As businesses grapple with economic and political uncertainty, the marketing sector has been filled with overwhelmingly positive sentiment in recent weeks. After a period of decline, some sources indicate that we are now seeing a resurgence in marketing effectiveness.
"If there's been a crisis in marketing effectiveness, it's over," says economist and Marketing Week columnist Grace Keith of ARC's Advertising Economics Research Database, which shows that effectiveness has improved over the past five years. Meanwhile, analysis of overall ROI data in the WARC database shows a gradual but steady increase in advertising ROI over the same period. This promising trend is reflected in Kantar's Ad Economics database, which shows a recovery in ROI after a decline during the pandemic.
While all of this is good news, history tells us that short-term market risk always comes when macroeconomic tailwinds bite. And recent reasons for optimism must be weighed against more sobering data, such as Dentsu's latest global ad spending report, which lowered its overall 2023 growth forecast from +5.4% in July 2022 to just +3.8% in December. According to WARC data, By 2023, more marketers plan to increase spending on performance marketing (46%) than branding (31%).
This threatens to restore efficiency in the industry and exposes the risk of brands turning to short-term methods. There is strong evidence that unbalanced brands struggle in the long run, and Kantar research shows that core sales decline when brands consistently deliver effective marketing (see graphs below).
In an increasingly complex media landscape, marketers are losing confidence that their company has the right media mix. According to Kantar Media Reaction's annual survey, trust in the marketing community has fallen from 59% to 52% in 2022. As the future becomes uncertain and media preferences become more fragmented, bridging this trust gap becomes increasingly important.
How can marketers resist the urge to use short-term strategies and make more confident investment decisions based on data that guides performance?
Maximum efficiency without reducing efficiency
It's an old marketing adage that efficiency is the enemy of effectiveness. Performance and its key KPI, marketing ROI, have been widely criticized as a guaranteed way to cut marketing budgets and limit a brand's growth potential.
Clearly, seeking efficiency without productivity is a futile pursuit. But there's another way: an opportunity for marketers to unlock performance by continuing the incentive. In the year In 2021, Oxford University's Side Business School conducted the largest academic media performance study in collaboration with Kantar, based on an analysis of 1,105 media companies in the Kantar CrossMedia database. The results were both informative and sobering. They showed that the average campaign with a different media allocation can be 2.6 times more effective in building brand equity.
At the same time, Kantar's touchpoint planning research consistently shows that a few touchpoints have the greatest impact on brands. Across all markets and categories, we typically see 20% of touchpoints providing 80% of product exposure.
This means there is a huge opportunity for brands to maximize efficiency without compromising effectiveness. A data-driven media investment strategy can help marketers maximize ROI by reducing unnecessary investments in ineffective touchpoints and redirecting budgets to those touchpoints instead.
The art of media neutrality
A meta-analysis by the Seid Business School concluded that no single media mix is optimal for all brand outcomes, and therefore no recipe for campaign success. However, a recent ISBA survey found that 67% of UK advertisers plan to reduce their TV spend, with a "clear trend towards digital delivery across all media".
While plans to increase the digital share of media spend are nothing new, the notion that one media channel is better than another to help brands survive an economic downturn is misleading. Unilaterally switching from one media channel to another can reduce brand effectiveness.
Brands have a great opportunity to maximize effectiveness without compromising effectiveness.
Are we forgetting the art of "media neutrality" that Marketing Week's Mark Ritson coined to describe a more agnostic, intuitive approach to choosing a media mix based on brand and campaign goals? A serious threat to effectiveness is that many marketing teams are not data literate. Kantar surveys of the global marketing community show that while 86% believe it is important to measure performance using short-term sales metrics and long-term production metrics, only 23% measure the impact of these combined results. Creating a holistic data ecosystem to improve marketing performance is a critical step toward a more effective strategy that builds strong brand equity and delivers short-term ROI.
Reach new heights of efficiency
For example, in recent years Virgin Atlantic partnered with Kantar to create a marketing performance analysis engine for brand promotion. We used innovation measurement, touchpoint planning, and economic modeling techniques to examine product impact across paid, acquired, and proprietary touchpoints. A comprehensive understanding of the impact of each touchpoint defines Virgin Atlantic's competitive advantage and laser-focused media strategy in 2022 as the brand launches its See the World's Difference campaign.
Jessica Marquette, the airline's performance manager, recalls: “After the pandemic, as consumers struggle to decide who to add to their travel wishlist, it was more important than ever to ensure our marketing budget was invested in brand building. . They say they have been delayed for several years. Working with Kantar has allowed us to see just how powerful our creativity is on the AdNow platform. We then expanded our plans for TV and VOD (video on demand) supported by social and cinema sub-channels using Connect and MediaLink research. The research also highlighted the power of our built-in touchpoints that provide new ways to showcase our brand.
The impact of the brand was huge. Virgin Atlantic's "demand volatility" (a brand's relative share of consumer demand determined by brand associations) grew by 2% in Q4 2022 compared to Q4 2021, outpacing other brands in category equity growth. Analytical models confirm the growing role of media investment, with media's contribution to branding doubling from 12% to 23% over the period, with heavyweights such as TV, VOD, film and social media contributing particularly heavily. Strong commercial results followed after Virgin Atlantic increased bookings on key routes.
The brand sums it up: “Building on the success of using data for our media strategy in the UK, we are bringing it to the US market. As consumers' media habits change, as part of our annual planning cycle, these studies provide us with actionable information to adjust and refine our future plans to maximize the effectiveness of our campaigns.
Virgin Atlantic's story is an instructive example of what can be achieved in difficult times. An informed, balanced and relevant marketing performance program can be a critical asset in helping marketers resist short-termism and ultimately build lasting brand equity.
Reducing the performance confidence gap
At Kantar, our goal is to close the performance confidence gap, determine where a company is on the "marketing performance maturity curve," and recommend three key steps to a more informed and effective marketing strategy.
Step 1: Lay the groundwork – Make sure the business is measuring meaningful data signals within the marketing ecosystem.
Step 2. Connect the dots . Build a comprehensive measurement system that links your entire marketing mix to short- and long-term results using a common performance language.
Step 3: A culture of effectiveness . Create a culture where the program regularly develops meta-learning skills and drives sustainable performance improvement.
Richard McLeod, Head of Marketing Performance Insights, UK, Kantar. Contact Richard.mcleod@kantar.com for more information.
