As businesses grapple with the backdrop of economic and political uncertainty, the marketing industry has been buoyed by unexpected positivity in recent weeks. After a period of decline, multiple sources now indicate that we are seeing a recovery in marketing effectiveness.
The ARC database of advertising econometric studies shows effectiveness has been improving over the past five years, with economist and Marketing Week columnist Grace Kite proclaiming that “if there was a marketing effectiveness crisis, it’s now over”. Meanwhile, an analysis of aggregated ROI data in the WARC database over the same period shows a gradual but steady increase in advertising profitability. This promising trend is mirrored in Kantar’s own database of advertising econometric studies, which shows a recovery in ROI following a slump during the pandemic.
Whilst this is all welcome news, history tells us that when macroeconomic headwinds bite, the threat of marketing short-termism is never far away. And the recent causes for optimism should be weighed against more sobering data, such as the latest Dentsu global ad spending report, which slashed its overall growth forecast for 2023 from +5.4% in July 2022 to just +3.8% in December. WARC data also shows more marketers are planning to increase performance marketing spend (46%) than brand investment (31%) in 2023.
This poses a threat to the industry-wide recovery in effectiveness and highlights the risk of brands retreating into short-term tactics. There is indisputable evidence that unbalanced brands struggle in the long term, and Kantar studies show that if brands consistently favour performance marketing, baseline sales will erode (see charts below).
In an increasingly complex media landscape, marketers are becoming less confident that their organisation has the right media mix – Kantar’s annual Media Reactions study shows confidence amongst the marketing community dropped from 59% to 52% in 2022. As the future remains uncertain, and media choices continue to fragment, closing this confidence gap is increasingly important.
How can marketers avoid the temptation of short-term tactics and make more confident, data-led investment decisions that fuel effectiveness?
Maximise efficiency without sacrificing effectiveness
It’s an old marketing adage that efficiency is the enemy of effectiveness. Efficiency, and its primary KPI of marketing ROI, has been widely criticised as a guaranteed way of justifying marketing budget cuts and limiting brand growth potential.
Clearly, the pursuit of efficiency without effectiveness is a futile aim. But there is a different way – an opportunity for marketers to unlock efficiencies whilst continuing to push for effectiveness. In 2021, Oxford University’s Saïd Business School partnered with Kantar to conduct the largest ever academic study into media effectiveness, based on an analysis of 1,105 multi-media campaigns in Kantar’s CrossMedia database. The findings were both instructive and alarming in equal measure, revealing that the average campaign could be 2.6 times more effective in driving brand equity outcomes with a different allocation of media spend.
At the same time, Kantar touchpoint planning studies consistently show that a minority of touchpoints deliver most of the impact for brands. Across markets and categories, we typically see that 20% of touchpoints deliver 80% of the brand impact.
This means there is a huge opportunity for brands to maximise efficiency without sacrificing effectiveness. A data-led media investment strategy can help marketers to maximise ROI by scaling back wasteful investments in less impactful touchpoints, and instead shift budgets towards the touchpoints that are proven to deliver more impact for the brand.
The art of media neutrality
The meta-analysis with the Saïd Business school concluded that no single media mix is best for all brand outcomes, and hence there is no recipe for campaign success. Yet a recent survey by ISBA revealed that 67% of UK advertisers were planning to cut TV spend, “with a significant swing towards digital delivery in every medium”.
Whilst the planned increase in digital’s share of media spend is nothing new, the idea that one media channel is better than another for helping brands survive the economic downturn is flawed. Unilateral shifts from one media channel to another will most likely undermine effectiveness for brands.
There is a huge opportunity for brands to maximise efficiency without sacrificing effectiveness.
Are we forgetting the art of ‘media neutrality’ – a term used by Marketing Week’s Mark Ritson for a more agnostic and insights-led strategy of selecting the right combination of media based on the job-to-be-done for the brand and campaign? A considerable threat to effectiveness is that many marketing teams are data-poor. Kantar surveys amongst the global marketing community reveal that, while 86% agree it’s important to measure effectiveness via both short-term sales and longer-term brand metrics, only 23% measure returns on these outcomes in an integrated way. Establishing a holistic marketing effectiveness data ecosystem is a crucial step in guiding a more effective strategy – one that builds lasting brand value, while also delivering ROI in the short term.
Soaring to new effectiveness heights
As one example, Virgin Atlantic has partnered with Kantar in recent years to build a marketing effectiveness insights engine that is helping to propel the brand forwards. We used a combination of creative measurement, touchpoint planning and econometric modelling techniques to explore brand impact across paid, earned and owned touchpoints. A holistic understanding of the returns delivered by each touchpoint identified competitive edges for Virgin Atlantic, informing a laser-focused media strategy in 2022 as the brand launched the ‘See the World Differently’ campaign.
The airline’s effectiveness manager, Jessica Marke, recalls: “Coming out of the pandemic it has been more important than ever to ensure that our marketing budget is invested in building the brand, as consumers try to navigate who to choose for their bucket-list trips that have been put on hold for a couple of years. Partnering with Kantar helped us identify how strong our creative was through its AdNow platform, then utilising Connect and Media Link studies we upweighted our TV and VOD [video-on-demand] plans supported by secondary channels social and cinema. The study also highlighted the power of our in-flight touchpoints, providing new opportunities to showcase our brand.”
The brand impact has been stunning. Virgin Atlantic’s ‘Demand Power’ (the brand’s relative share of consumer demand driven by brand associations), increased by 2 percentage points in Q4 2022 compared with Q4 2021, outpacing the brand equity growth of all other brands in the category. Analytical modelling validated the increased role played by media investment – media’s contribution to brand almost doubled from 12% to 23% over this period, with particularly strong contributions from upweighted channels such as TV, VOD, cinema and social. Strong commercial results followed as Virgin Atlantic increased bookings ahead of plan across key flight routes.
Marke concludes: “Given the success of using data to inform our UK media strategy, we are rolling this out to our US market. As consumer media habits continue to evolve, having these studies as part of our annual planning cycle informs us with actionable insight to adjust and adapt our future plans, to maximise the effectiveness of our campaigns.”
In turbulent times the Virgin Atlantic story is an instructive example of what can be achieved. A data-driven, balanced and connected marketing effectiveness programme can be a powerful asset in helping marketers to defend against short-termism and ultimately build lasting brand value.
Overcoming the effectiveness confidence gap
At Kantar, our goal is to bridge the effectiveness confidence gap – diagnosing where a business sits on the ‘Marketing Effectiveness Maturity Curve’, and advising three key steps to a more informed and effective marketing strategy:
Stage 1: Establish the fundamentals – ensure the business is measuring meaningful data signals across the marketing ecosystem.
Stage 2: Connect the dots – develop a holistic measurement system, connecting the full marketing mix to short-term and long-term outcomes with a common language for effectiveness.
Stage 3: Culture of effectiveness – establish a culture in which the programme is driving capability development and sustained effectiveness gains, fuelled by routine meta-learning.
Richard McLeod is head of marketing effectiveness, insights, UK at Kantar. To find out more, contact firstname.lastname@example.org.