Case: Effective Hybrid Ads AdPeople ADVERTISING AGENCY: ADPEOPLE ADVERTISER: DELL COMPUTER CORPORATION EMEA
index page 1. Executive summary... Page 01 2. Introduction... Page 02 3. Strategy... Page 03 4. Creativity... Page 08 5. Results... Page 10 6. Conclusion... Page 13
1. Executive summary This case describes how in 2005 AdPeople challenged Dell Computers in Europe with a new ad concept for use in newspapers across Europe. The challenge was to deliver a more effective way of newspaper advertising in Europe than hitherto. AdPeople were of the opinion that Dell s previous communication through newspaper ads, tended to focus in style with the ads used by the retail sector selling PCs. Dell tried to match retailers style of communication, but the outcome was a very aggressive and promotion orientated type of communication. It was done in the belief that this type of communication alone would push sales of PC without consideration for end users thoughts and preferences. AdPeople identified this strategy as being too undifferentiated in relation to Dell s marketing and business objectives. To bring about effective communication in newspapers requires that all options be explored to ensure meaningful relevance to end users. communication for retailers to deal with when their customers are close to buying. Dell s situation is different. Their direct selling concept to end users requires that they must communicate both brand/product and price in one and the same advertisement. On this basis, the strategy was to create hybrid ads for newspapers ads which would inspire customers to choose Dell as a brand and at the same time give clear product information leading to a purchase decision. To evaluate whether AdPeople hybrid ads would be more effective, Dell prepared a test run versus their previous style ads. The ads were tested under as even conditions as possible to achieve fair comparisons. The test results clearly showed that AdPeople s new ad concept was a more effective way of communicating in newspapers not only in one country, but across all of the European markets with their diverse market structures and competitive environments. Dell s competitors can focus on creating interest and preferences for their brands/products and leave price The table below shows the test results in Great Britain. Results from other countries are covered in Section 5. Newspaper Previous advertisement AdPeople hybrid ad (index = 100) The Sun 100 262 The Daily Telegraph 100 132 The Times 100 131 Dell have now implemented AdPeople s hybrid ad concept for use in European newspapers. 1
2. Introduction The purpose of this case is to demonstrate what results can be achieved by applying a proper creative strategy strategy which differentiates itself within the overall product category, communicates the brand s identity and produces relevance to the end user. The case focuses on AdPeople s work involvement with Dell Computers Europe on the development of ads for use in daily newspapers throughout Europe. AdPeople have developed communication for Dell products since 1999. Initially the work was for ad hoc tasks in the Nordic markets, but this has since extended to all direct communication for Dell in Europe covering 13 countries and 15 language versions. Dell Management defines their direct communication as covering all marketing activities except for ads on TV and in newspapers/magazines. In the past, the development of ads was undertaken by another advertising agency in Europe which has responsibility for the development of Dell s mass communication (TV ads as well as ads for newspapers/magazines). At the end of 2005, AdPeople prepared a proposal on how improvements could be made to Dell s ads for use in newspapers and integrating these with the rest of Dell s marketing portfolio. Not so long ago AdPeople developed a unique marketing portal for Dell under the trade name DellShare and this is now the hub or centre point for all of Dell s marketing activities in Europe. The DellShare tool has not only optimized marketing processes, but also made it possible to manage the integration of the direct communication, leading to lower marketing costs and reduced time to market. This integrated direct communication and implementation of DellShare has very much contributed towards Dell s strong position in Europe today. The case looks at the strategic background to AdPeople s creative development of ads, the creative strategy and the results which the new ads are generating in comparison with Dell s previous advertisment communication. Note: Dell s policy on business confidentiality is restrictive and hence any specific analysis data about Dell cannot be shown and is confined to other references or main conclusions. In cases where market data is shown in non-indexed format, such information comes either from generic or public available sources. 2
3. Strategy The market for PCs in Europe The market for PCs in Europe is growing with demand increasing year after year. Competition for market share among producers is intense, with pricing being a particularly strong tool for driving sales ahead. Dell s business and marketing model Dell is the only main PC producer who does not use the retail sector as a vehicle for selling their products. Dell s business model is instead to sell direct to end users without intermediaries. The market is dominated by HP, Dell and Fujitsu Siemens. These are under pressure from smaller aggressive players like Acer, Asus and Lenovo all produced in the Far East at low cost. Besides these, there are products with a strong presence and history in individual markets. Profit margins for PCs are being squeezed and producers are forced to make their production and sales in the market more effective. Polarization is taking place between niche producers and mass producers. The latter become dependent on bigger and bigger sales volumes in order to achieve large scale production benefits and thereby ensure their earnings. At the retail level, a