Mark Ritson: 10 lessons all marketers should take from Direct Line’s brand strategy

Direct Line Group’s brand strategy is best-in-class, as evidenced by its IPA Effectiveness Award win last week. Here’s 10 reasons why marketers should sit up and take note.

direct line

Last week was a busy one for marketers. In addition to the Festival of Marketing, the IPA was running Effectiveness Week, the pinnacle of which is the Effectiveness Awards.

Congratulations is due to all the winners, especially Audi and BBH for taking home the grand prix, but it was the Direct Line Group (which includes the Churchill, Privilege, Green Flag and Direct Line brands) and its gold for ‘best new learning’ that struck me as the most fascinating win of the night.

Reading its submission to the IPA I kept nodding and then nodding more. I certainly appreciated what Direct Line had achieved with its marketing and the way it measured success, but the lessons I took from the business’s journey are useful for all marketers. So here they are – 10 in total.

1. Price premium is often overlooked when it comes to brand building

Most marketers know that brand building delivers manifest rewards. You get lower acquisition costs, familiarity, more loyalty and so on. But in this commoditised age I think we are forgetting that perhaps the biggest and best advantage of brand equity is still that it lowers price sensitivity.

Provided a good marketer is running the brand and holds the line on price, there are significant profit advantages to be had from investing in brand and then reaping the margin-related outcomes that result.

That conclusion usually suggests strong brands deliver very large price premiums for consumers, cue a series of pictures of Chanel handbags and Rolls Royce grills. But it’s clear from DLG’s analysis that it’s more a case of slightly stronger brands delivering relatively small premiums for lots of consumers.

The “small budge” that Churchill’s brand equity gave many customers looking for auto insurance only delivered a price premium in the £10 to £20 range, but measured across tens of thousands of customers, this marginal superiority delivered spectacular profits.

2. Brand image and differentiation still matter

There is a worrying (and growing) trend to favour distinctiveness over differentiation. Clearly the advances in creating and reinforcing distinctive assets that make a brand “look like itself” have proven important and effective. But there is a current fashion among brand managers and account planners to focus on distinctiveness above all else and conclude that differentiation is an ancient myth.

Well, it is a myth if you use an old-fashioned, undergraduate definition of differentiation consisting three parts unique selling proposition and one part love marks. The more complex and realistic view of brand image and the way it can differentiate a brand versus the competition is that a few non-unique but important associations can be claimed by a brand, combined in a gestalt offer, and used to stand out and pull in customers.

That is clear from the DLG case and the company’s use of factor analysis and econometrics to show very clearly the empirical connection between brand associations like “helpful”, “reassuring”, “leader” and “proactive” and the link with driving consideration and then sales.

Clearly you need distinctiveness. Equally clearly you need differentiation too. And there is no reason one needs to come at the cost of the other.

READ MORE: How brands are creating a culture of marketing effectiveness

3. Digital is overrated

Despite marketers’ ongoing love affair with the new and shiny tools of digital and the ever upward snaking line that represents overall marketing spend on digital display and digital video in this country, it is abundantly clear that much of that spend is mistaken.

That is not to say that all digital is pointless or that it should be excised completely from the mix, just that most marketers have been bamboozled by YouTube and Facebook into spending too much with them.

Creativity still counts, probably more than media in most cases.

Between 2013 and 2017, DLG substantially reduced its investment in digital display and programmatic online video. The company did this not because of some burning hatred for digital but because it has the kind of advanced analytics and independent thinking that is sorely lacking from most marketing teams.

Crucially it also has a longer-term horizon upon which it reviews the value of various media; seen from this perspective digital loses out.

“We call ourselves digital conservatives but we are not anti-digital,” DLG concludes in its submission to the IPA. “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”.

Ouch.

4. TV is not dead, it’s still mighty

It’s a story we see from so many successful marketing companies but one that most marketers seem entirely immune to. TV is still marketing gold.

As price comparison websites, like Compare the Market, became more and more important to British consumers over the past decade most marketers of financial services dialled down the spending on long-term, brand building TV investments and switched their budget to shorter-term digital tools.

DLG did the opposite and kept TV at the heart of its media plan. In fact, in 2017 DLG’s share of TV spend was twice its share of the market – a reflection of the belief and its rival’s ignorance of the value of the big box on the wall.

The company even switched most of its TV budget from the more short-term direct response TV (DRTV) that usually airs during the daytime to brand building TV that doesn’t try and make an immediate sale but builds brand equity instead. DLG has no vested interest in doing down digital or testifying to the power of TV – that makes its observations both eye opening and, I believe, trustworthy.

READ MORE: Mark Ritson – Marketers are clueless about media effectiveness – here’s the proof

5. The long and short of it

I have become a very open and explicit supporter of Peter Field and Les Binet’s work which is, of course, based on a meta-analysis of many years of IPA Effectiveness submissions like the one from DLG.

