Lairig Marketing

Market Research Hall Of Sham Award – Part 473

This is depressing. As much as we have tried…and tried…and tried…to alert the Marketing industry to the absolutely horrifying state of market research, the deluge continues. And no one but Lairig Marketing gives a flying f*ck.

And we can’t figure out why.

Today, we present a study from the typically up-to-snuff IAB (Interactive Advertising Bureau), who teamed up with InMobi and Viggle to research the current adoption of financial apps. Bias alert: InMobi is a mobile ad vendor, Viggle is a “social TV” app provider.

Here is the introduction from their report:
“It’s tax season, and money matters are very much on the minds of American consumers. Increasingly, Americans are embracing mobile services to help them manage their financial lives.”

Note the intentional reference to “Americans,” meaning EVERY CONSUMER.

But a few sentences later, a plot twist:
“To investigate how media-savvy consumers are adopting mobile internet tools to help the [sic] manage their financial lives, the IAB, InMobi, and Viggle teamed up to field a survey to Viggle’s user base.”

So we’re not really talking about “Americans.” Not every consumer, apparently.

Next, then, are some highlighted results:

>>> 83% of “respondents” are aware their bank has a mobile app
>>> 75% of “respondents” are aware their bank has a mobile-optimized website
>>> 58% of “respondents” say they have used their bank’s mobile app
>>> almost 40% of “respondents” who use mobile financial apps have downloaded Paypal’s mobile app

Unfortunately, and perhaps not unintentionally, the specific detailed data charts for each of the results cited above don’t say anything about the “respondents” other than how many there are (i.e., “n = 1242”).

At this point, realists like us look at these numbers and call “bullsh*t!” As just one example, if the PayPal number was accurate, then the total number of PayPal mobile app downloads in the U.S. would be north of 50 million. As of a year ago, PayPal reported 17 million downloads.

We’d also venture that 58% of “Americans” don’t even know what an “app” is, but we digress.

It’s not until you force yourself to page down to “Survey Methodology,” that you understand who the survey “respondents” truly are:

“Viggle emailed invites to a random sample of Viggle’s nearly two million registered users…The Viggle audience is both technology- and media-savvy…centered around the 25 – 34 demographic. They’re more coastal, more urban and tech savvy than the average consumer.”

Not Americans, not every consumer, not even representative of the smartphone user base, for Christ’s sake. So what really is the point of a research exercise like this? What does one do with findings like these? To what reward?

We could come up with only one answer. To that end, we congratulate the IAB, InMobi and Viggle for receiving the latest Lairig Marketing Research Hall of Sham Award.

"They Were Such Nice Kids"

Two more among the many murderers and terrorists that we’ve seen neighbors recall on the evening news as “such nice boys”…"never would have suspected them”…"shocked”…"angels.” When the true “angels” in all these stories are the victims.

Time and time again, we see that we don’t really have the social skills necessary to understand the “whole” person. Can you truly understand the horror that someone – in reality, a stranger to you – is capable of, by watching them do the same things you do?

They go to school. They participate in sports. They have outside interests like music. So what? So do you. Of course they appear “normal” to you. Irony of ironies, we come to find out, we are all in some strange competition, in which very few win, and most lose. Losing makes many people mad.

>>>Where did they come from? Do you know that area’s history, its winners and losers, and its impact on them?

>>>Where do they live now? Are you familiar with that culture, how it ranks the winners and losers among them, and its impact?

>>>Who else do they “do things” with? They aren’t the same people you know – what impact do these people, and the sense of competition, have on their full selves?

We can even read the public declarations they write about themselves on Facebook, with the true meaning of those words incomprehensible to us. Are they references to winning, or to losing?

It’s called “context,” and we don’t have it.

It’s as laughable as the research we see touted so much in the marketing world (examples of which we dissect for you on this blog, probably way too often). Everyone uses a smartphone in Best Buy, the researchers declare. Everyone eats organic, says the latest poll. Everyone wants a hybrid car. Survey after survey, telling us we should be “shocked” if we see or hear anyone behaving differently.

