In October, L'Oréal won the 2012 Effie Award for Special Contribution for Industry at the 19th China International Advertising Festival. According to the award committee, L'Oréal has been advancing the development of the Chinese advertising industry by understanding how to increase return on media investment and resolve difficulties with data analysis.
With the most adspend among all advertisers in China in 2011, ahead of KFC and Olay, L'Oréal has also devoted resources to evaluation standards and optimisation tools for better cross-media GRPs. Media-related agencies that serve the brand in China include Miaozhen Systems, Millward Brown, Mindshare and ZenithOptimedia.
In an exclusive interview with Campaign Asia-Pacific, Michael Zhang, corporate media service director of L'Oréal China, reacts to the win.
What is the significance of the award?
This Effie Award is given to advertisers who want to bring positive results from the money they spend. It's about efficiency across different screens. According to the accumulated data of our online campaigns over the past three years, we realised how to better estimate media effectiveness and improve our reach rate. That obviously led to savings in adspend.
What are the broad media trends in China now?
A higher number of digital screens for advertising, high media inflation versus a couple of years ago, and lower TV ratings. These made us really try to think of a way out, rather than continuing what we have done for the past decade. We started thinking about online video in 2010, and started investing in the boom this year. It happened quite naturally.
Budget allocation depends on a lot of things: unit price, inventory, to name some. We definitely want to spend more money on online video, but it's about how to balance those factors. In some markets in China, online video is almost as expensive as TV.
It's dated to think that we should first reach people by TV, and if we cannot reach them, then we think of some other methods as an afterthought. Of course TV is still the most cost-efficient way in terms of reach, but for some target groups, it might not be the case anymore. In the future, maybe we will even start thinking about online video as a first priority before other channels.
How do you attempt to solve the problem of raising ROI for cross-channel media activities?
Through data mining, we made a breakthrough in the field of measurement. Technical solutions to validate the reach of TV + online video helped to reduce duplication after we proved that multi-screen advertising has significant advantages over TV-only campaigns.
For example, Garnier's target audience is women 18 to 25 years old. We looked at the level of reach from using purely TV or online video, but because our costs are relatively fixed, it's better to use a mixed-reach curve to project a likely goal in a specific market, say 75 per cent in Shanghai.
Without data we cannot do anything. With the support from Miaozhen Systems and Millward Brown, we benefited from remixing our traditional TV budget and allocating it across different screens. It is still the same advertising material, the same commercial, but our overall marketing communications objective is the same: how to reach as many target consumers as possible in a cost-efficient way.
In one case, Miaozhen Systems and Millward Brown conducted research on three test markets and three control markets as a feasibility test, with TV CPMs and reach as the base to measure a campaign.
With hard figures, we are able to look at the incremental reach we can get from online video. In the past, we don't have single-source data that can help us look at reach and frequency across all the different channels at the same time. Even if we spent a million dollars on online video, we had no idea how much incremental reach it gave us, or whether there is any overlap. Now we know.
How about mobile?
As for mobile, we all knew that it was going to happen. The platform may be there now, but a system of how to advertise on it, how to set a KPI, how to track GRPs, how to connect it back to existing media channels is not ready yet. We haven't prepared for any mobile marketing campaigns in China, but are taking steps for a pilot test within the next two quarters.
To me, GRP is just terminology to help evaluate relative media weightage; it is not the communications objective itself. The real goal behind the GRP is how many people you have reached by how many times. Media optimisation across multiple screens is the ultimate goal.
Tell us about your media strategy to woo consumers in the beauty category, known to be the most finicky of all.
When L'Oréal came to China 15 years ago, we focused on tier-one and two markets, as with all multinational companies. Now things have changed dramatically, especially in tier-two or -three markets with people getting much richer than we expected. Even if they live in relatively poor conditions, their disposable incomes are high. But when you live in Shanghai or Beijing, you may not have first-hand knowledge of their purchasing power. Outside of Beijing, Guangdong and Shanghai, Zhejiang has the most millionaires in China.
Nowadays, consumers are not like our parents, who are still watching TV as a major form of media consumption. Consumers are spending less time on the traditional TV screen, but they are still consuming the same programmes.
Consumers in tier-one markets are more sophisticated and picky, so it costs much more to reach them, communicate to them and change their consumption habits, than in other provinces. Because we are an adspend giant, you can imagine that we can't change our media plan overnight, but we try to keep ourselves as flexible as possible from the media point of view.
One insight in China is that younger girls in their mid-twenties are found to be 'overspending' on beauty products that belong to a more premium category. They are buying Estee Lauder or Lancome instead of Garnier or L'Oréal Paris, albeit on entry-level products such as toners rarther than anti-aging creams. Though not widespread, it's interesting. This behaviourial unpredictability is only among a small group of consumers, so it doesn't pose media selection challenges to us.
How will you ensure that you keep your job (or your hair) in the next two years?
One: Innovate new ways of communicating to new-generation consumers in a cost-efficient and effective way. We're not just buying ad space anymore. A 30-second commercial or a full-page advertisement needs to give way to softer, more engaging ideas of communication. Instead of hard-selling, we want to leverage brand assets like celebrities or sponsorships to tell consumers about our brand image and history.
Two: Do more things with less money. Push ROI as a measurement of performance. Now we have reach curves of digital TV, IPTV and other new media to think about.
