Modernizing Your Approach to Media

By Dmitry Kutovoy

A few days ago, the Ministry of Economy declared that Ukraine is breaking out of the recession that still afflicts large parts of the world economy. This news underscores the increasing importance that the world economy plays in matters within Ukraine’s borders. It also suggests that Ukraine’s description of recession may differ from that of the wider world.

Since the industrial marketing times of Henry Ford (famous for his statement, “Any customer can have a car painted any color that he wants so long as it is black.”) until the most recent recession, economic science has created numerous models aiming at helping in understanding and modeling economic processes – Maslow pyramid, 4P, Brand Onion etc.

In spite of all these models, the day arrived when there was no model that prepared anyone for the stark realities of the sharpest downturn in the economy since the Great Depression of the 1930s.

No one dares utter the depression word today, but almost no one was prepared to face the deepest recession into which economy fell so quickly and completely.

The severity of the downturn reminded us once again of an unpleasant fact for marketing, i.e. in times of recession marketing and advertising drop faster than GDP and when the inevitable turn around comes, their recovery comes at a much slower rate.

Therefore, marketers had some time for considering their processes. Like the ones from Paul Garrison’s Exponential Marketing book. 

The World Has Changed

 One way or another, we all will break through the recession. However, when it happens we all will be different and changes are already in place. Here is an example:

In 2004-2005, our agency developed and fine-tuned an instrument that we called “test markets” or “cluster launch.” The principle of this method is as follows: 

We determine three Ukrainian towns that represent all Ukrainian towns as one indivisible cluster. For instance, in East Ukraine it would be megalopolis, Russian-speaking, industrial city; in Central Ukraine it would be mid-size town, mixed language, developed agricultural production, with relatively low purchasing power; in West Ukraine – a small town, Ukrainian-speaking, with a prevalence of small businesses. Based on those parameters, we chose for the cluster Kharkiv, Zhytomyr, and Kolomyya. 

The chosen cities need to be part of a client’s distribution network. The penetration of the product being tested should be high at purchasing points.

We then analyze communication channels in the given regions. The toughest task is TV since regional TV surveys are not conducted on a regular basis. However, we found a possibility of estimating number of delivered GRPs [Gross Rating Points] and that way can calculate media indices for regions.  

Then we estimate sales in chosen regions, run an ad campaign, and estimate sales after it again. It is important not to look at sales in one region separately from the others. The sales dynamics should be estimated only for all the regions in a cluster together.

As a further step in using this instrument, we can test a few creative concepts by taking a few more cities to the ones we already have, e.g. Donetsk, Vinnytsia, and Burstyn. In this case, we can compare efficiencies of creative concepts under consideration.

Price factor: A nationwide TV campaign would cost UAH 3 million, while testing using the cluster method described above requires a budget of only UAH 400-500,000. 

The question then becomes, do you think it is a good marketing approach when an advertiser might be able to save 80 percent of his budget and get at least partial return on his investment? To our mind, the answer is positive, without doubt.

Let us add in summation that over recent years, our clients bought this instrument just once, but in the last six months, it has been utilized three times. 

So, is the crisis evil? It is not a question of good and evil but rather a question of adopting new techniques for new times.

Dmitry Kutovoy is the CEO of the Nostra Communication media-agency.