Yet the different behavior goes on, and on. And on.

Right under our noses, pressed as they are into tablets and smartphones and laptops and game consoles.

We’ll be shocked if no one is shocked the next time something “different” happens.

What We CAN Learn From CMO Surveys (Part 6 & Final)

After plowing through dozens of charts from the February 2013 version of The CMO Survey – filled mostly with useless numbers – we found three we consider to be constructive (our multi-part series began here).

First up was a table of data showing to what extent “CMOs” say they lead certain business activities. Among the list was “Targeting/Market Selection.” Once again, a horrible question, combining two words with varied meanings. But let’s take on faith that survey respondents understood it to mean “segmentation and targeting of prioritized customer groups.”

Over the past four surveys conducted by The CMO Survey, the percentage of senior marketers who say the Marketing department leads this activity has never been above 40%.

Astounding.

This implies that there are loads of companies around who still choose to let Product Management, Sales, Media or – God forbid – Finance decide how customer segments are defined, and which ones to focus investment on.

It goes against the fundamentals of segmentation and targeting to focus only on product affinity or demographics or purchase behavior. These are all one-legged segmentation stools.

Second, we came across a chart that, to some extent, helps explain why Marketing might not be sitting in the driver’s seat on segmentation. A new question in the most current version of the survey asked respondents to cite how their Marketing departments are organized, either by “customer groups” or by “product groups.”

Once again, we were astounded by the results.

Almost three-quarters of companies’ marketing departments are organized by product line. So much for talking about “customer centricity” all these years.

Finally, a chart with results for the answer to where the marketing team is located. The choices were Corporate, Business, Brand/Product, or Field Offices (forget for a moment that this is one more poorly formatted answer set).

The percentage choosing “Corporate” actually increased, from 80% last August to 86% in the February 2013 version. Again, given recent trends in decentralization (as well as “getting closer to the customer”), this seems odd.

It is certainly more cost-efficient to centralize Marketing. But it's a loser for effectiveness, and cedes power and “trench” insight to Sales. Which is why Sales always wins every argument it has with Marketing.

Oh, that future surveys would pursue issues like the three surfaced here, summarized as follows:
>>> Giving Marketing control of customer segmentation
>>> Organizing Marketing by customer segments
>>> Better balancing the “Corporate” versus “Field” Marketing dilemma

But they won’t.

Our series on The CMO Survey, now completed, was merely six trees falling in a forest where no human sets foot. Thus, no sound.

Just more dead wood.

CMOs, Lies & Surveys (Part 5 of Many…)

We’re almost done drilling through the muck that is The CMO Survey, February 2013 version (multipart series began here). Today we examine the not-CMOs’ meager attempts at business and marketing analytics.

Another interesting question in the semi-annual survey asks for the marketer’s expectation for his or her company’s sales and profits. Revenue-increase projections have been in the neighborhood of 4% the past five surveys, pretty conservative when compared to what we showed you yesterday – that companies will need to grow sales 36% in order to match respondents’ budget expectations.

But much more enlightening are the profit projections. In every case, the “CMOs” forecast an increase in income that is LOWER than the gain in revenues. (A) This doesn’t match the record profit margins companies have been amassing the past couple of years – by slashing costs to the bone, mind you. (B) This is Finance 101, and implies that a business is going down the tubes. CMOs get an “F” for this.

Not to worry…Big Data will come to the rescue, right? Apparently not.

When asked to project their budget allocation to marketing analytics, survey participants said it would grow from 6% today to a measly 10% within the next three years. That’s not very Big. And remember from Part 3 of our series, CMOs said social media would get DOUBLE that allocation. Cart drives horse.

A nice mix of data and social media insight comes from the response to this question: “What social media metrics are you using?” Ten out of fourteen metrics DECLINED, most substantially, from the August 2010 survey to February 2013. Further, since February 2011, marketers’ self-rating on how well social media is integrated with overall marketing hasn’t budged one decimal point.

