Advertising Effectiveness for dot coms. By Les Binet and Peter Field
Christmas 2018 brought not just a flurry, but a veritable avalanche of TV brand advertising for online brands. The deluge can’t have escaped any TV viewer’s attention, and with good reason. Amazon, Google, eBay and Uber spent £15m on TV in December alone, and there were many other online brands competing for our attention.
But this was not just a Christmas blip. For several years now, the big tech companies have been major investors in TV, both here and in the States. These days, even Facebook advertises on TV.
So, what’s going on? These are the very companies that are reputed to understand advertising effectiveness in exquisite detail. With their rich data and world-leading analytics, we might have expected them to focus on data-driven sales activation media. Isn’t TV the medium they are advising others is a waste of money?
Either they’ve been reading our new book, Effectiveness in Context, or, more likely, they’ve worked out for themselves that online businesses need offline advertising, and they especially need the extraordinary brand-building powers of TV.
The effectiveness sweet spot
In Effectiveness in Context we examined how the rules of effectiveness vary for different brands in different situations. In particular, we looked at how context influences the ideal balance between brand-building and sales activation, adjusting our ‘60:40 rule’ for budget allocation.
This rule – derived from extensive empirical effectiveness evidence – demonstrates that businesses need both brand advertising (broadly targeted) and short-term sales activation (tightly targeted), and that these should generally be balanced 60:40. Too little brand building and the brand weakens, undermining response to sales activation messages. Too little activation and the brand fails to exploit its full sales potential. So effectiveness is all about balance. We always knew that the 60:40 sweet spot was an average across all brands and that it was likely to shift in different contexts. Our latest research now confirms this and offers new guidance on how to get the balance right. The key principle however, in all contexts, is to ensure that brand and activation effects are balanced. And that means focusing on whichever is the harder task; so if activation is the easy part, the focus should shift towards brand building. But if brand building is easy, then the focus should switch to activation.
It turns out that the digital revolution has had a significant impact on this optimum balance, but not in the way most marketers think. New digital channels have generally made activation easier, especially for online brands.
In this context, buyers tend to leave conspicuous data trails as they approach purchase, and although the path from exposure to sale may only be a few clicks long, there will be opportunities to serve activation messages. With activation made this easy, the predictable response in many companies has been to put ever more resource behind it, but our research suggests that this is a mistake. Online businesses should be using these efficiencies to save money on activation, and investing that money instead in building their brands; a much harder task in today’s crowded and competitive online markets. In this context, then, the sweet spot moves closer to 75:25, brand advertising to sales activation.
One of the reasons online brands’ sales are easier to activate is that buyers are more likely to have done some online research before hitting the buy button. This creates additional data and opportunities to serve activation messages.
But online research is not only a feature of online purchasing: it has been growing for offline brands as well. The growth of online research and e-commerce, together with other marketplace trends that make activation easier, have worked together to generate a strong pro-brand trend in the optimum balance across the whole economy – whether online or offline.
Balance in an imbalanced world
So, in most contexts marketers should be tilting ever more towards brand building. But are they actually doing this? In practice, they are doing the very reverse, and with disastrous consequences; typical effectiveness levels are being driven ever lower.
In most contexts marketers should be tilting ever more towards brand building.
This scenario has, however, created fantastic opportunities for brands smart enough to strive for balance in this imbalanced world. The 2018 IPA Effectiveness Awards case studies from the Direct Line Group and the AA are both magnificent demonstrations of what can be achieved. Both businesses operate in largely online markets and both chose to tilt strongly towards brand building, with remarkable results.
And both chose TV as their primary brand-building channel because of its proven potency for them. As the Direct Line Group reported in their case study: “We could find compelling evidence for both the long-term and short-term effectiveness of media lines such as TV and radio. By contrast, our research did not support continued investment in a number of programmatic digital media lines even on a short-term basis.”
Presumably, tech giants like Amazon, Google, eBay and Uber have already reached similar conclusions in their own research. Why else did they spend Christmas piling into TV?
The recent media choices of the tech giants reflect a growing realisation amongst online businesses of the power of TV. They are proving that we have been led astray by the zealous advocates of online-only ‘digital’ media, but they are also showing us the way forward. And where Silicon Valley leads, the rest of marketing will eventually follow.So perhaps 2019 is the year we reach “peak digital” (to use Nick Suckley’s phrase) for branded businesses? It would be a welcome development – and hopefully it would not escape the attention of those digital advocates; they might even start noticing the compelling effectiveness evidence that already surrounds them.