Integration and Branding: Some Radical Thoughts

1. Integration and Branding: Some Radical Thoughts Don E. Schultz, PhD IMC at The Medill School Integrated Marketing Summit San Diego 30, January, 2014

2. Isn’t Integration Supposed to Build Brands?That’s What All the Media Pundits Say!

3. And, Even I Have Been Pontificating on That Point for Some Time!

4. Until We Analyzed the Data, That Seemed the Logical Conclusion….. We didn’t set out to question brand value or brand futures, or, even integration……it just happened as we “connected the dots” in our research

5. The Data Source Provided the Pathway • Prosper International – Worthington, OH • Online data gathering started in U.S. in 2002 • Consumer Intentions and Actions (CIA) and Media Behavior and Influence (MBI) studies • CIA monthly, MBI twice yearly • Both conduct online questionnaires in U.S. • 8,000 responses in CIA, 22,000+ responses in MBI per wave • Nationally projectable – using 14 U.S. Census age/sex format • Product purchases in 8 categories – present and future • Media use and influence – 31 external media forms, 23 internal • NU data analysis, no restrictions

6. We’ve Now Aggregated and Combined 10 Years of CIA and MBI Data for the U.S. 1,100,375 consumer responses analyzed 73 fmcg product categories 1,529 individual brands 31 media forms consumed – online and offline 23 in-store media forms reported Media consumption (minutes per day) and media influence by media form Eight (8) broad product fmcg categories analyzed Get or give advice to others enabling NPS-type scoring

7. Findings Based on NPS-Type Scores Primarily fmcg products – food and drug Consumers shifting brand loyalty from manufacturer product brands to retail store brand (not private label) Substantial growth of “No Product Brand Preference” in most product categories

8. Source: Reichheld, “The Ultimate Question”

9. Market Performance of Stores and Products – Preference

10. Example: 10 Year AGR for Brands, Stores and No Brand Preference AGR = Average growth/decline rate for the 10 year aggregated period Brand AGR -1.68% Store AGR -0.98% No Preference +1.38%

11. Top 6 Leading Brands in Top Quintile by Category

12. 6 Brands With Lowest Brand Preference Scores

13. It Looks Brands Really Are in Trouble? Manufacturer brand preference is declining, and, has been for some time Not being replaced by store brands Is “No Brand Preference” the same as brand commoditization? The “signs” aren’t good

14. What’s Going On?Some Potential Contributing Factors Recession economy Value shifting among consumers Product proliferation and commoditization Growth of on-line shopping Increased fragmentation of media Expanding use of search Etc.

15. We Thought at First, It Might Simply Be a Reflection of the Recession

16. The Economy Alone Doesn’t Explain the Changes Observed Correlation between 2007-2012 changes in Leading Brand and changes in Consumer Confidence = -.02 Correlation between 2007-2012 changes in Consumer Confidence and No Brand Preference = .03

17. Instead, Our Evidence Points to Consumer’s Shift in Media Usage

18. On Further Investigation, We Discovered Growth in Social Media Was DirectlyCorrelated With Declines in Traditional Media Usage and Declining Brand Preference Scores

20. Internet TV

21. Can Social Media be “Killing Brands….Softly?”

22. The “Bigger Questions”: Does the Marketer’s Integrating of Social Media into Their Communication Mix Have an Impact on Brands?

23. And, What Is the Impact of Consumer Use of Social Media on Brand Preference?

24. Today, I Can Answer the First Question But, Not the Second!

25. Changes in Media Consumption Over 10 Year Period

26. Average Traditional Media InfluenceOver 10 Year Period

27. Average Digital Media InfluenceOver 10 Year Period

28. Shifting Media Influence 2005-2012

29. Correlation Between the Rise in No Brand Preference and the Decline in Traditional Media Usage Over 10 Year Period Television -0.678 Newspapers +0.707 Magazines +0.897 Direct Mail +0.894

30. Some Speculation on Why Most brand theory and concepts developed in 1970s-1990s – age of mass media - common consumer denominators Brands are an artifact of large mass media investments – primarily television Mass media advertising provided widespread icons, languages, understanding and acceptance among large consumer base Traditional brand success was built, and still depends, on mass audiences, mass acceptance and mass understanding – brands are all about “scale”

31. For Example, Everyone Remembers… “Where the beef”? “Just do it” “Fly the friendly skies” “Ho! Ho! Ho! “The King of Beers” “The Pause that Refreshes”

32. Today’s Brands Were Built With Mass Media for a Mass Market Society: As That Shifts and Fragments, Will Brand Preferences Follow?