Even more Faux Big Data. To the question “What percentage of your projects use marketing analytics?” the percentage has FALLEN over the past three surveys. Worse, for the question “To what degree does the use of marketing analytics contribute to your company’s performance?” almost two-thirds of marketers gave a rating no better than neutral. If you were looking for a tutorial on “How To Spot A Meme,” this is it.

Without the basics of finance and marketing analytics, it seems all is lost for Marketing.

Thank God for CMO surveys. It appears they will be the only thing that saves us.

CMOs, Lies & Surveys (Part 4 of Many…)

How timely the economic announcements were last Wednesday through Friday:

>>> Payrolls: Awful
>>> Jobless Claims: Bloody awful
>>> Job Gains: Zombie bloody awful

Timely, because we’ve come to the part in our review of Duke/Fuqua’s February 2013 version of “The CMO Survey” (multipart series began here) where marketers-who-are-not-CMOs were asked for their prescient views on the state of the U.S. economy.

They must all be watching another channel.

For the question “How optimistic are you about the U.S. economy?” the percentage climbed from 58.4% (August 2012) to 62.7%. What hopeful signs did these marketers see? After all, the initial report on Q4-2012 GDP had just come in at MINUS 0.1%.

A related question asked “Are you more or less optimistic…?” The percent who chose “more” nearly doubled from the prior survey period. At the time of the February survey, the fiscal cliff had been can-kicked down the road, and sequester was the word of the day. Where is the optimism in that?

The answer to this riddle starts to come into focus when each of the non-CMOs rated his or her company against the economy in general. They were, of course, more optimistic about “own company” than “overall economy.” Welcome to Lake Wobegon, where all the CMOs are strong AND good looking, and all the companies are above average.

The optimism spreads all the way to the marketing budget. Since February 2010, as the U.S. economy has basically run in place, The CMO Survey has never shown an answer lower than 5.9% to the question “What is your expected change in marketing budget in the next 12 months?”

That is at odds with the oft-repeated mantra - in The CMO Survey and a billion other places - that traditional advertising spending is “plummeting,” with the spending shifted to digital. Zero sum does not equal budgetary growth of 6%.

Finally, some new math. When asked what their marketing spend is of the company’s total expense budget, the figure fell only slightly from the prior survey, 11.4% to 10.6%. But get this – when asked on a percentage-of-revenue basis, it - *drumroll* - PLUMMETED from 11% to 7.9%.

Even adjusting for the 6.1% marketing budget increase cited earlier, this would require nothing short of a 36% - THIRTY SIX percent – increase in revenues.

This isn’t Lake Wobegon at all. This is Loch Ness.

CMOs, Lies & Surveys (Part 3 of Many…)

Today we flip to the other side of The CMO Survey “coin” from the one we analyzed in Part 2. (New readers of this series who want to start from the beginning can click here.) If Part 2 was about the darkness of boring, old “traditional” advertising, then today’s side of the coin will blind you with its shininess.

One of the questions The CMO Survey asked its many non-CMO participants was this: “What is your social media spending as a percentage of your marketing budget?”

Let’s quickly repeat what we said in Part 1: any survey question about specific line items in a budget, especially if they are not real line items such as “social media spending,” put in front of someone who doesn’t have the actual budget in hand at that precise time will yield an incorrect answer.

And, if The CMO Survey instrument forced the respondent to choose from a set of ranges (e.g., 1 to 5 %, 6 to 10%, etc.), the result is entirely without validity.

What did the survey show? That social media spending will rise from 8.4% of the marketing budget now to 11.5% over the next year. Further, it would reach an astounding 21.6% five years from now.

As we did in Part 2 for the survey respondents’ guesses on traditional advertising, let’s debunk their social media hyper-inflation with some “external” checks.

