by:
David Rich
In today’s competitive economy, the role of advertising and promotion has never been more important. Creating consumer awareness and driving them to make a buying decision continues to be the central focus, but the average consumer is attacked with more messages than ever before. As the level of total advertising has risen, there has been an evolution of the variety of methods and types in existence. This has placed the advertising industry in a state of chaos. Some traditional forms are going away, while newer ones are taking hold as major advertising mediums. We see this more than ever in the types of promotional events brands are executing in an attempt to win a trial and market share.
Event marketing is one of the promotional mediums that has seen tremendous growth recently. Each year, there is a rise in both the total number of events and the money spent by companies on these types of programs. However, despite the increase, they continue to concern marketers and agencies alike because of the difficulties they present in accurately measuring the results. Reaching the consumer in a one-to-one manner has proven to be effective in building market-share and brand equity, but along with this success, being able to control the event and effectively measure the results is still an issue. Many times, event marketing programs do not have the same control and measurement factors that are typically found when running a more traditional marketing program.
With the rise of event marketing, there has also been a decline in the effectiveness of traditional advertising mediums such as television, magazine and print. For years, they had been the preferred marketing methods because of the manufacturer’s ability to tightly control the variables and measure the results. In addition, advertising agencies could easily gauge their work and accurately assess the return on investment. Over the past 10 years, the shift in funds to more promotionally-oriented programs has created a gap in both being able to precisely measure each element of a program and determining the ROI.
Although event marketing programs can be an effective means of reaching the consumer, the inability to assess and modify them mid-stream has become a significant issue. Unlike television campaigns where it is possible to use recall scores and overnight ratings to quickly ascertain its effectiveness and then make necessary adjustments, the structure of the vast majority of event marketing programs make it difficult to accurately measure them while they are in progress. The number of contact points involved in a typical one can make mid-stream adjustments nearly impossible.
None of the issues outlined above would be a concern if marketing did not have to worry about the efficiency of their spending. It would not be a problem if event marketing was only being done to fulfill the needs of a retailer in conjunction with a larger trade program. However, this is not the case. Today, event marketing is an integral part of the advertising mix. The ability to successfully execute a program of this type is often the reason a brand either achieves or misses its quarterly volume / share objectives. For someone in marketing, the way an event marketing program runs and the results it achieves can be the very reason why they get promoted or passed over. To an agency, a well-run campaign is not only a key marketing tool, but it can also provide the agency with a huge PR lift.
It’s easy to find examples of brands that have incurred near fatal blows from a marketing campaign that was poorly executed. It’s even more common to find brands that have incurred significant financial losses simply from a marketing campaign that was conducted in the field in a manner different from what management had planned for. Over the years, there have been many occasions where an event marketing program that was not executed to the expected standards has resulted in a lengthy legal fight between the involved parties.
For many CPG companies, running an event marketing program such as an in-store product demonstration requires additional levels of approval to secure the funds. In most cases, this is a result of a finance department’s concern over how the money is going to be used and the audit process in place to ensure it is used properly. The only reason a finance department would have these additional controls in place is due to a bad experience from an event marketing program that may have run years earlier, but the issues associated with it remain in the minds of those in control.
A prime example of this is the ability for an independent auditor to verify placement of an ad in newspapers by reviewing tear sheets or case shipments in conjunction with a trade program. For an event marketing program, the same verification is not as easily done, especially if the audit is not conducted by people who understand this type of promotion. The event marketing company will have their control processes and reports to verify the execution of a program, but it’s the company itself saying how they performed. When the company involved in running a program is also the one charged with measuring it, it suddenly takes on all of the elements of a conflict-of-interest problem.
Compounding this issue is the fact that many marketing programs that worked effectively in the past do not have the same impact in driving the business as they once did. For this reason, CPG companies have shifted their marketing dollars over the past 10 years to new forms of marketing and promotional programs. This change has placed a strain on the traditional agency business model and how they interact with CPG companies. Because of the broad cross-section of promotional programs that are available today, it is impossible to adhere to the standard models of the past. However, although those old models of execution and measurement do not necessarily work in today’s environment, it doesn’t mean measuring a program’s effectiveness is no longer a critical component of marketing. Event marketing programs today are one of the most exposed areas for misuse in the total advertising budget. Few companies have in place the controls necessary to ensure the funds are properly spent and the programs are executed as they are designed to be. If this same money and resources were spent on a trade program, there would be a much higher level of accountability.
