Effectiveness in Mobile Display Advertising

One might assume the types of companies that benefit most from mobile display advertising (MDA) are those that sell no-frills, everyday products like cleaning supplies. But new research from Columbia Business School’s Professor Miklos Sarvary has shown that short, promotional messages on mobile devices pack a powerful punch for big ticket items that entail a high level of consideration during the path to purchase—such as cars.

In Which Products Are Best Suited to Mobile Advertising?, Prof. Sarvary, along with INSEAD’s Yakov Bart and the University of Pittsburgh’s Andrew Stephen, analyzed mobile display campaign data from a variety of industries spanning 2007-2010 and reaching nearly 40,000 US consumers. They focused on two primary psychological measures: (1) how favorable consumers’ attitudes are toward advertised products and (2) consumers’ intentions to purchase or use advertised products.

Sarvary, Bart and Stephen identified product characteristics associated with MDA campaigns that boost consumer attitudes and purchase intent and found that mobile ads are most effective in reminding people of a purchase decision for highly-involved products.

“If you’ve been thinking about buying a car, you already have plenty of information in your mind about it…” Sarvary explains. “The ad’s strength is not adding new data, but reminding you what you already know and making you think about the product again.”

By 2016, global spend on mobile advertising is predicted to reach $36 billion. As marketers increasingly dedicate larger portions of their budgets to MDAs, it’s essential to have an in-depth understanding of when and why these ads are most effective.

Download the study to learn more about mobile display advertising and its effects on consumer attitudes and intentions.

BY ALLIE ABODEELY

New Opportunities for Brands in Africa

A PwC’s survey of Global CEOs found that despite 74 percent of respondents expecting to grow their operations in the next 12 months; only 13 percent currently have key operations in Africa. There is ample opportunity for brands to be pioneers in the market.

According to the World Bank, Sub-Saharan Africa’s GDP is estimated to reach 5.2 percent in 2014, while global growth is estimated to rise by 3.7 percent. The International Monetary Fund (IMF) reports that out of the 20 countries with the highest expected GDP growth in 2014, nine are from Sub-Saharan Africa, with Sierra Leon’s GDP projected to reach 13.04 percent by the end of the year.

Economic growth in the region is fueled by mobile tech: The Ericsson Consumer Lab forecasts that by the end of 2014, “there will be over 635 million [mobile] subscriptions in Sub-Saharan Africa. This is predicted to rise to around 930 million by the end of 2019.”

Africans are using mobile technology to optimize markets, to improve health care, and to voice their opinions. It is not surprising that Africa’s top two most valued brands are MTN, a South African telecom service company, and Vodacom, South Africa’s largest mobile operator by subscriber numbers. In fact, MTN is the only African brand to make it to the top 100 list of MillwardBrown’s BrandZ tracker.

Big tech brands (like Google, Nokia, Samsung, IBM, Microsoft and Intel) are not wasting time, bringing more products to market and building research facilities in Africa. In a recent post for the Stanford Social Innovation Review, Erik Hersman, co-founder of Ushahidi and founder of iHub -an Innovation hub and hacker space for the technology community in Nairobi-, explained that “big tech companies [are] viewing Africa as the last blue ocean of consumer demand for technology.”

African consumers are tired of being misrepresented and are using mobile technologies and social media to speak up about product performance, customer service, and advertising.

Take the example of Kenyans on Twitter (#KOT). During the 2013 attacks at Westgate Mall in Nairobi, #KOT denounced CNN with the hashtag #someoneTellCNN for reports showing Kenya as a nation in chaos while they were suffering a terrorist attack.

The Mo Ibrahim Foundation reports that in 2013, “Sixty-eight percent of Twitter users in Africa relied on the platform as a primary source of information on national news.”

Strategy

When developing a strategy for Africa, it’s important to consider that: 1) word of mouth (empowered by mobile) is the predominant way of communication, and 2) market research in the continent is very limited, making it extremely important to learn about the aspirations of local communities when designing your strategy.

Since many common products are new for local markets, word of mouth — both in person and through mobile platforms — will help brands provide customers with stories to tell about their products, and will give these brands the opportunity to educate consumers on how to use those products.

Gerhard Fritz, Divisional Manager for the Shoprite Group of companies, told PwC : “What works in other parts of the world may not work in Africa. People in Africa have a proud heritage; they don’t take kindly to others coming and telling them what to do. Our perspective is to think of every business as local.”

