Chief financial officers and other C-suite executives tighten their belts during challenging economic times such as these, demanding precise return on investment for every rand spent.
Yet many decision-makers would be horrified to learn that more than eight out of every R10 spent on their digital marketing efforts to grow the business may well be going down the drain with zero impact, says M&C Saatchi Group South Africa co-founder and chief strategy officer, Robert Grace.
Grace, who also sits on the National Arts Festival board and a communications panel for the Rome-based United Nations Food and Agriculture Organisation, says without absolute clarity about where sustainable growth will come from, businesses run the risk of perpetuating the status quo and channeling the majority of their marketing budgets into strategies and tactics that may not work, and certainly don’t deliver any impactful return on investment.
Challenge assumptions about growth
Explaining what he means, Grace says: “Dr Karen Nelson-Field, who is a world-renowned researcher in media science conducted a study of more than 130,000 online advertisements and found that 85% failed.
“That failure arose from a finding that the attention threshold for advertising is 2.5 seconds. In other words, that’s how long an advert must hold attention for it to have any impact. 85% failed to reach that benchmark. Decision makers need to be equipped with this kind of information in order to challenge assumptions around how you go about finding growth.”
Grace says all indications point to economic conditions not improving radically any time soon, yet despite this businesses need a plan to ensure they not only retain, but also grow market share in a rapidly digitising world.
“Businesses need to know where sustainable growth and increased revenue will come from in three to five years. It reminds me of the mistake Adidas made, which turned out to be a blessing for the business.”
Switched off search
“Adidas,” he explains, “without knowing, switched off all its search marketing in South America a few years ago. No one noticed because sales weren’t affected and the business was still assuming that sales were attributed to its search marketing efforts.
“Only after the fact and re-thinking its attribution modelling did it learn that brand advertising was in fact driving sales in the region. Similarly, AirBnB slashed its performance marketing budget by 90% two years ago and chose to invest more heavily in brand education. A year later they said it was the right move and posted record profit,” he says.
Grace admits that this might be disconcerting to C-suites. “It’s the realisation that performance marketing may not always be working quite so precisely and may not be delivering consistent growth because it is too focused on the short term,” he says.
Moments that matter
“No one is suggesting that performance and digital marketing don’t work and should be discarded. This could not be further from the truth. They are extremely powerful tools when used in a broader marketing toolkit. But brands should demand marketing that performs at the moments that matter,” he says.
Grace says that understanding this is only the beginning of a journey towards sustainable growth. The Chief Commercial and Digital Officer of Unilever recently noted that achieving brand distinction is the challenge of the decade.
To tackle this, Grace says that businesses need to constantly question the status-quo and the assumptions around measurement. At its simplest, he says, if your brand isn’t grabbing the attention of your audience, you won’t grow.
Beyond simplistic metrics
Marketing efforts need to move beyond simplistic metrics such as reach and awareness alone and move towards understanding how you are building something termed “depth of brand awareness”, a connection with your brand that is deep and lasting.
“How do you go about achieving this? Decision makers need to ask themselves three questions: Do we have the most precise positioning in the market? Do we know, with absolute clarity, what we want to be famous for? And then, based on the answers to the first two questions: Are we certain our marketing efforts are performing at the moments that matter?”
Grace says that this is the starting point for shifting spend to deliver the growth businesses need and the return on investment CEOs and CFOs demand.
