Different industries (and even different advertisers) will have slightly different models. There is no one-size fits all.
The basic marketing funnel has also changed over the years (especially with the adoption of digital performance media) moving from a linear, top to bottom funnel, to a more complex, intertwined model.
But the basic premise really hasn’t changed … essentially, advertisers need to move people from a state of not being aware of their product or service, to getting said product/service onto the consumers’ consideration list, to actually converting them to purchase, and finally ensuring that they become loyal, repeat purchases.
It doesn’t really matter the journey that we take the consumer on, as long as we move them towards the ultimate goal of sales and retention.
But there is a growing problem!
We all know that consumers and the economy are under sever pressure! We have seen rampant inflation, rising petrol prices due to global wars and rumours of wars, load shedding, water disruptions, failing infrastructure, shortages of raw materials, and disrupted supply chains due to the Covid-19 pandemic.
Consumers are tightening their purse strings, and the result is that they are thinking longer and harder before making purchase decisions. Or in reality they can simply no longer afford to spend like they used to.
They are considering each and every purchase more closely and having to choose what they forgo, and where they can save money by switching to more affordable options.
This is putting businesses under increasing pressure with their stakeholders, who expect bottom-line growth, no matter what.
As a result, many advertisers are doing what appears to be a smart thing, but in reality it will ultimately have long-term consequences on their brands.
Not sustainable
In order to drive bottom line growth, many advertisers are moving away from upper funnel advertising where the objective is brand building, brand saliency, creating mental availability, and they are moving budgets into performance digital in an attempt to drive sales, conversions, and bottom-line growth.
Given how digital is sold by advertising agencies and publishers alike as the ultimate in measurability and performance efficacy, this seems like a smart move. After all, who wouldn’t want to use media platforms can guarantee leads and sales? It seems like the obvious solution under the current economic hardships we find ourselves operating in.
But this is a very short-sighted strategy. Whilst it might deliver gains in the short term, it is not a sustainable strategy.
The problem is this. We know from many years of research from people like Byron Sharp, and organisations like the Ehrenberg-Bass Institute for Marketing Science, that brands grow when the broad consumer category is targeted.
Short-term gains
Targeting existing customers, or “in-market” consumers, might deliver short-term gains but in the long run, this strategy does not grow a brand or position it for future success.
Why? Because if you are not filling up the top of the funnel, you are eventually going to run out of people to talk to. Once someone has bought your product or service, they may well purchase it again, but getting existing customers to buy more will not get you incrementally more sales. You need to bring new customers into your business to show real growth!
Performance digital is optimised to show ads only to people who are likely to respond / buy/convert. This tends to be a comparatively small group of people. People either want to buy your product or they don’t. If they see your ad and click on it to buy, great!
But two or three more repeat purchases from existing customer is not real growth. And if someone doesn’t want to buy product/service, the optimisation algorithms of Google and Meta will stop serving your ad to them.
Pool getting smaller
This means that the pool of potential customers is continually getting smaller. Brands who are not filling up the top of the funnel eventually run out of people to speak to, and the short-term sales gains will start diminishing.
Furthermore, if a brand is not spending time and effort positioning themselves against their competitors, even if an “in-market” consumer sees an ad urging them to buy now, if they know nothing about the brand and what it stands for (the reasons to believe) they will have little reason to click on the ad and to convert.
Yes, price is important and many consumers will buy on price alone, but it is not the only thing that makes people purchase a product or service.
Things like trust in the brand, brand personality, how the brand makes me feel, and simple brand awareness are monumentally important in convincing a consumer to part with their hard-earned cash!
Focus on the full funnel
So the bottom line is, brands need to focus on the full funnel, ensuring that they are creating brand awareness, brand love, brand salience, and mental availability – and this is where TV, radio, OOH play such a vital role (cinema and print have their place too depending on the brand and the objectives).
Then add in the lower funnel performance marketing to convert the consumer into a loyal customer and advocate, and you have a winning strategy!
Ignore the power of TV, radio, and OOH to do this job at your peril. Performance digital is important, and it works – but not in a vacuum! Focusing on the bottom of the funnel might work for a while, but there are only so many consumers actually “in-market” now, and eventually you will run out of people to buy your product!
Contributed by Richard Lord for the Advertising Media Forum board.