concentration is evident whereby large chains become more dominant. This development puts further pressure on PC prices because of the competition between retail chains and their increasing negotiation power with PC producers. PC producers are applying the same fundamental technology. End users find it easier to compare products and can by and large choose on price. It is, therefore, important that communications contribute positively to end users perception of a brand so their choice of PC, apart from pricing, is also based on a preference the product. In order to create demand using this direct model requires an effective communication. A communication which provides attention and generates traffic to Dell s sales centres either by telephone or the internet. The fundamental requirement to develop communication for Dell is, therefore, that it focuses on direct response and call to action elements. Dell use all media channels for their direct response communication. Dell s model for communication is therefore different from the traditional. The model is flat and all marketing activities include more or less the same message a message which tells their target groups that Dell deliver high quality PCs based on the latest technology and at competitive prices. Depending on the media channel s characteristics, small adjustments to the message may occur. Dell s previous communication in newspapers In the past Dell used an aggressive price and promotion (free delivery etc) communication style in their newspaper ads. This communication was used in most of Europe over a long period. The communication was based on using the same templates for all newspaper ads on current deals. This communication has fulfilled Dell s fundamental demands on direct response and focus on call to action. 3
3. Strategy (continued) Examples of past communication: From direct communication to mass communication AdPeople are responsible for the development of Dell s direct communication based on direct distribution to recipients (i.e. end users). This communication allows targeted customers to read the message on product offers without interference from Dell s competitors. The circumstances change when developing communication via newspaper ads Dell are no longer alone with the customer, but in the same arena as their competitors. The ad reading situation has altered inasmuch as it is more difficult to draw the attention of customers. These strategic demands set by AdPeople provide the framework for developing new newspaper ads for Dell. In order to gain insight and contents for developing new ads, AdPeople analysed the following: Customer behaviour Customer behaviour in relation to the influence of the hierarchy in communication Dells previous ads seen in perspective ensure their earnings. AdPeople s strategic thoughts Differentiation from competitors and creating relevance with target customers become important parameters for effective communication in newspapers. The communication must be developed in a style and tone which contribute positively to the perception of Dell as a high quality brand, whilst keeping within Dell s design guidelines. 4
3. Strategy (continued) The typical decision-making process by customers Throughout the years working with Dell, AdPeople have gained knowledge about customer behaviour when buying PCs. The typical decision-making process by customers is illustrated as follows: The decision-making process can be divided into the following phases: 1. A preliminary search, when the need for a PC as well as a budget ceiling are defined and the initial uncovering of relevant solutions have been addressed. 2. The shortlist phase - narrowing down potential possibilities and solutions 3. And finally the decision-making process - the ideal solution has been found, both in relation to need and budget, leading to purchase. The process illustrates that purchasing a PC is not an entirely rational process. There are several stages in the process where it is important for a brand/product to influence customer thoughts and considerations with inspiration. It follows, therefore, that communication must include elements which create a preference for the brand and that communication cannot be solely based on price and promotion. Customer decision versus brand communication The customer s decision-making process versus the influence of the hierarchy in communication is shown here: 5
3. Strategy (continued) From the diagram, it follows that the contents of the message and the layout of communication should cover the progression from inspiration to buying decision, if the communication is to create relevance, bring about a purchase decision and thereby be effective. In PC market reports, it is often said that a PC is becoming a generic benefit and therefore no longer requires much decision-making consideration by the end user. This view should, however, be seen in the context that the purchase of a PC will continue to be an investment in a long lasting product for most people. The purchase of a PC is seldom an impulse buy based on a special offer - several customer considerations and a longer decision process lie behind the final choice and purchase of a PC. Dell s direct challenges From Dell s quarterly Brand Tracker (quantitative research in selective European markets) we know that Dell have challenges to overcome. Dell have extensive knowledge of the PC sector and the markets in which they operate, but in the process of moving from knowledge to gaining consumer attention, Dell fall short of their competitors. This inadequacy is also repeated in the phase between consumer attention and purchase decision. As a starting point, powerful knowledge is good, but if this is not converted into attention and purchase at the same level as competitors, then there is a problem to be overcome. The reason for Dell s lower standing in the consideration phase may be due to several factors. One of these might be that Dell s communication hitherto failed to inspire