Irrespective of whether the economy is in a good or a bad space, the current reality – which will continue into the future – is that brands need to fight harder than ever to find, convert and, importantly, retain customers.
The modern consumer has more options than ever before, which means that businesses have to find ways to promote themselves effectively. This comes at a cost and so businesses need to find and prove the best return on investment (ROI) for their marketing spend to the rest of the C-suite.
Easier said than done of course. It is often joked that Google knows everything, but even so, the tech giant has spoken about what they term the ‘three grand challenges’ when it comes to advertising effectiveness.
The first is causality, how do you accurately attribute a result to an action? The second is, how do you measure the short-term versus long-term return? And lastly, how do you bring all the metrics together to form a holistic view?
Layering metrics
There needs to be a great deal of introspection to arrive at a clearer understanding of those challenges. There is no one ‘thing’ to arrive at an answer. In other words, you need to start layering a number of metrics over each other and start testing some hypotheses to get closer to understanding real ROI.
Brands need to be prepared to test, and to test bravely. A few years ago Adidas accidentally turned off their search marketing in South America. They didn’t know they’d done it and the reason they were in the dark is that sales were unaffected.
They had believed their short-term media spend was driving their sales when, as it turned out, their sales were coming from brand advertising and not their over-investment in performance marketing. This was quickly rebalanced.
Be prepared to challenge conventions
The point is, brands must be prepared to challenge conventions in pursuit of a real understanding of what is and isn’t working. Adidas is just one example, Airbnb did something similar. They pivoted to strong brand building in place of paying for clicks and their performance increased.
To be clear, this is not to imply that performance marketing isn’t working for everyone, it very clearly is. But do you know with certainty what is working best for you, both short and long-term? You should, because you’re paying for it.
At this year’s Cannes Lions Festival, the majority of delegates were brand owners, CMOs and a significant number of CEOs and CFOs.
Laura Jones, the CMO of Instacart, the multi-billion dollar grocery delivery app in the US, spoke about taking the business down another road – by shifting from product and performance marketing-led growth, to one of brand-led growth.
A strategy often at odds with digital platform businesses – but driving growth is something she knows a fair bit about having been the global CMO at Uber for seven years.
Budget shift
She also noted the shift from doing away with separate brand and performance media budgets, and the realisation and subsequent shift that most of their previous creative efforts were focused on adapting for testability on digital platforms, not consumer need.
Her efforts were to ultimately prove to the rest of the C-suite that brand-led marketing does effectively and efficiently drive business performance, something she was able to do successfully having worked through a number of hypotheses.
Many marketers are moving away from the – in my opinion – short-sighted view that short-term efforts are the driver of sales. When I look at many of the short-term lead gen efforts I see as a consumer, I wonder how much of that spend is wasted.
We need to remind ourselves that short-term lead gen efforts are there to attract consumers who are already in the market.
About timing
I recently heard a radio campaign for a paint brand advertising, in drive-time, a competition linked to buying paint. The ad spoke about painting your house. But here’s the thing: How many people, on that day and at that time, were really about to go paint their house?
My sense is that this spend would have been better placed behind an equity building message that drives brand awareness. So that when it is time to paint the house, I might just remember this paint brand.
Obviously promotions play a very important role and this varies by sector, but brands should always ask: Is this the best use of my spend? Is a short-term play now the best for my ROI in the long term?
Once we understand that ROI over the long-term requires longer-term thinking, we must appreciate that ROI, to put it bluntly, depends on what you are measuring. We’ve all heard the saying: What gets measured, gets done.
Short-term play
So something like performance media, which is a short-term play, has the ability to measure the short-term in exquisite detail. Because of this, we find many businesses prefer and find comfort in it over longer-term initiatives that are far more difficult to measure.
So, what can a CMO or marketing director do?
Beyond the debate of short-term versus long-term metrics, start by asking yourself this important question: how do you challenge your organisation to be brave enough to go one step further and to delve deeper in gaining an understanding of what it is working to achieve?
How your organisation responds to that question will go a long way towards unlocking superior and indeed valuable ROI for your marketing spend. The risk is for marketers to play it safe when budgets are closely scrutinised. But when playing it safe delivers inferior ROI, it’s time to be bravely creative, not just in the work you do, but in how you test, measure and execute.
Robert Grace is co-founder and chief strategy officer at The Up&Up Group.