They postulate an ideal balance for brands of 60% long-term, non-targeted brand building combined with 40% shorter-term, targeted sales activations. More recent research from Field and Binet suggests this 60/40 split varies depending on the nature of the category and the brand being operated, but that most marketers stray far too much to the short-term side of the equation.

You then need to look at where your weak spots are and what drives and diminishes the consumer’s movement from one stage to another.

There is growing push-back from many marketing commentators that Field and Binet’s conclusions are flawed because they come from the self-promoted, selective case collection that is the IPA Effectiveness submissions database. I find these criticisms valid but also petty, like a child at a party who sees another find the last Easter egg and then claims, with a snarl, that they do not even like chocolate.

DLG appear to have independently found a very similar pattern from its own experiences and now ensures that 45% to 50% of its budget is spent on long-term brand building across all its brands.

When you see DLG and other successful exponents of marketing strategy discovering essentially the same balance of the long and short of it, and using it to achieve such clear market accomplishments, it’s apparent that most companies are too short term in their approach and that the balance Field and Binet prescribe is exactly what is missing.

6. Creative still matters, remember?

As the battle for media supremacy becomes ever-more bitter, most marketers are besieged by studies and data proclaiming the superiority of TV/digital/influencers/radio/whatever over all the other alternatives.

In this ongoing gladiatorial contest we tend to forget that media is, quite literally, just the conveyor belt for the message. If that message is powerful and creative and attractive it will clearly work better than a message with none of the above.

And yet the intensity of the media debate in marketing has obscured this fact.

Where once we reviewed different media with the assumed same creative and content strength for the purposes of comparison, we now commission campaigns that are all about the media and treat the creative as almost an afterthought in the effectiveness equation. That is a mistake because creativity and content obviously count. Massively.

Media on its own is not enough or, as David Abbott once told Dave Trott: “Shit that arrives at the speed of light is still shit”.

For all the impressive analysis and even more impressive results, it’s clear from DLG’s submission that without hiring Harvey Keitel and running a long and consistently excellent series of ads for Direct Line none of the outcomes that it is now so justifiably proud of would have transpired.

Creativity still counts, probably more than media in most cases. I read somewhere that 70% of advertising impact is the content and 30% can be accounted for by the media that carries it. I am unsure if that is true, but it feels about right. And it suggests we are wildly overstating the media discussion and wilfully ignoring the power of creativity in our current industry analyses.

READ MORE: How Lloyds put effectiveness at the heart of marketing

7. Ebiquity are awesome

The consultancy does not pay me anything. I do not know or like anyone that works there. But whenever Ebiquity turn up at conferences or, as in this case, work with a client like DLG, it inevitably produces first-class work. I find it to be bullshit free. I find it to be empirically advanced. I find it to be practical. And, in a sea of ridiculous consultants, bent media advice and conference wankers, those traits make it incredibly attractive. If I were you I would work with them.

8. The funnel matters

One of the delights of the DLG submission is the way it is clearly structured around a simple but empirically founded consumer funnel. The DLG team know that awareness leads to consideration, which leads to preference to purchase and then to satisfaction, measured via net promoter score and other metrics. It measures these stages. It looks at what brand attributes and customer experiences increase or decrease the conversion rates between each stage.

There is nothing expert about any of this, well there shouldn’t be, but in a world where everyone wants to declare the funnel dead or try and warp it up with inane digital concepts, it is comforting to see a funnel as the backbone of brand strategy – just like it should be.

If you won’t take it from me, take it from the prize winning work of DLG, you need to build a custom consumer funnel. You need to populate it with data. You then need to look at where your weak spots are and what drives and diminishes the consumer’s movement from one stage to another.

In DLG’s case, for example, its emergency plumber ad featuring Harvey Keitel increased perceptions that Direct Line was a brand that would “do the right thing”. That association drove consideration among non-customers, which increased preference and purchase later on down the funnel. It’s simple but it’s gratifying to see such basic marketing concepts applied so properly and expertly.

9. Brand portfolios require brand skill but then deliver learning

My life in brand consulting is haunted by the companies that could not manage a portfolio of brands. It should be simple: different teams, different strategies, different executions all combine to delivery synergy. But usually the company in question cuts corners or starts to treat all the brands in the same way.

So it’s gratifying to see DLG not only use its data to manage multiple brands well, but also use it to justify why it needs multiple brands in the first place.

The reason more companies do not follow DLG’s example is simple: the marketers and the brand plans they build each year simply are not good enough.

And in an extra twist, because it has multiple brands in the same category it can use these different brands to learn more. Churchill can, for example, test its price premium threshold by offering choices versus Privilege, which the DLG team knows has less brand equity.