Background:
Because of the decline of other types of marketing programs and their inability to drive volume, many companies are looking for new ways to reach the consumer. In an attempt to meet that need, the event marketing industry has evolved dramatically over the past several years. Early programs consisted of nothing more sophisticated than giving away product samples, coupons, or even more basic, ensuring a sign is in place. These initial programs were often successful because of their newness and novelty, not because of their execution. Over the past few years, event marketing programs have become far more sophisticated in their reach and scope, thus increasing both their cost and expectations.
A key reason for the growth of event marketing has been the need by companies to find an alternative to trade deals. Trade spending was an outgrowth of the federal price controls of the 1970’s. Initially, trade rate allowances were seen as a systematic way to maneuver around federally mandated price controls during the inflationary environment that existed at that time. With the demise of price controls, they were ways to increase inventories to the advantage of the retailer and the manufacturer. This issue was further compounded because of the systems retailers had put in place to profit from buying product in an inflationary period. As inflation declined, the retail industry put more pressure on retailers to increase their trade rates in order to offset the retailer’s ability to forward buy in an inflationary period. Over the years, trade spending for many brands and for many CPG companies increased to being the single biggest expense, exceeding advertising.
This historical trend in trade spending drove CPG companies to find ways to either reduce their rates or make them more efficient. For this reason, CPG companies enthusiastically embraced a wide cross-section of event marketing programs. Early on, these consisted primarily of in-store product sampling events that were very effective because they were unique. However, with this early success came exploitation by every party involved in executing events. As in-store sampling grew, problems grew even faster, and with the emergence of each problem, a solution quickly emerged. Many times, it was to move the funds into an entirely new type of event marketing program. These moves may have solved the initial problem, but in the process, they created their own set of unique problems, each requiring a different solution.
Today, event marketing programs are run by a number of companies that are quick to proclaim that the processes they have in place ensure superior execution and effective measurement of the results. Unfortunately, on many occasions, the verification and reporting processes do not accurately reflect the outcomes of the program. An example of this can be seen with how a major marketing agency claims they verify programs. This large agency regularly audits 5% of their events; however, they’re audited by the people conducting the event. The audit consists of having a picture taken showing the person conducting the event. Ironically, in examining the photos of these self-audits this major marketing agency was still found to have 50% of the demos in non-compliance due to the required POS not being in place. For several of these events the cost of the POS materials represented a significant expenditure by the manufacturer. In the end, this major marketing agency, which claimed to deliver on what they were charged to do in reality, failed miserably. Ultimately, the manufacturer paid for a sub-optimal program.
The need to measure and evaluate any type of event marketing program is important, especially with the number of variables they contain (usually more than 100). If any variable is not executed correctly, it can derail the entire program or severely impact the effectiveness of it. For the typical CPG company or advertising agency looking to use an event marketing company for a program, it becomes imperative to subscribe to the tenant: “Inspect what you expect.” As basic as this sounds, the issues surrounding failed or under-performing programs are daunting. During 2007 alone, there were documented program failures ranging from neglecting to secure the necessary permits to not having enough staff to, alarmingly, not having the product ready for distribution. In addition, product safely is an even more critical issue. It is this area that creates the biggest risk to everyone, yet few really know how to deal with it. Product safety includes a wide cross-section of potential hazards, any one of which could destroy not just an event marketing program, but an entire brand. Despite the number of documented mishaps, agencies, retailers and manufacturers that have not put in place the controls necessary to ensure the integrity of their supply-chain, let alone their event marketing programs.
For this simple reason, a company looking to run an event marketing program must have the necessary measurement tools in place to ensure that both performance occurs at the desired level and the entire program remains safe. It is imperative to know what to look for when hiring a company.
Below are some of the key items that, if not handled correctly, will harm any program:
• What controls are in place to ensure that the product remains 100% safe and free from any potential risks? Is each component of the program (including signage, tools, etc.) free from risk hazards? Does the agency have the expertise to field-test a program to ensure that a safety issue does not develop in the field? Are each of the companies involved educated on how to identify and deal with potential risks should they occur during the program? An audit of 500 food demonstrations across the US in supermarkets and mass merchants recently found that 23% were not wearing gloves while serving the food. Additionally, 55% did not have hairnets or hats and 9% had cross contamination issues with serving utensils. All it takes is ONE issue to damage a brand and a retailer or worse, put a person’s life at risk.