Let’s start with media firm Group M, who found that in the U.S. the % of all media spend allocated to digital is 23%. Combine that with a Technorati Media’s 2103 Digital influence Report found that social media represented just 10% of the total digital media spend. Or choose the report from Nielsen subsidiary Vizu which found a slightly higher allocation, with 70% of advertisers near 10% - let’s take the total up to 15%, then.

So, if social media represents 15% of 23%, how can the resulting 3.45% come near The CMO Survey’s result of 11.5% ? And that, by the way, is just a media allocation. Remember from our detailed look at a marketing budget here, there are several other line items to consider (and that social media must be 11.5% of, at least).

These include:

>>> Staff (and related Occupancy expense)
>>> Database Technology
>>> Agencies (In-house or external)
>>> Campaign Production
>>> Market Research
>>> Training

It is preposterous to believe that direct social media expenses could represent 11.5% of any, let alone all, of the above items. We challenge any marketer on the planet to show us such an accounting.

Until then, The CMO Survey’s result for “percent of marketing budget allocated to social media spending” (that last bit in quotes in case Google ever decides to crawl this site again) is hereby and forthwith declared null. And void.

Avoid.

We’re not done. In Part 4, we’ll look at what the “CMOs” say they’ll do with their overall marketing budgets. To prepare, you can ditch today’s sunglasses for the rose-colored kind.

CMOs, Lies & Surveys (Part 2 of Many…)

Welcome back to what could be our longest series yet – an under-the-hood look at the February 2013 update to The CMO Survey. If you missed the background, see Part 1 here. Today, we continue to tear apart the survey’s specious and foolish conclusion that “traditional ad spend is plummeting.”

In Part 1, we dissected the survey’s poor construction and analysis. Today we take what we call an “external” perspective – looking at real-world indicators for where marketers are allocating their scarce budgets.

We constantly trawl the trade press for stories about new marketing campaigns, keeping our eyes peeled for “first time ever” TV advertising. If “traditional ad spend is plummeting,” we shouldn’t expect, then, to see a story like this:

“For the first time in a decade, Just Born is using TV to advertise its Peeps, those fluorescent-yellow marshmallow critters that are a staple of America’s Easter baskets. And for the first time ever, it says it will keep ads running all year long…”

Or like this one:

“Moe’s Southwest Grill has launched its first national television campaign.” Moe’s has been around for a dozen years, long enough to figure out it needs some more “traditional” marketing to get the revenue growth out of its ongoing expansion into more than 30 states.

Or like this one:

“The farmers’ cooperative Organic Valley is using a television ad for the first time.” The co-op has existed for TWICE as long as Moe’s. Yet, it states that it is “poised for its next phase of growth.” Just like Moe’s, there’s that “G” word again.

Or like this one:

“…in the coming year, Gatorade Perform beverages will be the focus of TV ads, while Prime chews and pouches, as well as Recover beverages and shakes, will be hyped in print ads…’We are investing more in print than we have at least the last two years. It's really about using print to articulate the product benefits’…[Gatorade] is also increasing its investment in grassroots and various locker room and sidelines programs, boosting its presence at summer camps and year-round competitions.” The latter are, of course, traditional forms of advertising. Since cave men.

Or like this one:

“On-demand music service Spotify is launching its first advertising campaign, focusing on U.S. television to hook additional listeners. Spotify is spending more than $10 million on commercials…” For that's what it will take to win its fight to the death with Pandora, et al.

Lest Professor Christine Merman, er, Moorman ! , is not appeased by this evidence, all of which is from the past 30 days, then let’s take a look at the reputable media-spend data collectors.

Kantar media recently tallied up the results for full-year 2012. TV spend was up nearly 8% over 2011. Radio was up almost 3%. And out-of-home, which Lairig Marketing has been pounding the table on since 2008, was up over 5%.

One other interesting data point from Kantar: Spanish-language TV ad spend reverse-plummeted, if you will, surging 20% in Q4 and up 15% over the whole of 2012. We are repeatedly told that Hispanics are overindex on digital tech savviness – Qué pasa con eso?