“We understand,” explains DLG in its submission, “that while there may be cost advantages to reducing the number of brands we support, we would lose out on the benefits of a ‘diversified portfolio’”. It’s rare to see such clarity or such ability to manage multiple brands. It should not be, but it is.

10. Zero-based budgeting is the highest signal of marketing skill

In my own consulting career I regard setting up zero-based budgeting for several large clients as one of my favourite and most satisfying experiences.

DLG is on exactly the same page. It has dodged the bullet of dumb-as-rocks advertising-to-sales ratios and reached a place where each year its four main brands and eight different products all present their marketing plans and the investment levels that each need for both short- and long-term success.

That’s an amazing advantage over competitors who do not really know what to spend or how to spend it and it sets up the always useful context of internal competition for marketing funds, which, in my experience, invariably leads to better overall marketing and improved effectiveness.

The reason more companies do not follow DLG’s example and also use the zero-based approach is simple: the marketers and the brand plans they build each year simply are not good enough.

So, a hearty congratulations to the Direct Line Group and the superb marketers who work there. Its efforts are exemplary in that DLG represents the very best of brand strategy and, hopefully, it can teach other marketers how to up their game too.

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Comments
  • richard stokes 17 Oct 2018 at 1:36 pm

    Hi Mark
    This is a thorough and enjoyable summary of some excellent long-term work from DLG. However, there is (for me at least) a glaring omission from your “10 reasons why…”.

    DLG are smart marketers and have employed some smart agencies to support them on this journey to brilliant ROI. I think both MediaCom and Saatchi (for the Direct Line brand) deserve some kind of mention in your piece, especially at a time when commentators and some of those “ridiculous consultants’ you mention when praising the role of Ebquity in this work, are lining up on a daily basis to thrash the motives of the agency.

    How about throwing some deserved props their way too? Who knows, they may have even ‘helped’ write the IPA paper.

    • Billy Ryan 17 Oct 2018 at 2:28 pm

      Hi Richard. I don’t disagree with your point – some great work has been done by both agencies.

      I think the lion’s share of credit goes to DLG again though. They have enabled this work by creating mutually beneficial incentive structures, allowing both advertiser and agency to thrive.

      This is still a real point of difference vs. other advertisers and the more important 11th lesson to take for me. It’s not sufficient to have great partners (which DLG do), you need to give them the right incentives and rewards too.

    • Robert Strohfeldt 23 Oct 2018 at 12:45 am

      Well said. Mark you can’t argue with the basics of your work, as I could have given you those 10 points 30 years ago.(well digital versus traditional was not an issue). Chartered Accountants ahem, Consultancies,have been trying to move on agency business for 30 years now and the digital media deceptions, have been a huge help to them. If you want communications strategy and creative, the consultancies won;t give it to you. It takes more than a PowerPoint presentation to move consumers. Media, data and what we once termed bottom feeders are now ruling the roost.
      https://www.realitycheckonline.com.au/home/2017/11/20/ai-separating-fact-from-science-fiction-99f5l-g85p3-5298c-p6ecl-24s8t-j3t2c-grn7y-d3zpe-3pkga-l56lw-8yex6-xgzmn-szkb6-ffxpe-xapdp-cw8ka-ryl9y

  • Mark Ritson 18 Oct 2018 at 3:03 am

    Yeah. It’s a very fair point. Totally agree. The Effectiveness Awards are cool because the agency and the client go in for it together but it was Ebiquity in this case because the submission was for analysis and learning.

    So plaudits to Mediacom and Saatchi too.

  • John Vickary (JV) AFAMI CPM 18 Oct 2018 at 4:05 am

    Always a good read Mark, and I particularly like your disdain for the muppets new to Marketing whose only contribution is to renounce the rudiments of our profession – in this case their trashing the funnel theory probably because they don’t understand it. Given their messianic focus on digital as the “new marketing’ one has to wonder what they will do when their favourite theory is shitcanned or folded into Marketing theory and practice as interesting addenda to the big marcoms picture.
    And thanks Mark for the quote from David Abbott – my sides still ache from laughing!

  • Al King 18 Oct 2018 at 9:44 am

    One of your best yet mate. Effectively a condensed “How To” text book. They deserve their award. As do you.

  • Steven Herron 22 Oct 2018 at 3:08 pm

    Marketing people are victims of the belief in their own superior intellect and cleverness. Truth be told the foundations of marketing remain the same. As you so astutely, and why I am one of your disciples, reveal it is finding the right balance among the available channels, branding vs sales activation, creativity, and delivering the right message at the right time in the funnel. Yes, the funnel still exists!

  • Jane Wiley 23 Oct 2018 at 3:20 pm

    Congrats on another excellent article bridging marketing fundamentals with new world technology and highlighting how important they are to each other to succeed .

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