In The Media
Reengineer That Ad
Forbes Magazine, May 23 2005, Page 89
As a materials science engineer, James Kowalick spent 25 years
assembling bullets, bombs, rockets and nuclear warhead detonators
for the U.S. government and Aerojet, a defense contractor.
Now he is trying to use his expertise to add a little brisance
to advertising. The shattering power he has in mind comes
not from shock ads but from the sedate realm of multivariable
Multivariable testing is a basic element of the engineer's
tool bag. You want to find out, say, what combination of catalyst,
temperature and pressure produces the highest yield in a reactor
vessel. You could find out by trying thousands of combinations,
but what if each experiment costs a lot of money?
The situation calls for a science known as experimental design,
a way to harvest the most data from a small crop of experiments.
The technique favored by Kowalick is called the Taguchi Method,
created just after World War II by Japanese electronics engineer
Genichi Taguchi. The method has been used in product design
by many companies, including Aerojet, Eastman Kodak and Ford
Kowalick, 66, thinks it's time to apply Taguchi to ads. What
combination of headline, copy and price information delivers
the most response from an ad? Experiments will tell you. Try
different direct-mail pieces or e-mail pitches to see which
ones get results.
Madison Avenue types do not, by their nature, think like engineers.
Isn't copywriting more art than science? But they may come
around. "Creating ads to win awards will soon take a
second seat to profitability," Kowalick says.
Nordax Finans, an unsecured-loan lender in Sweden, is among
the 22 companies that are shelling out up to $150,000 per
project to Kowalick Inc. in Sacramento. Nordax, one of the
few Kowalick clients that agreed to be identified, credits
his system with boosting the response rate to its direct-mail
campaigns from 0.9% to 5.4%, thereby adding $50 million since
last year to its $150 million loan portfolio. "This is
really good stuff," says Mats Lagerqvist, Nordax cofounder.
Dell Inc. tapped Kowalick last summer for an e-mail pitch.
There were 11 different ad elements, including product models,
warranty offers, discounts and prices. From the 10,368 possible
combinations, Taguchi's algorithm selected 18 that could best
tease out the effect of the different variables. Every customer
in 18 test groups, each with 2,000 people, got one of the
randomly selected pitches.
Within a week Kowalick was able to analyze the effect of the
different variables on the response rate. One ad incorporating
the most compelling features - including a discount of 10%
and a hurry-offer-ends-soon call to action - was then created
and sent to 150,000 consumers. Kowalick's data show the fraction
of recipients willing to open up the e-mail was 16%, three
times the rate for a similar e-mail barrage Dell sent to a
Dell won't comment, but Kowalick says sales per ad from the
promotion - a total of $400,000 - were seven times better
than in the control group.
Results like these aren't making Kowalick rich - yet. Kowalick
Inc., which the engineer founded in 2003 with Mario Fantoni,
a former management consultant to Oracle and EDS, is still
a tiny enterprise. Their company's 2004 revenue was just $1.5
But Kowalick is so optimistic about the potential to sell
the Taguchi method to desperate marketers that he gave up
a teaching post at the California Institute of Technology,
where he lectured about the methodology. He also stepped down
as president of the Renaissance Leadership Institute, where
he taught Taguchi to engineers.
Explosives, junk mail - Taguchi can be applied to just about
any optimization problem amenable to experimentation. At home
Kowalick applies the rules of multivariable testing to optimize
the amounts of garlic and tomatoes he puts in salsa.
Kowalick is attracting some supporters. "A lot of the
ads that win awards don't tend to move the business forward
or make money," says Kevin Wassong, president of Minyanville
Publishing & Multimedia. He met Kowalick when Wassong
headed an online advertising group at New York ad agency JWT
(part of WPP Group).
But there are also challenges. Kowalick admits some agency
executives, namely creative types who are skeptical of ad
tests, have turned him away. Ad agencies "generally go
with the most creative ad of the moment," he sighs. "They
see any additional testing time, even if it is very short,
as an unnecessary delay to getting their ads out."
Some of the ads that have come out of the Kowalick process
are certainly creative, but they aren't award-show candidates.
Kowalick is a big fan of attention-getting images and headlines,
or "interrupters," that he can test, often bringing
in another optimization system, called TRIZ, an acronym for
a Russian expression meaning "theory of the solution
of inventive problems."
TRIZ numerically rates consumer responses to images and headlines
based on a database of 24,000 ads. Kowalick uses those responses
to help clients pick advertising centerpieces that command
For client TEMO Sunrooms of Clinton Township, Mich., Kowalick's
system helped winnow down 67 images and 282 headlines to the
best 6. A resulting four-page newspaper insert for the company
in the Detroit Free Press last year included the 6 combinations.
One image featured a "100% Carb Free!" headline
over a picture of a sunroom.
In another a boy flies through the air in his family's sunroom.
That ad was duly ridiculed on NBC's Tonight Show With Jay
Leno with the line: "How long does this boy got to live?"
Denise Wahl, senior writer in the marketing department at
TEMO, says it received twice as many responses as it did from
comparable pre-Kowalick inserts. But she says she expected
a threefold increase. "This method didn't necessarily
provide the extreme results we had hoped for," she says.
Like many marketers, Kowalick tends to overpromise. He likes
to boast that some clients have had tenfold increases in response
rates, but he admits such claims make doubters even more skeptical.
To reassure them, Kowalick now says marketers pay only if
they at least double their current response rate. No doubt
he would be willing to put that ploy to the test. Let's see
if it gets him any more business.