• Does the event marketing company have experience executing the specific type of event you desire to run? What were the results of that event and what did they learn from it than can help ensure your event runs smoothly? Remember, you’re hiring a professional company. If they are not willing to provide you with valuable expertise to help the event run better, then they’re not worth working with. Recently, an audit was conducted to verify a program targeted towards Hispanic consumers. The independent audit found more than 25% of the stores not in compliance and more than 30% of the event staff not speaking Spanish. For this program, the manufacturer had specific requirements which in this case were not met in a wide number of stores. The damage to the brand’s image and the ability of the manufacturer to reach this key consumer segment was severely impaired.
• How much experience does management have in the event marketing business and how active will each one of them be in the development and execution of your program? You want to deal with people who have experience, but at the same time, the expertise doesn’t do you any good unless they’re actively involved in your program. Does management take a hands-on approach to events and will they be in the field each day the program is running?
• Look closely at how they staff events. Are they employees or contractors? Can they verify U.S. citizenship and do their employees have to pass a background inspection and drug test? Are the people used competent in their communication skills to be able to deal with the types of consumers in which they’ll be interacting? Do the people being used have a verifiable performance track record? For most companies, staffing represents the single biggest expense, so it is usually one company who will try to cut wherever possible. It’s not unusual for an event marketing company to switch to lower paid personnel just prior to running an event. In the same regard, it is not unusual for a company to present a training program and a superior plan to ensure each of the people being used in your program are properly trained only to see it be cut or altered at the last minute.
• Does the firm you’re looking to hire have experience navigating all of the legal requirements with regards to securing the necessary permits, zoning requirements, bonding needs, etc.? The number of permits necessary to execute even the simplest event can be daunting when it is being run across multiple governmental jurisdictions.
• How does the company intend to deal with the post-event clean-up? Many times, a company will overlook the need to return the area to its original state.
• In regards to food, how does the company intend to ensure complete product safety and integrity is maintained throughout the entire event and through the clean-up and disposal process? Do the employees have the necessary permits to handle the food? This issue cannot be over-stated. The number of companies that have to deal with product safety issues grows almost daily.
• For any item being used, what are the steps that have been taken to ensure each element is 100% safe for the intended audience and others in general? It’s no longer good enough to have items that are intended for a certain group of people, such as children over the age of 12. Today’s society demands safety procedures to be in place to protect all consumers. Have steps been taken to prevent items from falling into the wrong person’s hands at anytime during the promotion?
• Has there been a strategy put in place to deal with a “blog-attack” should something about the promotion elicit somebody to post a positive or negative comment on a high-traffic blog site? Is there a process in place to monitor results as they occur to be able to pro-actively deal with an incident like this?
• What are the proprietary processes the company uses to verify performance, and how do they report it back to you? Because this is extremely important, a good technique is to ask some of their previous clients about the integrity of their reporting systems.
• Verify the company’s overall financial integrity and ability to execute your event. This includes their capacity to receive and move the necessary materials for your event and the ability to pay all of the parties they employ in a timely manner at its conclusion. Nothing will sour an event faster. Requiring the company you’re hiring to declare up front how they will source each of the items they will need to run the event is essential.
• Do each of the companies involved carry sufficient business insurance, and are each of the people involved in the program bondable? Do the companies have a policy of random drug screening?
Each of the issues outlined above are critical to the overall success of a program. However, this list is not all-inclusive. There are many other variables that require attention if an event is going to run smoothly. It is not the intention of this document to detail the countless issues regarding how an event marketing program can go wrong in order to scare companies away from running them. On the contrary, the reason for listing them is to heighten awareness. Because a lot of programs have not been executed effectively, many people have been turned off to the potential of what a well-run event marketing program can actually do for a brand.
The critical issue in all of this is to know how to monitor and verify a program. This is where the issue moves to another level. Monitoring and verifying performance is prudent. However, the real payout comes in being able to use the data to not just improve the next program, but to improve the current program as it is being run. Being able to monitor and improve a program mid-stream can and will dramatically increase the program’s return on investment. Furthermore, it is critical in order to be able to respond to any type of negative or risk-oriented news that may appear anytime during the event.
It is in the real-time verification of a program and its subsequent alterations that significant disconnects can occur with the company running the program. They have designed it to ensure they receive a level of profit equal to the risk and work they’ve put into it. Naturally, any changes to a program while it is still running can put this element of profit at risk. That is why the company or agency running a program will rarely allow you to see results while it is ongoing. Yet, at the same time, that is why it is essential for the owner of the event to know how the program is doing and to be able to modify it if needed. Any data collected by these personnel winds up being so suspect in nature that it becomes hard to be able to make an objective decision from it, particularly one that may immediately impact how the rest of the program is to be run.
