Money talks: why marketing budgets and mass reach matter more than ever in the digital age, reveals new IPA research from Peter Field and Les Binet
With the rise of owned and earned online media, many marketers have begun to question the need to spend money on paid media and mass reach. New IPA research on effectiveness in the changing media landscape, released today (31 October) by Les Binet and Peter Field, refutes this. Other key research highlights reveal the power of television, online video and VoD in driving effectiveness and the overarching need to maintain the 60:40 brand building/sales activation ratio to build profits.
The findings constitute the first part of a full report, to be published in 2018, designed to identify marketing best practice at a time of mature, experienced usage of digital channels. This first section provides analysis of the IPA Databank* and draws on IPA TouchPoints data to highlight the long and short term effects of new digital media and how they operate with one another and with more traditional media in order to achieve maximum effectiveness. It is a follow up to Peter and Les’s previous IPA reports Marketing in the Era of Accountability (2007) and The Long and the Short of it (2011).
The importance of marketing budgets and mass reach
The data shows that penetration is still three times more likely to be the main driver of growth and profit vs loyalty. As such, brands must focus on widening their customer base for which a broad reach of owned and earned communications and particularly paid media, and subsequent budget, are vital.
According to the research, brands that use paid media typically grow three times faster than those that rely on owned and earned media alone. However, adding owned media typically increases the effectiveness of a paid campaign by 13% and earned media by 26%. This is also true online: paid online media is much more effective than unpaid.
The other vital ingredient is emotion. Les and Peter's previous work highlighted the importance of emotion for brand building. The new analysis shows that video has a powerful effect on business performance given their emotive power and broad reach across online and offline.
Coupled with this, scale of medium is revealed as the primary driver of effectiveness. In particular, the findings reveal the impact of television and the impact of television and online video working together. Adding television increases effectiveness by 40%, making it the most effective medium. It is also the best for generating top-line growth that drives profit, with a 2.6% average market share point gained per year when using television advertising
Video drives effectiveness
One reason why television advertising effectiveness has increased is due to video on demand and online video working in synergy with live television. The research shows a 54% increase in the average number of very large business effects from adding television and online video together, versus 32% for television only and 25% for online video only.
Adding new digital media increases the effectiveness of more established media. For instance, the advent of digital outdoor appears to have more than doubled the effectiveness of Out of Home.
Renewed focus on long-term brand investment required to re-ignite growth
This latest analysis confirms findings from The Long and the Short of It that the most profitable campaigns have a 60:40 ratio of long-term brand-building media (broad reach, highly emotive) and short-terms sales activation (tightly targeted and information rich).
Despite this recipe for success, the latest findings reveal a sub-optimal focus on short-term activation strategies at the expense of long-term brand building and subsequent effectiveness. The average proportion of budget spent on activation objectives now exceeds the optimum, increasingly from 31% (average percentage of comms budget) in 2014 to 47% in 2016.
On top of this, the average share of voice of IPA cases are revealed to have been falling by 9 percentage points over a decade.
Says Les Binet, report author and Head of Effectiveness at Adam & Eve DDB: “This latest research provides empirical evidence that our industry is focussing too much on the short term. The pendulum has swung too far in favour of brand activation, yet for truly effective advertising, we must continue to invest more in long-term brand building.”
Says Peter Field, report author marketing consultant: “What underpins these new findings is that budgets matter more than ever in the current media landscape. To gain fame and top-line growth, brands need media with mass reach and scale, for which – as these findings reveal - television and video are the key ingredients.”
Says Janet Hull OBE, IPA Director of Marketing Strategy: “Here lies the proof that the digital transformation has helped make mass media work even harder. It also proves that while it is good to have earned and owned media, for top-line growth brands must invest in paid-for, mass reach.”
* The IPA Databank represents the most rigorous and comprehensive examination
of marketing communications working in the marketplace, and in the world. Over
more than 30 years of the IPA’s Effectiveness Awards competition, we have collected over 1,400 examples of best practice in advertising development and results across a wide spectrum of marketing sources and expenditures. Each example contains up to 4,000 words of text and is illustrated in full by market, research, sales and profit data.