the customer in the early phases of the decision process, when brand consideration and brand preferences are made. Dell need, therefore, to have a strong message which in style and tone will inspire customers. A communication simply based on price and PC specifications mean that Dell figure too late in customers decision process and thus miss out being on the customers shortlist. Image versus price communication A further point confirming that communication should include more than price and promotion, is apparent in Dell s business and marketing model in relation to their competitors. The communication scenario: Dell: Brand/product and product detail integrated (direct to end user) Competitors: Brand/product and detail separate Implications for communication and brand perception? Dell: Must communicate both brand & price competitiveness Competitors: Can focus on communication of brand and leave the retail sector to communicate price Dell s competitors can focus on creating attention and preference for their brand and product. This is done by eye-catching image ads with the purpose of inspiring the customer. 6
3. Strategy (continued) Dell s competitors can leave communication on pricing rationale to retail shops and chains who are in a position to aggressively discuss pricing with customers at point of purchase. Dell s situation is different. Their flat marketing model requires that Dell must communicate both brand image and price - in one and the same communication. These considerations conflict with Dell s previous way of communicating in newspapers. Ad communication on retailers terms In the past, Dell focused on retailers way of communicating and tried to emulate them in the belief that this type of communication alone would push sales of PC products without giving consideration to end users thoughts and preferences. AdPeople identified this strategy as being too undifferentiated in relation to Dell s marketing and business objectives. To bring about effective communication in newspapers requires that all possibilities be explored to ensure meaningful relevance to end users. Examples of a chain store s newspaper d and a previous Dell ad are shown to the left: The above should be seen in the light of the restrictions which Dell s direct marketing model dictates. Dell have always been and will continue to be a challenger to the traditional business models in the product category. Therefore, Dell s communication will never be pure image and brand communication. Quality The quality elements are understandably important to Dell and not least in ensuring they are communicated to target customers. The end users must, as far as possible, experience that Dell offer quality for money. Market research on the PC business segment, show Dell is perceived as cheap not the most attractive perception for a segment where credibility, reliability and quality are key factors. Research findings also show that the reason for this negative perception stems from peoples exposure to Dell communication targeted at the private segment particularly so through newspaper ads. Both the private and business markets are important to Dell and any negative perception and its adverse effects are, therefore, unhelpful. 7
4. Creativity From strategy to creativity On the basis of the strategic analysis, AdPeople s strategy was to create a hybrid ad for newspapers an ad form which would challenge and fulfill the following tasks: To confront competitors on both retailer and brand levels. To create preference and relevance among PC end users whilst being faithful to Dell s direct marketing model. To create an ad format integrating with Dell s other communication and contributing positively to the brand image of Dell. To create communication raising the quality perception of Dell. Media strategy AdPeople chose to follow the existing media strategy for newspaper advertising. Dell is a brand for all target groups in the market for PCs right from the simple emailer to the most advanced gamer. Therefore, Dell s media target group is also very broad. This, in conjunction with Dell s flat and massive marketing model, means that Dell is on the whole advertising widely in newspapers all the time. Dell, together with their other media bureau, developed ads to all newspapers in each country without much consideration for newspaper profiles, terminology and readership. The ads changed product contents on an on-going basis so always to be able to offer up to date competitive deals. In the past the advertising contents have been faithful to Dell s marketing philosophy, which dictates that communication elements must be as independent of media as possible. This is more rooted in process and effectiveness issues in relation to costs, rather than communicating relevance to the consumers. Creative strategy AdPeople were of the firm opinion that Dell could improve ROI in relation to marketing effectiveness and media spend, by using a new format for newspaper ads a format integrating with the collective communication programme across all media channels. Style and tone need to connect together and create relevance to the customer in the various situations they are exposed to the communication. The media campaign must thus cover as much as possible the elements involved in the customer s decision-making process. The media strategy is in other words not a question of segmentation and selective media, but more a question of being present in as many places as possible. 8