Building trust is especially important in an environment where shoppers maintain a strong brand consciousness. A 2012 McKinsey survey shows that 59 percent of African grocery shoppers are loyal to their favorite brands, compared to 38 percent who chose the cheapest offer.

Educating customers about the use of new products will make or break your brand. In Nakumatt stores, for example, shoppers tried to put black mascara on their lips because they didn’t know what it was for. Now, according to the Financial Times, the chain is setting up “free nail bars and makeovers to spread the word and tempt new customers for more expensive western brands entering the market, including Revlon and L’Oréal’s Maybelline.”

Understanding how locals are using products will give you clues on how to market to them. Think about the contrasts that are part of the daily life of your customers: from fetching water for their households, to actively using mobile phones to get livestock price updates.

Brands entering or repositioning in Africa will need to pioneer market research efforts in the continent; understand how Africans use mobile technologies and embrace these technologies as part of their strategy; and earn the trust of African customers.

Their strategies should be both global yet hyper-local, and consider partnerships with established brands which will share knowledge of distribution channels and influencers, and how to participate in informal economies.

BY GABRIELA TORRES PATIÑO

Enhancing Consumer Performance in Idea Generation

It can be argued that there is a science to ideation and innovation; it’s not “strictly” about creative inspiration and throwing caution to the wind. More and more, companies in a variety of industries are looking to consumers for fresh ideas (i.e. My Starbucks Idea).

Columbia Business School’s Olivier Toubia and Marshall School of Business’ Lan Luo found that for effective consumer ideation, the research process cannot be a one-size-fits-all approach. Their study, Fostering Consumer Performance in Idea Generation, offers research to help marketers and research and development teams to extract “better quality ideas from consumers and to identify their needs to inform new product and service development.”

Toubia and Luo write, “As firms… increasingly seek out consumers’ ideas in various domains, they will encounter individuals with different levels of domain-specific knowledge.” They segmented such individuals as low-knowledge and high-knowledge with regards to a particular area of interest. But with consumer segments at different ends of the knowledge spectrum come challenges in extracting insights. “The performance of low-knowledge consumers is likely to be hindered by their lack of relevant knowledge in the problem domain…,” note Toubia and Luo. “[High-knowledge] consumers often do not perform in accordance with their full potential (due to factors such as shallow processing and inattention).”

Despite the discrepancy in depth of knowledge, each segment provides valuable insights on said domain. The study examines the interplay and outlines a process for creating customized ways to mitigate such obstacles, so companies may experience enhanced consumer performance in idea generation. Further, their research explores ways to apply this customized task system to open innovation platforms conducted online, a practice many brands currently use.

Download Fostering Consumer Performance in Idea Generation to learn more about taking a strategic approach to consumer ideation.

BY ALLIE ABODEELY

Warby Parker: Oversharing as a Business Strategy

Neil Blumenthal and his business partners – David Gilboa, Andrew Hunt, and Jeffrey Raider – believed the eyewear industry wasn’t responding to customer needs and found an innovative solution to meet those needs. Blumenthal, who recently spoke at the BRITE ’14 conference, explained, “[We] didn’t like the process of buying glasses. . . [or] that glasses cost as much as an iPhone.” As a result, they founded Warby Parker, a company with “a lofty objective: to create boutique-quality, classically crafted eyewear at a revolutionary price point.”

Warby Parker effectively disrupted the eyewear industry in two ways: First, by using a direct, e-commerce model -cutting out the middle man- and by building a new brand –thus not having to pay licensing fees-, they significantly lowered the price of stylish eyewear; their frames, with premium lenses included, start at $95, that’s 25% of the market price. And second, by creating their “home try-on program,” sending customers, free of charge, a test package of frames they select to try on at home before they commit to buy. As a spin-off benefit, the home try-on experience is a shared customer experience, inherently accessible to family, friends, and even co-workers. The program, then, turned in to a marketing tool itself.

Blumenthal described Warby Parker as a lifestyle brand that offers value and service with a social mission at its core. With every pair of glasses purchased, Warby Parker gives a pair of glasses to someone in need. “Even at $95, there are still about a billion people in the planet that don’t have access to glasses and we think that that’s just crazy,” he said. At the end of each month, the Warby Parker team tally up the number of glasses sold and makes a financial contribution to Vision Spring; an organization that uses glasses to create jobs, making a more sustainable impact. In terms of their own business, Blumenthal believes that having a social mission helps increase customer loyalty and referrals, but does not drive the decision of making the first purchase.