In Part 3, we will explore where The CMO Survey claims all this “plummeting” is being offset. Get your sunglasses ready, for we shall head to the land of Shiny New Toys – social media.

It makes Disney World look like a yard sale.

CMOs, Lies & Surveys (Part 1 of Many…)

OK, so it’s missing the “Sex” and the “Videotape,” but we consider it a fair exchange as there are more “CMO Surveys” than “Sex Videotapes” nowadays.

Loyal readers know we have been here many times before, most often with our friends at the CMO Council, poking holes in survey after survey. Today we introduce a new source, one so plagued with faults it might take us two weeks to step through them all. Dust off your seismometers!

Welcome to “The CMO Survey,” which can be found at CMOSurvey.org. Now in its sixth year, this semi-annual survey is pure academia, sponsored by Duke’s Fuqua School of Business (we shall resist cheap shots on the name as long as possible), and piloted by Professor Christine Merman, er, Moorman.

Before we tackle our first CMO Survey fault, allow us to raise two higher-order issues.

>>> Issue #1: As part of its 13-word tagline, The CMO Survey claims it “[predicts] the future of markets.” It is a strange, illogical promise, sounding more like something your stock broker would say. We’ve looked through all 60 pages of the most recent survey (the “February 2013 survey”), and find no predictions of anything, “markets” or otherwise.

>>> Issue #2: Just like the CMO Council, The CMO Survey’s effort isn’t confined to CMOs. We’ve said it a million times, but there just aren’t enough CMOs, nor hours in their days, to take all of these so-called “CMO” surveys.

To wit: from the February 2013 CMO Survey report’s methodology page:
- 4963 top U.S. marketers were sent the survey (emphasis ours)
- of those that took part, 95% were VP-level or above (emphasis, again, ours)

“The VP Survey” or “The Top Marketers Survey” would be (more) truthful, but wouldn’t have the je ne sais quoi quality that “CMO” does.

With that out of the way, let’s place our scanners on fault line #1: “Marketing spending on traditional advertising continues to plummet.”

So says the headline on page 21 of the survey, as well as the opening title in a video short of Prof. Merman, er, Moorman, summarizing the survey results.

Let’s look at this from the inside first, then from the outside.

Sh*tty Question
Let’s say you are a “top marketer,” who agreed to take a 50+ question survey. Without any preparation, nor resources at hand, one of the questions asks you to parse your entire marketing budget by type of spend, by %. How could you possibly get the answer correct?

Loaded Question
One of the categories of spending comes with loaded terminology: a la, how much will you change your spending on TRADITIONAL ADVERTISING ? All the other choices have sweet-sounding words like “digital” and “brand building” and “new.” You remember reading somewhere, on a content farm like Mashable or LinkedIn, that traditional advertising is dying. So you answer that yours is too.

Skewed Analysis
Only one historical graph is shown for the “spend by type” results discussion: yep, you guessed it, that of the expected change in “traditional advertising.” And, at that, we are shown only the prior four surveys’ data points, which yield a line sloping smoothly downward.

From an expected GAIN in spending on traditional advertsing of 1.3% in August 2011, the number has fallen to -0.8%, then -1.9%, then -2.7%. Note the difference between the last two is a drop of 0.8 percentage points. Yet, the same survey participants said their digital spend would fall by 1.3 percentage points from the last survey to the current one. Plummet much?

In Part 2, we’ll take an “outside” view, looking at actual marketing spend figures. They don’t corroborate The CMO Survey’s findings at all.

The only thing plummeting is our tolerance for bad marketing research.

Organic Food Industry Already In Downsizing Mode

Try and find some hard numbers on the size of the organic industry. Most of what you’ll find are anecdotal claims about “fast growing” and “bigger share” and “sprouting sales” (ugh).

In fact, the only real source of organic sales data seems to be the Organic Trade Association. It bases its numbers on surveys of consumers, who apparently are supposed to remember how much they spent in the prior 12 months on organic products, BY CATEGORY.