For most companies, the way an agency is held accountable is for the manufacturer to send out their own people to view the event marketing program in action. This process can and does provide valuable learning for the marketing personnel involved, however it is not without a high cost. Placing these people in the field requires them to forgo other work, resulting in other priorities not being dealt with on a timely basis. In addition, because of their limited experience with event marketing programs and the industry, they will not know what to look for and, more importantly, how to evaluate it. By not being able to collect objective and measurable data from enough points, the ability to truly evaluate a program is greatly diminished. Finally, because of the salary level these people command, the cost to send them into the field can often far exceed any potential benefit.
Solution:
Successfully running an event marketing program can be a daunting task as evidenced by any or all of the reasons outlined in the previous sections. At the same time, it is imperative for any brand to be able to use them as a way of building equity and market share. Therefore, the key lies in the old saying shared earlier in this document, “Inspect what you expect.” As simple as it sounds, ignoring this statement is often the single biggest reason why a program does not succeed.
As mentioned above, there are several problems that cause both the company running the event and the brand paying for the event to be unsuitable for completing the inspection of it. Therefore, an independent company who knows the industry and its complexities is best qualified to provide a truly unbiased evaluation of a program. This is no different than using Arbritron to measure television audiences or IRI to measure retail movement. Companies like these do an excellent job of measuring definitive results in environments that are 100% controlled. However, in the world of event marketing, many programs are not perfectly controllable. With the average event consisting of more than 100 variables, it becomes very difficult for anybody but a highly-focused audit company to understand how to measure it.
There are many additional benefits to using a respected independent auditor. For example, their findings will be more accurate and, therefore, be able to be leveraged when considering how to effectively execute your next program. Using a respected industry leader also allows you to profit from their expertise, thus providing you with a valuable resource to help you develop your programs. Finally, their findings will be more readily accepted by the companies being audited than if they were gathered by someone with little experience in the industry.
Because of the wide number of safety issues that can quickly derail any brand, the use of an independent audit company provides the additional level of control companies are looking for. Their additional expertise can be the difference between having a successfully run program or a media frenzy caused by a lapse in safety.
Keep in mind, however, that hiring an industry leading expert is not by itself a perfect answer. The organization you intend to use has to have the ability to audit programs using a cross-section of techniques that allow the findings to both have merit and be actionable. This means the audit process must be both visible and invisible to the event marketing company hired to run the event. Every measurement used must have supporting data to validate the findings. On most occasions, this can only be done behind the scenes so as to avoid the company being measured from knowing, ensuring complete objectivity of the results.
As if collecting the data isn’t enough, there are also several critical components to an effective audit. These include timely reporting, understandable and purposeful findings and recommended conclusions to help improve the effectiveness of the next program.
Timely reporting of the data includes the ability to see it while the program is still running. For this to take place, there must be enough data to allow for adjustments to be made while the program is still in process. This also requires a clear understanding between the brand and the audit company regarding how the measurement process is going to occur and how the data should be read.
A clear understanding of the results is also critical. Every definition used in the event marketing industry today potentially has an alternate definition. An example of how data gets twisted in this industry is the measurement “rate of execution.” For a brand manager, this may mean the percentage of locations where an event ran on a particular date at a specific time. To an event marketing company, this may mean the percentage of locations which ran the event over a two-week period at any given time. Therefore, everyone involved in the audit must be on the same page.
In addition, the findings must be in a format from which the brand can make meaningful decisions. Unfortunately, it’s in this area that many event marketing companies use interesting but irrelevant statistics and findings as an attempt to make themselves look good. For new brand managers, this can be a very difficult situation to break free from because most are eager to seek out new ideas to propel both their brand and themselves to a higher level. This combination, however, can cause them to be led down a futile path, chasing irrelevant data that has been slickly packaged by an event marketing company as a way of showing how unique they are in the marketplace. An experienced, industry-leading audit company is able to present data that has stood the test of time, thus preventing the new brand manager from running after false expectations.
Finally, the audit company needs to have industry expertise so the results can be effectively leveraged. Information by itself is meaningless. Even more dangerous is information that is used incorrectly. An industry-leading event marketing audit company should be able to provide insights and benchmarked findings that will help increase the effectiveness of an event marketing budget. By using their expertise, the brand should be able to benefit from having a qualified voice that is outside of the advertising / marketing agencies they use. This allows the audit company to be totally objective in their findings.
