Hegarty merely clouds ad effectiveness issue

Better understanding of all marketing and advertising media is essential if advertisers are to reap long-term rewards from investment and build business on rock rather than sand, says Andrew Sharp. Andrew Sharp is marketing and communications

John Hegarty recently complained that much of the recent criticism of TV as an effective marketing medium was misplaced. Perhaps, he suggested, it was merely that some marketers’ disappointing results stemmed from their inability to use the medium to its best advantage. Logically, in at least some cases, he must be right. It is every marketing and advertising executive’s right to create commercial communications in any medium, however effective it might be.

But is it fair for the advertising fraternity to bounce all the responsibility for results back into the advertiser’s court?

It’s not so much that advertisers have decided TV (or any other medium) is ineffectual and are reallocating their budgets; more that they simply aren’t sure what works best. Since doubt leads to reduced or volatile budgets it is heavily in marketing service companies’ interests to work out how and when media “work”.

The key to being able to answer the question “what medium works?” is defining what “works” means. Many executives will tell you: “sales increases”. But the only real definition is business success – whether there is a positive return on your marketing investment over an appropriate period of time.

If you measure success over a shorter period, say 12 weeks, you may fool yourself. What will appear to work is price-off/ coupons/ extra volume/ loyalty bonuses. Sales will rise, and yet the long-term effect may be to create a class of price and deal-chasing customers which weaken market stability, brand loyalty and margins. Properly analysed, a short-term gain may turn out to be highly unprofitable.

Conversely, no immediate sales gains from marketing investment could represent good long-term business. In many mature, fiercely contested markets sales increases are unlikely. Holding the same volume and maintaining margin over a three-year period could be just as significant an outcome.

I was recently told of a UK retailer which had gained a 900 per cent return on its ad investment within four weeks. A stunning demonstration of the power of advertising? Perhaps not. More likely evidence of a highly volatile market. We know UK retailing is highly competitive – so if Retailer A can take share so quickly, Retailer B will quickly reply in kind. Net result: everyone loses.

Far more telling may be the performance of a mature but undramatic brand, which fends off competitive activity and yet maintains a useful price premium and margin over less-marketed brands.

Some “business-like” investments may be almost imperceptible in their effect. A recent sponsorship campaign, conducted on behalf of a brown goods company, aimed to move the brand image – and customer base – upmarket. The pay-off for migrating to a less price-sensitive customer base may be as long as ten years – but its ultimate yield could easily exceed that of flashier short-term sales.

I do have sympathy for Hegarty’s viewpoint. But it is not enough to transfer the moral responsibility for marketing efficiency back onto the advertiser. If we don’t develop a more sophisticated view of how investment in advertising or other marketing pays back we are going to fail clients as well as ourselves.

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