A History of Marketing / Episode 51

My guest Tod Johnson, a market research pioneer who was among the first people to measure the Internet. He’s an inductee to the Market Research Council Hall of Fame and former chairman of the Advertising Research Foundation. Tod is President and CEO of the Board of the Metropolitan Opera and is a member of the board of the Lincoln Center for the Performing Arts.

Tod led The NPD Group for over 50 years, building it into one of the largest consumer research firms in the world. NPD became the company retailers like Mattel and Hasbro relied on to understand what was selling. In 1995, he founded Media Metrix, essentially the Nielsen ratings of the early internet.

In this conversation, we dive into:

* The era of pencil-and-paper diary panels, when consumer research meant tracking grocery purchases by hand and mailing the booklets back every month

* Why Tod’s analysis showed that brand loyalty is mostly a myth, long before anyone in advertising wanted to admit it

* How he accidentally discovered the internet was about to change everything

Listen to the podcast: Spotify / Apple Podcasts

Special thanks to Xiaoying Feng, a Marketing Ph.D. Candidate at Syracuse, for reviewing and editing transcripts for accuracy and clarity. And to Bill Moult, whom you may remember from episode 23 of this podcast, for introducing me to Tod.

Why spend a career in market research?

Andrew Mitrak: I watched a speech you gave while accepting a lifetime achievement award. And at the start of the speech, you quipped that you’re tempted to aim for a second lifetime achievement award and do it all over again. I take that as a sign that you spent your career really doing something you love, and your career was in market research. So, what do you love about market research?

Tod Johnson: Well, I’ve always been a very quantitative-oriented person. I’ve loved numbers, I’ve loved facts supported by numbers, and I’ve always had an interest in psychology as well. In fact, I taught what today would be called cognitive psychology when I got out of graduate school for a while. Market research just puts those two pieces together very, very naturally. So it fit into what I really found exciting and wanted to do. I have to say, I never started out thinking market research was my career objective. I kind of fell into it by accident, but once I got into it, it was where I wanted to be.

Innovation and Innovation Models in Early Market Research

Andrew Mitrak: You were an academic doing quantitative analysis, and these were real-world business practitioners. Was this seen as new pioneering research that they could apply to their business? What was that dynamic like with them?

Tod Johnson: Well, the dynamic was interesting and different in those days. These companies had their own staffs oriented to innovation and development, and they were always open to new ideas. Today, that’s not so easy to get into a company with a new idea because there’s just too many of them out there. But back then, it was kind of open arms, wanting to explore new ideas. We were solving real problems like new product introductions with trial and repeat models, which hadn’t really been focused on much before, market structure work, and consumer packaged goods (CPG) companies had a curiosity to want to learn that.

The Era of National Purchase Diaries

Andrew Mitrak: Can you set a scene of what market research looked like at the time? Was it ever influencing a certain product launch, or a certain product strategy, or messaging or positioning type?

Tod Johnson: In those days, virtually every new product launch would go into a test market. We would set up a diary panel of consumers to record purchases in the appropriate category. We would do the trial and repeat analyses that would predict the long run success or failure of the particular product. That would be the most common application. On a national basis it would be more about consumer trends in those categories uh and how they were structured and what was changing.

The other thing that was very good, I’m now jumping ahead to when I became involved in developing NPD, was in the mid70s, General Mills started to diversify from CPG into a lot of other categories like food service, toys, apparel, jewelry, and I was fortunate enough to be the person they looked to to set up how to track those industries similar to how CPG had been tracked.

Andrew Mitrak: Amazing. They embraced the general in their name and kind of not so much the mills part of their name.

Tod Johnson: Well, the general went away about 10, 15 years later.

Andrew Mitrak: You mentioned National Purchase Diaries. What was the actual purchase diary? You mentioned like purchase diary panels and what does it look like? Walk me through the nuts and bolts of what a purchase diary panel would look like.

Tod Johnson: Well, it would be a booklet which was about 20 pages and each page had a couple of categories on it like toilet paper, facial tissue, and paper towels might all be on a page, and they’d be structured in a way that if you bought one of those items, you answered some questions.

The panelists would get a new booklet every month and mail the old booklet back in to us, which we would code up. Back then, it was pretty easy to get good representative samples because women typically weren’t working. They were interested in doing projects and interested in helping, and we made it clear how they were helping manufacturers make better products for them by providing this kind of information. That relationship with the consumer in market research just doesn’t exist anymore, but it was what a lot of the industry was based on in the ‘40s, ‘50s, ‘60s, and ‘70s.

Measuring Product Success and Consumer Loyalty

Andrew Mitrak: The consumers were part of the panel who had these diaries. They would kind of punch in their purchases for the week?

Tod Johnson: No, they’d fill them in by hand with pencil.

Andrew Mitrak: Do you have any favorite examples of how this data was used? Especially in the early years of these manual diary entries.

Tod Johnson: New product introductions, which were elaborate test markets for the most part back then, was perhaps the most common use. The other use was it was a way to track demographics. It was a way to track loyalty. I can remember in the ‘80s, I did a lot of publishing about how consumers weren’t very loyal because we’d see their purchase patterns. That was at a time when advertisers and advertising agencies believed in loyalty. You were always talking about their loyal buyers. It didn’t really exist, but that was the basic premise. I know I was swimming upstream for a while with those publications, but today, everybody accepts that as the truth and the fact, and that there’s enormous brand shifting and much less loyalty than once was thought to exist.

The Growth and Diversification of NPD

Andrew Mitrak: You joined when it was a $300,000 revenue company.

Tod Johnson: $400,000. Give me the full credit.

Andrew Mitrak: sorry, I also want to give you credit because it grew to a lot more than that. How did the small kind of regional fi...