According to Blumenthal, what has helped build strong relationships with customers and ultimately increase sales is a culture of transparency. “The more vulnerable we are, the more that we put ourselves out there, the deeper those relationships and the more valuable they become from an economic standpoint,” he added. In just four years, Warby Parker has sold over 500,000 frames and has grown from an apartment-based startup in Philadelphia, to a 350-employee business with a flagship store in SoHo.

“The public and your customers [are] participating more and near dictating what your brand is…you need to give people the tools to have it the way you want them to have it,” Blumenthal explained. Warby Parker focuses on creating experiences that are meant to spark conversations both online and offline. “It’s all about customer experience and constant innovation.”

When asked about a seemingly counter-intuitive expansion into the realm of brick-and-mortar stores – Warby Parker now has stores in New York, LA, and Boston, and has showrooms within boutiques in five additional states- Blumenthal explained, “[The] medium doesn’t matter. It’s the experience that matters and we need to design those experiences [holistically] from the moment they hear about the brand.”

Sharing is a fundamental element of the Warby Parker strategy – internally with staff and externally with consumers. As the majority of Warby Parker employees are millennials who want instant feedback on their performance, the leadership team has instituted monthly informal reviews and quarterly 360° reviews.

Moreover, as Ross Crooks explains in Forbes, “Business is becoming increasingly personal…; we crave more personal connection in a web-based world.” Customers want to relate to the people behind the brands they support, they want to know “that employees are people they might hang out with.” The Warby Parker team constantly keeps their fans abreast of “what [Warby Parker is] doing, how and why”, which, Blumenthal says “pays in spades.” According to a recent Mintel study, millennials are more likely to overshare than their Baby Boomer parents.

Warby Parker’s annual report is a perfect example of how the company creatively engages stakeholders. The unique feeling of its annual report has proved to be a successful marketing tool, leading to the highest sales days and traffic after releasing it each year and gaining free publicity for the brand; with fans sharing the report in social media, and getting mentions in press outlets such as Forbes, AdAge, Bloomberg BusinessWeek and Business Insider. This year’s infographic annual report is laid out as an illustrated calendar with an update for each day of the year, is described by Business Insider as “a shareable page of organized chaos inspired by internet culture.” One tidbit of transparency it shares in this year’s report is the fact that half the inventory of their new collection was delivered to the wrong address.

In today’s world, Blumenthal said, “brands are able to rise faster than ever before, but they’re also able to collapse faster than ever before.” Warby Parker has found that the best way to maintain momentum is by strengthening its connections with its customers through the sharing of relevant, personal, and entertaining content and the creation of experiences, regardless of the platform.

Watch Neil Blumenthal’s BRITE ’14 talk to learn more about how Warby Parker incorporates innovation into customer experience.

BY GABRIELA TORRES PATIÑO, EDITED BY ALLIE ABODEELY

RESEARCH: The Temperature Premium Effect

In a comfortably warm room, a chocolate chip cookie seems to be closer than it actually is, and potential buyers are willing to pay more for it than if the room was colder. Purchasing behaviors are influenced by real-world environmental factors, like temperature. So much so, that moderately warmer temperature increases both product valuation and physical closeness perception.

Research from Columbia Business School professor Leonard Lee focuses on how consumers shop in real world environments and how environmental factors affect their shopping behavior and preferences.  His latest work with Jacob Goldberg of the Interdisciplinary Center in Herzliya, Israel, and Yonat Zwebner of the Hebrew University of Jerusalem, focuses on the important connection between physical warmth and product valuation.

They found that “warming temperatures increased the probability that shoppers would buy a product, even after controlling for seasonality and factors specific to individual products, and despite the fact that shoppers were hunting for bargains.” Findings apply both to brick and mortar and online retailers and to a variety of products, from cameras and watches, to books and chocolate cake. “We found that physical warmth, despite being product irrelevant, can shape consumer’s purchase decisions.” Furthermore, “the studies suggest that exposure to physical warmth activates the concept of emotional warmth, eliciting positive reactions and increasing product valuation.”

How warm is too warm? Lee’s experiments showed that an eight degree increase to the standard room temperature (71.6°F), or 79°F, would make participants “more willing to pay significantly more – at least ten percent- for a given product, compared to participants sitting in a cooler room (64°F).” However, “as the temperature increases, its effect on purchase intent diminishes.”

Read more about Lee’s research in Ideas at Work.

For the quants out there, download the full paper on the Journal of Consumer Psychology.

BY GABRIELA TORRES PATIÑO