On a recent Thursday, Darren Herman, the president of Varick Media Management, was sequestered in his SoHo office. He wasn’t scrutinizing a TV ad or images from a photo shoot. He was combing through graphs and Excel spreadsheets.
Herman had run 27 ads on the Web for his client Vespa, the scooter company. Some were rectangular, some square. And the text varied: One tagline said, “Smart looks. Smarter purchase,” and displayed a $0 down, 0 percent interest offer. “Pure fun. And function,” another read, and promoted a free T-shirt.
Vespa’s goal was to find out whether a financial offer would attract customers, and Herman’s data concluded that it did. The US$0 down offer attracted 71 percent more responses from one group of Web surfers than the average of all the Vespa ads, while the T-shirt offer drew 29 percent fewer. And Herman didn’t just compare the messages in the ads — he also looked at the sites where they ran, when they ran and what groups of people responded.
From the “Mad Men” era until now, advertising has been about a catchy tagline, an arresting image, the Big Idea. But Herman and his competitors are bringing some Wall Street-like analysis to Madison Avenue, exploiting the huge amounts of data produced by the Internet to adjust strategy almost instantly.
“It’s putting numbers to an industry that never had numbers before,” says Herman, 27, who started and sold three media and technology companies before founding Varick last summer.
“It’s nice to be able to tell your brand manager or the chief marketing officer which audience is interacting with the unit, what time of day, what day of the week, and what the response is on certain types of offers. Before, nobody could really tell you that,” he said.
This approach turns marketing “upside down,” says Ron Proleika, the vice president of marketing communications at Windstream Communications, an Internet service provider and a client of Herman’s. “It forces marketers to stay on their toes and think of thousands of small great ideas instead of one great big one.”
Major advertising holding companies like WPP, the Publicis Groupe, Havas, MDC Partners and the Interpublic Group are starting data practices, hoping to latch onto what is expected to be the fastest-growing category of online advertising in the next five years.
Where the data guys were once an afterthought in a marketing presentation, now they are at the core of the online strategy. What’s more, they can help advertisers save money in traditional media by testing different phrases or images online to see what works before producing an expensive TV commercial or magazine ad. Who attracts more clicks in a grape juice ad, for example — the blond girl or the brown-haired boy?
NEW SKILLS
The shift to data-based campaigns is forcing marketers to learn new skills and drawing a new breed of worker to Madison Avenue. While most data executives now in the field came from media backgrounds, they are recruiting Wall Street math geniuses because the job requires hourly adjustments in strategy based on numbers.
Herman is trying to hire people from Citigroup and Bank of America, and he hopes that the layoffs in the financial industry will help him do it on the cheap.
“It mirrors the financial markets in many ways,” he said, so “that’s where we go.”
Still, getting advertising agency employees to rely on data is difficult, agencies say. And as people trained on Wall Street migrate to Madison Avenue, executives anticipate battles between creative types and wonks.
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