Sound familiar? What other industry trade association sizes its market not by asking its member companies, but by surveying customers? Yep, our friends at the National Retail Federation.

In any case, while we were trawling for data, we came across this headline:

“Smaller But Better? Organic Tomatoes May Pack More Nutritional Punch”

The article, posted on NPR’s website (how appropo), opened with this:

“A new study published in the journal PLOS ONE finds that tomatoes grown on organic farms were about 40 percent smaller than conventionally grown tomatoes. The upside? They pack more of a nutritional punch. The researchers found the organic tomatoes had significantly higher levels of vitamin C, sugar and lycopene.”

Consider that Exhibit A for why the organic food industry has a definite near-term ceiling on “fast growth.”

All that chemistry misses the core wants and needs of U.S. consumers when it comes to food: volume. We eat by amount. For example, recipes will call for “two cups of diced tomatoes.” They won’t say “mix in the amount of diced tomatoes that will provide 25 mg of lycopene.”

If something looks too small to eat, then it is too small to eat. This whole thing is on par with the range anxiety we claimed in this post will hold back the electric vehicle industry (and that was almost a full year before The New York Times versus Tesla p&ssing match).

Indirectly, we might have finally found something truly useful that Big Data could do for Marketing. Rather than ask consumers to guess at what they bought last year at the grocery store, maybe Big Data can count all those small organic melons as they fly off the shelves.

COPPA Forgot To Keep Kids Safe From Market Researchers

After two years of wrangling and public commentary, the Federal Trade Commission just released an amended Children’s Online Privacy Protection Rule (aka, COPPA…don’t ask us where the “A” went). The intent, as it was in the 2010 version, is to keep kids’ online data private.

Included in COPPA 2013 are new protections for the under-13 age bracket that keep marketers from doing things like the following while kids are online:

• Collecting geolocation information, photographs, and videos, unless parents consent (!!!??)
• Permitting third parties to collect personal information from children through (sneaky) plug-ins
• Using IP addresses and mobile device IDs to track kids across the web
• Being sloppy about data sharing and data security (how was THAT not in the 2010 version ?!?)

All good things that will p*ss off many a shady marketer.

But what we didn’t see in the FTC’s press release (fair disclosure: we haven’t read the full 169-page rule, and don’t plan to) was any reference to keeping market researchers away from kids.

Why should we care? After all, toy companies, for example, have been using focus groups of kids for years to help figure out what products to make, and how to market them.

Because of a story we came across at (the typically) excellent Paid Content earlier this week. It featured results of a study by the children’s publisher Scholastic about kids, e-books, and e-readers.

“46% of kids have read an e-book, up from 25% in 2010.” OK. Sounds logical.

“57% of girls who had never read an e-book said they wanted to…46% [for] boys.” Whaaaaaaaaat?

How would a kid know what an e-book was if she’d never read one before? Maybe the person doing the survey waved a shiny Kindle in front of the kid’s face? What kid wouldn’t say “yes” to that ?

But it turns out there was no “surveyor in the room.” This survey was done ONLINE. So how do you describe an e-book – something 54% of kids have never seen or could contemplate at age 6 – in an online poll?

Looking deeper into the survey methodology, we saw this:
“Parents were invited to help young children read the survey but were asked to allow children to independently answer all questions.”

So, little Suzie took an online survey about technology she can’t see and has never seen, with “no help” *wink wink* from Mommy?

As evidence of how contaminated the results were, we noted that the % of kids who never had an e-reader that said they now wanted one plummeted in the higher age ranges. Teens don’t ask Mommy for help, even with online surveys. So they end up not knowing about, thus not wanting, an e-book.

Next time COPPA comes up for renewal, hopefully the FTC can add a clause that disallows all online market research of kids under 13.

Unless the marketers doing the research can prove that they – the marketers, not the kids – have more than a third-grade education.