First hand research to corroborate that TV advertising is mainly for awareness while digital ads/channel is mainly for performance (i.e. for harvesting leads)

1. Augustine Fou- 1 -
Usefulness of
Advertising
Dr. Augustine Fou
http://linkd.in/augustinefou
acfou @mktsci .com
March 2014

2. Augustine Fou- 2 -
Author’s Commentary
“From our custom research with N > 2,500
respondents, we triangulated the questions 1) „do
you recall seeing specific kinds of ads?‟2) „are ads
useful?‟and 3) what is useful in your purchase
decision for big ticket items and/or low-cost items?
We believe the combined answers yield useful
insights about what consumers value at each stage
of their purchase journey (or purchase „funnel‟).”
-- Dr. Augustine Fou

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In the past WEEK, do you recall seeing ANY of the following types of ads?
44% Don’t Recall ANY Ads
Source: Marketing Science Custom Research, March 2014

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Who’s Ignoring Which Ads?
Source: Harris Interactive via MarketingCharts Feb 2014

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“Which of the following help you decide to buy a specific low-
cost/big-ticket item (e.g. soda, candy, toilet paper, shampoo)” N = 1,000
70% Think Ads Don’t Help
Source: Marketing Science Custom Research, March 2014

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Closer Look - Comparison
Most useful for
“big ticket” items
Most useful for
“low cost” items
Corroborates the hypothesis that low cost items like soup
and soda need awareness type ads, while big ticket items
like cars and computers need digital ads.

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Role of the Channel
0% 20% 40% 60% 80% 100%
Email
Mobile App
Direct Mail
SMS Text Message
Website
Social Media (not paid)
Search
Radio
Print Ads
Online Display Ads
Social Display Ads
TV
Greeter (Awareness)
Influencer (Consideration)
Closer (Decision)
Source: Experian Marketing
Services March 2014
Sorted by
Awareness

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• Recommendations
from friends
• Consumer
opinions/ratings
posted online
big-ticket
item
low-cost
item
Consumers rely on peers...

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Young U.S. Consumers’ Attitudes
Source: Millward Brown March 2014

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Where Digital Ads Fit
in the Purchase Funnel

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Main Types of Digital Ads
Impressions
(CPM/CPV)
Clicks
(CPC)
Leads
(CPL)
Sales
(CPA)
• Display ads
• Video ads
• Social display
• Mobile display
• Search ads
• Mobile search
• Affiliate
revenue share
• Completed
lead forms
sold on cost-
per-lead basis

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Digital Ad Spend (IAB H1 2013)
Impressions
(CPM/CPV)
Clicks
(CPC)
Leads
(CPL)
Sales
(CPA)
Search 43%
$18.1B
Video 7%
$2.9B
Lead Gen 4%
$1.7B
11% Other
$4.8B
Source: IAB, 1H 2013 Digital Advertising Report, Oct 2013
$35.5B
Display 19%
$8.0B
Mobile 15%
$3.7B$2.8B
NOTE: revenues annualized from
actual 1H 2013 figures from IAB
(assumes $42B annual ad spend)
CPM Performance
• classifieds
• sponsorship
• rich media
• email
$6.5B

13. Augustine Fou- 13 -
Digital is Mainly Performance
Source: IAB, 1H 2013 Digital Advertising Report, Oct 2013

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Cross-channel Cost
Comparisons

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Comparative Media Costs
Cost per Thousand (CPM): Cost to reach 1,000 users or impressions
Source: Morgan Stanley Research 2010
Broadcast TV $28
Radio $10
Magazines $16
Newspaper $16
Out of Home $5
Internet $3
Traditional vs digital media costs
Traditional media CPM
Digital media CPMs
Comparing costs of various media
Relative costs of media
how do media costs compare
media costs compared
Understanding the Economics
of Digital Compared to Traditional
Advertising and Media Services
Digital media compared to traditional advertising
digital versus traditional marketing
Augustine Fou- 15 -

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Comparative Media Costs
Cost per Thousand (CPM): Cost to reach 1,000 users or impressions
$450
$250
$140
$30 $15 $7 $2
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
$500
Direct Mail Mail Order
Catalog
Drive Time
Radio
Prime Time
TV
Online
Video Ads
Online
Display
Online
Search
pay for
mailing
costs
Offline: w/o Unit Costs ONLINE: WINNER
pay for
media
costs
no mailing or
media costs
Offline: w/ Unit Costs
Augustine Fou- 16 -

17. Augustine Fou- 17 -
Dr. Augustine Fou – Digital Consigliere
“I advise clients on optimizing
advertising across all channels. One
main area of focus is reducing ad waste
due to fraud – fake impressions, clicks,
leads, and sales.”
FORMER CHIEF DIGITAL OFFICER, HCG (OMNICOM)
MCKINSEY CONSULTANT
CLIENT SIDE / AGENCY SIDE EXPERIENCE
PROFESSOR AND COLUMNIST
ENTREPRENEUR / SMALL BUSINESS OWNER
PHD MATERIALS SCIENCE (MIT '95) AT AGE 23
@acfou
ClickZ Articles: http://bit.ly/augustine-fou-clickz
Slideshares: http://bit.ly/augustine-fou-slideshares
LinkedIn: http://linkd.in/augustinefou

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Related Articles
Augustine Fou- 18 -
http://www.slideshare.net/augustinefou/why-digital-tactics-kick-traditional-tactics-in-cost-
effectiveness
http://www.slideshare.net/augustinefou/why-users-interact-with-ads-by-augustine-fou
http://www.slideshare.net/augustinefou/video-ads-vs-tv-ads-by-the-numbers-comparison-by-
augustine-fou
http://www.slideshare.net/augustinefou/mythbusting-tv-advertising-by-augustine-fou
http://www.slideshare.net/augustinefou/digital-channel-comparison-for-customer-acquisition-
by-augustine-fou
http://www.slideshare.net/augustinefou/branding-dollars-shift-from-tv-to-digital-video-by-
augustine-fou
http://www.slideshare.net/augustinefou/digital-ad-spending-branding-vs-direct-response-by-
augustine-fou

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APPENDIX

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Primary role of each channel in customer journey
Global Marketers’ Perception
Source: Experian via Marketing Charts, March 2014