Conclusions:
Event marketing is an industry that is going to continue to grow for many years to come. With this growth comes increasing expectations and demands. This is a positive trend, as long as it is objectively funneled towards helping brands achieve their goals. Although the use of independent event marketing audit companies is still new today, within the next several years we will see a dramatic increase in the role they play. Brands that are able to realize how much an audit company can increase the effectiveness of their event marketing dollars will be those that in the end are able to use them as a key piece of their overall advertising and marketing mix.
On the other hand, brands that want to continue to spend for the sake of spending will be the slowest to see the benefits of auditing event marketing programs. It’s these same brands that are most likely struggling in other areas as well. In this regard, event marketing today is no different than where the trade funding issue was 5 – 10 years ago. Ten years ago, trade spending was seen by brands as a very inefficient way to build market share and, more importantly, it was viewed as a dark hole with few control processes. Today, trade spending is a highly-audited area and, as a result, the level of performance compared to dollars spent has increased dramatically. Although it’s not fair to say event marketing today has the same issues as trade spending of years past, they are similar in the awareness that spending is not always as effective as it could be and the ability to learn from it is still underdeveloped. Compounding this is the ever-growing issue surrounding product safety and the need to ensure the consumer is 100% safe when interacting with and using the product.
In the next three to five years, more brands will employ the strategy referred to as “integrated trade marketing.” This means every element of the brand marketing message is intertwined with how funds are allocated. Those programs that have the greatest ability to support multiple initiatives will be those that have the greatest ability to be funded. Event marketing programs, by their very nature, have the ability to bring the advertising message and the marketing goals together. As mentioned at the beginning of this report, with the decline of traditional advertising, the more a brand can find a way to deliver their advertising message to the customer, the more successful they’ll be in retaining or building their brand’s equity.
Recommended Next Steps:
Review your event marketing programs and ask yourself the following questions:
1. What are the total direct costs of my programs?
2. What are the total indirect costs of my programs? (Include labor and resources used to help plan, run and evaluate the program).
3. How confident am I that the program was executed as I had planned?
4. What makes me feel confident or not confident about my programs?
5. Am I completely confident that none of my samples, promotional materials, or information wound up in the hands of competitors or was misused in some manner?
6. How could my programs be perceived by a blogger who had an issue to fight with our company?
7. What are the safety risks involved in my program and how good are the safeguards?
8. What would I do if the news media picked up on something negative about the programs I run?
9. Do my event marketing programs play well in distant markets? How do I know this?
10. How confident am I in being able to substantiate my ROI for an event marketing program with my managers?
11. Do event marketing programs create more work and issues for me than other types of programs I work on? Why?
12. What is the best use of my time?
13. What steps can I put in place to ensure my total advertising message comes off exactly as I had planned?
14. What steps do I need to do to make sure I meet or exceed my annual goals?
Your Next Steps:
Evaluate the event marketing programs you have run in the past and assess their results compared to other forms of marketing you’ve done.
Assess the role event marketing programs play in your advertising / marketing mix.
Establish benchmarks regarding the return on investment you want to achieve from each of your advertising and marketing programs.
Interview an industry-leading event marketing audit company to assist you in your next program.
Case Study Findings:
The review audit process has already been used successfully by major CPG companies. ICC / Decision Services is an expert in the audit process. Below are key findings from a cross-section of audits:
• Food Safety: An audit of 500 food demonstrations across the US in supermarkets and mass merchants found that 23% were not wearing gloves while serving the food. Additionally, 55% did not have hairnets or hats and 9% had cross contamination issues with serving utensils. The findings proved the agency used was not capable of executing events in a safe manner.
• Program Execution: A sample audit of 10% of 2000 events showed less than 60% actually ran on the requested date. Furthermore, of those that did run, more than 50% were out of compliance due to expensive POS materials not being available.
• Brand Image: An audit conducted to measure the performance of a major program geared to Hispanic consumers found significant issues. More than 25% surveyed stores were found to be in non-compliance and 30% of the staff did not even speak Spanish. The result of this program is the manufacturer was not able to achieve the improvement in their brand image they were expecting from the program.
• Long-Term Programs: Below are the findings from a program audited by ICC / Decision Services. This program was executed by a promotional agency on behalf of a CPG company. The objective was to gain trial for a major breakfast cereal. Due to the leading role ICC / Decision Services plays in the industry, the CPG company asked them to conduct an audit of the program.
ICC / Decision Services implemented an audit process which allowed the CPG company and the promotional agency to modify the program while it was on-going, thus improving the entire program. The mid-stream information combined with their overall findings helped them with valuable information for future programs. In the end, the CPG company was able to increase their ROI from the original program and gain key insights to help them with future programs.
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