4. Creativity (continued) The creative work focused on developing an ad concept and a template, offering the customer both calmness and an overview by: Placing ad content in a logical flow inspiration first and then focusing on competitive price. Using a photo style contributing to an improved quality perception. Adapting headlines in relation to each newspaper s reader profile and its terminology. Besides the purely creative work, it was also essential to develop an ad format which would be effective and operational. Time to market is an important parameter for Dell in relation to the constant changes in the market. Therefore, AdPeople also developed a template based on a flexible grid system, optimised for latest PC designs etc. and rapid production. This is achieved by developing: Headlines which provide value, inspire interest and which can work throughout Europe. Communication which influences and demonstrates quality. Communication with a clear and modern mechanic and stop effect. Ad formats which are flexible in terms of insertion (sizes). Online communication which involves. In other words: an integrated communication programme intended to generate traffic (new business) as well as providing Dell with a more marked brand personality. Testing the concept That integrated communication is the way forward is not in doubt, but no marketing initiative at Dell can be implemented before market testing. Each activity must demonstrate worthwhile sales results and thereby contribute to Dell s bottom line. 9
5. Results To be able to evaluate whether AdPeople s ads would be more effective than previous ads, Dell arranged a test run. The ads were tested as evenly as possible to ensure proper balance and comparison. Dell have historical data on all activities in the markets and have, therefore, knowledge about the following: Their sales generated by each newspaper and which weekdays produce most sales. The optimum ad placement in newspapers as well as which ad formats work best. With this information available, Dell put together test run. Dell selected UK, Switzerland, Holland, France and Germany for testing markets representing different market structures and competition environments. The tests in the above markets were conducted over a period of time in order to provide a well-documented evaluation. The test run was designed so that the basis for evaluation was as even as possible on identical products and price matters. In case of conditions which might cause bias, corrections were made to account for these in the test results. Final results for each country are shown below in indexed form. The tables show how much traffic was generated to Dell s call centres for each ad format. All the products in the ads used were given unique codes so that the ad s effectiveness could be compared directly. In addition the table shows in index form the average cost per customer response. United Kingdom: Previous ad AdPeople ad Media Previous advertisement AdPeople ad (index = 100) The Sun 100 262 The Daily Telegraph 100 132 The Times 100 131 Total Response Cost 100 45 The results show an overall improved generation of traffic using AdPeople ads markedly better in The Sun. The response cost worked out at an index figure of 45 i.e. 55% below the average response cost using the previous ad. 10
5. Results (continued) Switzerland: Switzerland 20 Minuten/20 Minutes (German and French version) The results show better generation of traffic using AdPeople ads particularly in the German version. The response cost worked out at an index figure of 60 i.e. 40% below the average response cost using the old ad. Example of tested ads in 20 Minutes: Medie Previous advertisement AdPeople ad (index = 100) 20 Minuten (German) 100 174 20 Minutes (French) 100 113 Total response cost 100 60 The results show better generation of traffic using AdPeople ads. The response cost worked out at an index figure of 62 i.e. 38% below the average response cost using the old ad. Holland: Holland Spits and De Telegraaf Example of tested ads in De Telegraaf: Medie Previous advertisement (index = 100) The results show better generation of traffic using AdPeople ads. The response cost worked out at an index figure of 62 i.e. 38% below the average response cost using the old ad. AdPeople ad Spits 100 178 De Telegraaf 100 155 Total response cost 100 62 11
5. Results (continued) France: France 20 Minutes and Metro Example of tested ads in Metro: Medie Previous advertisement AdPeople ad (index = 100) Metro 100 167 20 Minutes 100 137 Total response cost 100 65 Germany: Also here the results show that AdPeople ads are more effective. The response cost worked out at an index figure of 65 - i.e. 35% below the average response cost using the old ad. Germany - Frankfurter Allgemeine and Die Welt Example of tested ads in Die Welt: Medie Previous advertisement AdPeople ad (index = 100) Franfurter Allgemeine 100 166 Die Welt 100 265 Total response cost 100 49 Also in Germany AdPeople s ads were much more effective. The response cost worked out at an index figure of 49 i.e. 51% below the average response cost using the old ad. 12
6. Conclusion The test results show that AdPeople s newspaper ads are more effective than those previously used. This effectiveness is not just achieved in one market, but right across European countries with their different market structures and competitive environments. The new ads are integrated in style and tone with Dell s other communication and therefore provide Dell with a uniform look in the market place. The new ads also contribute towards lifting the return on Dell s collective communication portfolio, which helps Dell to achieve a better and more positive perception among customers. In addition, the new ads bring a lift in the perception of quality and thus work in the right direction for Dell in their attempt to rid itself of the cheap image experienced by some in their target groups. That it is worthwhile to develop an ad form which underpins Dell s own values and those they aspire to, instead of it being dictated by retailers advertising methods, is confirmed. The new advertising strategy, connecting with the rest of Dell s communication portfolio, is now and in the long term more faithful towards Dell s direct model and hence more credible to the customers. Dell have now implemented AdPeople s ad format for use in newspapers in European markets and Dell Marketing in Europe have recently requested AdPeople to develop a similar ad format for magazines. 13