Helping marketers win their budget battles in times of uncertainty, Paul Head talks up the power of brand advertising.
Half the money I spend on advertising is wasted – I just don’t know which half.” It’s a good and enduring line. And whether you attribute it to US retail pioneer John Wanamaker or UK industrialist Lord Leverhulme, chances are every marketer has had their nose rubbed in it at least once.
But it’s also a line that’s no longer true. Thanks to a solid and growing body of evidence, we’ve entered an era when it’s possible to make marketing highly measurable. However, leading authorities on advertising effectiveness, such as Peter Field, Rob Brittain, Les Binet and Mark Ritson, have made some startling discoveries – and not all fit the accepted narrative of the internet age.
Over the past decade, we’ve seen an increasing number of marketers shift their focus from long-term brand building to short-term retail activation, because it’s cheaper and judged on metrics that can be understood by non-marketers. The argument follows that it’s therefore more efficient. But research over the past couple of years has overwhelmingly shown that brand building should remain a priority, especially in a time of economic uncertainty.
Brand campaigns are the ones we remember. At the recent Axis Awards for creative excellence in advertising, Toyota’s iconic ‘Bugger’ TVC was screened. The audience was rapt, even though most people there must have seen it countless times since its debut more than 20 years ago.
According to Field’s seven rules of effectiveness, a strong brand campaign is one that:
- Builds mental avilability,
- Creates distinctive assets,
- Is emotional,
- Creavtive and,
- Has a wide reach,
- and is part od a balanced spend.
That last point is crucial. Marketers don’t necessarily need to spend more – they need to allocate resources appropriately.
Field suggests the optimal balance between brand building and retail activation is 60:40 in favour of the former. This varies by sector, but as a rule of thumb, it’s a good place to start.
The facts show that businesses that invest in long-term brand building, as well as activations, are more profitable than those that don’t. Dialling back on brand building can negatively impact long-term results and erode shareholder value. I’m a long-time champion of brand building.
Field explains the benefits in a mini-book called Why Aren’t We Doing This?. They’re benefits that are even more important as we navigate the global challenges triggered by the Covid-19 pandemic.
In a white paper commissioned by the Commercial Communications Council last year, Field and Brittain consider the many studies investigating best-practice marketing investment during recessions, from the Great Depression of the 1920s through to the more recent GFC. The consistent insight is that businesses that maintain or increase their share of voice (SOV) when times are tough enjoy much stronger growth during and after a downturn than competitors that don’t.
Those that master the balance between cutting costs to survive in the short-term and investing in the right areas for future growth have the highest chance of success. But, note Field and Brittain, advertising spend in New Zealand in April 2020 was down 38 percent year-on-year, even as customers had an unprecedented opportunity to negotiate favourable terms with media platforms.
Furthermore, they express concern about “savage” cuts forecast for marketing budgets. They warn it will be tough for CMOs to convince CFOs and CEOs that recession is a time to hold the line, and they issue this impassioned plea to marketers: “It will take guts, but it is your duty to argue for better than easy, but destructive, knee-jerk response.”
No one denies such conversations will be tricky. Although most sectors of our economy have rebounded more quickly than many predicted last year, the threat of a double-dip recession lingers.
There’s another cause for concern: in many countries, there’s a track record of advertising budgets being restored once recessions are over, but not in New Zealand. The white paper states that investment here has yet to reach its pre-GFC level.
So how do we convince our colleagues at executive and board level? Let’s start with three big numbers. A further study commissioned by the Commercial Communications Council, ‘Advertising Pays: Deloitte Access Economics Report’, found the advertising industry in New Zealand has a turnover of $3.5 billion, supports 44,000 jobs and contributes more than $6 billion to our GDP annually in terms of increased economic activity.
That’s massive. Properly funded, we can be a key driver of economic recovery once the world further gets the pandemic under control.
As Field and Brittain explain, productivity slumps during a recession, but advertising can create consumer demand for brands. As demand grows, firms improve their competitiveness through innovation and investment. The result is in an increase in productivity.
We can assure non-marketers that we’ve been here before. In almost every case, recessions caused by previous pandemics were short and the recovery swift.
We can also decry the theory that lockdowns permanently changed consumer habits (as online shopping became more than just a matter of convenience) and justified the increased use of digital activation. The white paper is clear: activation still can’t fill the top of the sales funnel, and still can’t generate long-term awareness and loyalty.
Field and Brittain find support in an essay by award-winning researcher Orlando Wood. During the first lockdowns in the US and UK, writes Wood, there was no general reduction in advertising’s ability to connect with audiences. Well-performing ads focused on empathy, human connections, humility, music and humour – all powerful brand-building tools.
Smart companies know this. Globally, Proctor & Gamble declared, “This is not a time to go off air”, despite knowing distribution issues would stop it fully meeting demand. Here, Pak’nSave accelerated a three-year plan to shift its focus towards brand activity over retail activity.
Field and Brittain are certain: the marketers who’ll be able to retain and perhaps even grow their budgets will be those who can demonstrate the value of the investment to the rest of the business.
According to a 2019 study by the UK Institute of Practitioners in Advertising, many non-marketers don’t understand the relationship between brand metrics and commercial value (in contrast to the tangible results of retail activation), so we need to interpret marketing speak for them. For example: increasing brand consideration grows the customer base and underwrites future cash flows; improvements in brand preference decrease price sensitivity and increase the brand’s contribution margin.
I repeat: we know they’re not easy conversations. The current economic climate is creating uncertainty, but the evidence proves this a great time to focus on brand.
The experts have given us a road map. Let’s make the journey together.
Recession to recovery
Peter Field and Rob Brittain have six pieces of advice for marketers during a recession:
- If you can continue investing in advertising, do so. Going dark is expensive to recover from and carries more risk during a recession.
- Don’t accept decline as an outcome. As a minium, retain SOV – you’ll still bank some savings as costs fall.
- See a recession as an opportunity for growth. If your rivals are cutting tehir spend, gains in SOV can be made without increasing brand adverising investment.
- Eploit weakness among your competitors. Most drivers of change in category demand affect all players more or less equally. Therefore, the investment in a brand relative to category competitors will determaine perfmance durinf the recession and the recovery.
- Keep the balance of brand and activation. In most cases, a shift in favour of brand building will be beneficial, as it works in the short term while delivering more powerful long-term effects, and is connecting with consumers better in the current envrioment.
- Put your budget behind proven brand-building strategies. Warm, emotional advertising drives stronger long-term business success. Collect the evidence and make the case for continuity wherever appropriate.
This article was originally published in the June/July 2021 issue of NZ Marketing. Click here to subscribe.