Insider Chatter by Donna Bogatin

Greg Stuart no longer heads up the Interactive Advertising Bureau, but he is on an advertising mission nonetheless, a $295 billion one.

Stuart presented the keynote at the Future of Online Advertising conference in New York City last week and offered his perspective on how marketers can better optimize their ad spends in the future.

In other words, “What Sticks, Why Most Advertising Fails and How to Guarantee Yours Succeeds,” the latest Stuart book.

“What Sticks” puts $1 billlion in ad spend by 30 Fortune 200 companies to the “experimental design” test in order to “explain exactly how marketing and advertising works today,” all $295 billion worth.

Out of the $295 billion annual U.S. ad spend, over $112 is wasted, Stuart declared. Why? Problems can occur at any point within the marketing cycle: Motivation, messaging and/or media, Stuart indicated.

Stuart illustrated the importance of testing by using a “theory of 5.” If each of five core components of an advertising campaign have five diffrerent options–positioning, segmentation, creative, print, online–3,125 different combinations would be avaialble for marketing implementation.

To clarify the advertising situation, Stuart advises making sure there is universal agreement on the goals of a campaign, upfront. From the research team to the ad agency, and from the creatives to the media planners, all must be alligned towards the same marketing objective. Points of allignment include:

Knowing why consumers buy a brand,
Targeting a valuable consumer segment,
Creating an unambiguous defintion of campaign success.

Testing is a prerequisitie for achieving advertising goals, Stuart believes, because NOT testing is “really expensive,” he said. Testing must occur for both the creative and media components of campaigns.

In a nod to Google’s 70-20-10 technology “innovation theory,” Stuart presented his own marketing formula for success:

Apply 70% of budget to what is known to work,
Devote 20% of resources to innovation on what is known to work,
Dedicate 10% of assets towards brand new ideas.