33. Social Media Challenges the Entire Brand Concept Fragments Separates Personalizes Limits Isolates Diffuses Creates communities, not markets

34. What We’ve Found:As Social Media Usage Goes Up, Brand Preferences Go Down! Not What Most of Us Would Have Predicted!

35. But, Maybe We Have a Bad Data Set or Nutty Professors, or Even Inappropriate Analytical Techniques

36. The Triangulation Study • Two other brand research organizations have found the same results - declines in brand preference • Y&R BAV – attributes it to “declining brand and organizational trust” • Brand Keys (CEI) – suggests it’s “inability to create meaningful engagements due to the lack of product differentiation”

37. We Compared Three Product Categories • Our findings (BIG data), BAV and Brand Keys • BAV – 40,000 responses per year, 20 years – global - monitors brand strength and stature • Brand Keys – 30,000 responses per year, 13 years – U.S. only – measures engagement with brand • Three categories: cosmetics, ready-to-eat cereals and allergy medications

38. Brand Preference in All Three Declined Over the 10 Year Period!

39. BIG Data: Cereal Brand PreferenceBrands greater than 1% Share 2005 2006 2007 2008 2009 2010 2011 2012 AGR Kelloggs 13.9 12.8 11.6 11.6 12.6 12.3 14.0 15.5 -5.6 Cheerios 9.3 9.2 9.7 10.6 11.5 12.5 12.7 12.7 3.3 Genl Mills 4.5 3.8 2.9 3.6 3.1 3.3 2.9 3.1 -25.7 Post 3.8 3.6 3.2 3.6 2.7 2.7 2.2 2.1 -18.2 Special K 1.6 1.9 2.0 2.3 2.8 2.6 2.8 2.3 2.4 Store Brnd 1.9 1.8 1.9 1.9 2.2 2.2 2.3 2.2 0.6 Frosted Flks 1.7 1.7 1.7 1.5 1.8 1.9 1.6 1.8 -3.9 Kashi 1.1 1.4 2.1 2.4 2.2 2.3 2.2 2.0 8.8 Raisin Bran 1.4 1.1 1.3 1.4 1.5 1.5 1.3 1.2 -11.4 Quaker 1.3 1.1 0.9 1.0 0.9 1.0 0.8 1.7 -14.0 Honey Buns 1.4 1.4 1.5 1.5 1.6 0.9 1.1 1.2 -0.6 Corn Flakes 0.8 0.8 0.9 0.9 0.8 1.0 0.8 0.8 -10.9 Maltomeal 1.7 1.4 0.9 1.2 0.9 0.9 0.9 0.8 -1.8 No Pref 32.7 33.9 37.5 32.3 32.1 30.4 30.6 28.4 2.6

40. Global BAV Cereals - 2002

41. Global BAV Cereals - 2012

42. BIG Data: Allergy Medication Brand PreferenceBrands greater than 1% Share 2005 2006 2007 2008 2009 2010 2011 2012 AGR Store Brand 6.7 5.8 5.3 4.8 5.8 4.9 5.3 5.2 -2.7 Benadryl 5.0 5.8 5.4 4.0 4.4 5.1 5.1 4.7 -1.3 Tylenol 8.1 6.1 5.3 4.6 3.7 3.6 3.2 2.4 -15.6 Sudafed 5.6 5.3 4.4 3.3 3.5 3.3 2.9 2.7 -11.0 Claritin 2.1 2.6 3.6 3.4 3.7 4.2 3.7 3.3 5.8 Equate 2.4 2.3 1.8 1.7 1.6 1.8 2.1 1.9 -2.7 Advil 3.0 2.1 1.7 1.2 1.2 1.3 1.5 1.5 -10.7 No Pref 57.6 60.2 62.9 69.6 66.0 65.3 65.3 65.1 1.5

43. Global BAV Allergy - 2002

44. Global BAV Allergy - 2012

45. BIG Data: Cosmetic Brand Preference* * Only 2 years of data available

46. Global BAV Cosmetics - 2002

47. Global BAV Cosmetics - 2012

48. Brand Keys “Brand Engagement” – U.S. • Variance in the Engagement Index has fallen drastically in all 3 categories from 2004 to 2013 • Range in the Engagement Index is much smaller in 2013 than in 2004

50. We’re All Finding the Same Results….Over Long Periods of Time