Eddie Bauer, I analyzed the performance of Television Ads.  Here's a ad from 1999, just so you can get a hint of the theme of the content (click here please).

Somehow, a little analytics manager like me recommended a matched market test.  We'd air the commercials in Seattle, but not Portland ... Salt Lake City, but not Boise ... Los Angeles, but not San Francisco ... Phoenix, but not San Diego.

After a half year of commercials, we ran the numbers.  The commercials were responsible for something like a 4% increase in comp store sales.  But the profit and loss statement didn't look too good.

In other words, we had a 100% ad to sales ratio ... and we needed to see a 30% ad to sales ratio to generate profit.

This analysis drew criticism from all fronts.
  • Finance said I was overestimating the performance of the TV ads, that I couldn't possibly, with any precision, used matched market testing to show that we even generated $15,000,000.
  • Creative / Branding said that I couldn't possibly, with any precision, understand the long-term branding impact of the commercials - they said I was only measuring the short-term impact, which, in their minds, was completely meaningless.
This was the first time I employed what I call the "Switzerland Approach".  In other words, I chose to be neutral.  No attachment to the commercials, zero!  I didn't care if the commercials worked or did not work, I only cared in the profit number at the bottom of the profit and loss statement.

After a year of using the "Switzerland Approach", I was overwhelmed with "business". Everybody wanted to learn something about customer behavior, because the outcomes I sold were neutral, and without emotion.

That's the lesson of this blog post (and the 1993 - 1996 timeframe in general).  Try to be Switzerland.  Let the customer do the talking!  Sell the message, not the ideology.

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