To exploit the full potential of marketing in the changing media landscape, brand owners must strike a better balance between the long and short term. This is according to the IPA’s report, 'Media in Focus – Marketing effectiveness in the digital era', written by Les Binet and Peter Field, and released today (15 June 2017).
The report, which derives its evidence from the Databank of IPA Effectiveness Awards case studies, reveals three key ways agencies can improve the effectiveness of their campaigns:
• Adopt a longer-term strategy
Measured by their ability to generate large activation effects, short-term strategies can seem effective, but only when viewed over the long term are they revealed as highly ineffective: although twice as likely to generate large short-term sales activation effects than long-term cases, only 3% of short-term cases generated very large market share growth, whereas 38% of 3+ year cases did so.
This measurement approach can in turn falsely impact media choices, with the report revealing which media work best in the short term vs the long-term, as well as those that can do both (in particular, TV and online video).
• Focus on profit, not ROMI
The report reasserts the danger of targeting an efficiency metric, such as ROMI (also referred to as ROI) as it leads marketing to cut advertising budgets and reach only for ‘low-hanging fruit’ in the quest for growth.
While short-term campaigns comfortably exceed long-term ones in terms of ROMI, they underperform to a similar degree in terms of profit growth.
Instead, profit growth correlates most closely with broad improvements across the range of long-term business metrics, especially sales and market share growth, as well as brand metrics and penetration.
• Ensure the right balance of brand building/sales activation expenditure
Campaigns with activation objectives rose from 47 per cent of cases prior to the global financial crisis to 55 per cent subsequently. Over the four years to 2016, the figure reached 72 per cent.
Despite these findings, the report finds that the optimum balance of brand and activation expenditure remains at around 60:40 with evidence that deviation either side of this point results in a marked decline in long-term effectiveness.
Additional key drivers of campaign effectiveness, outlined in the top-line findings of the study released in October, and in further detail in the full report, assert the importance of investing in marketing budgets and mass reach to drive effectiveness, and reveal that:
o Broad-reach campaigns are still the best way to drive market share, which is in turn a key driver of profit.
o The digital revolution has increased the potential effectiveness of most forms of marketing, including traditional media for firms that invest at the right level, and in the right way, mass marketing is working better than ever.
o Video advertising, both on and offline, is the most effective brand-building form.
o Within that, TV is still the most effective medium and has been getting more effective, in part due to synergies with online video.
Says Les Binet, report co-author and Head of Effectiveness Adam&EveDDB: “The evidence from this latest study suggests that marketing is still primarily a numbers game, and that the main way brands grow is by increasingly penetration, not loyalty. Most crucially, however, the key message is that brands must rebalance their budgets towards brand building to maximise the potential of the changing media landscape.”
Says report co-author and consultant Peter Field: “By ignoring the enduring effectiveness truths of the changing media landscape businesses are undermining the tremendous potential of the new tools at the marketer’s disposal. To remedy this, marketers should return to a more balanced perspective on long vs short-term objectives and recognise that they will pull campaigns in different directions.”
‘Media in Focus’ updates the media-related findings of our two previous analyses of the IPA Databank: Marketing in the Era of Accountability (WARC 2007) and The Long and the Short of It (IPA 2013). Produced in association with Google and Thinkbox, it is the first part of a new series about Marketing Effectiveness in the Digital Era, and coincides with the launch of the IPA’s cross-industry EffWorks initiative (www.effworks.co.uk).
It is available to purchase, as a hard copy, here.
Against this backdrop, the IPA is taking the discussion around marketing effectiveness to a new level with its second Effectiveness Week (EffWeek) w/c 9th October this year. This year’s thought-leadership conference on 10th October will reveal new research identifying the spectrum of ways marketing is taking action, in addition to the new whitepapers and interactive workshops with clients and agencies.