Is digital marketing killing brands?

Digital marketing has unleashed an obsession with efficiency, trading long-term brand-building for short-term ROI. We’ve put the golden goose in a battery farm of scientific efficiency, and it’s killing the brand, business growth and profit,” suggested Simon White of FCB West in a recent Ad Age article1. Strong words. And pretty controversial, given the continued, explosive growth in digital ad spending.

Data from IPA effectiveness research (below) does suggest that advertising effectiveness has fallen as the share of digital advertising has increased (although this decline did start in 2004, before the exposition of digital advertising).

Below I explore the issues Simon raises and suggest how brand owners might respond.

1. The problem with short-term focus

Simon isn’t against digital marketing per se. His issue is with the short-term focus on ROI that it has created. This short-termism leads to targeting only those most likely to buy NOW.

In theory, this tight targeting eliminates “wastage” that comes from advertising to people who don’t want to buy your brand right now.

However, the key to brand growth is driving penetration. And this means marketing to a broad target that includes light and non-users, as we have posted on many times. This builds ‘memory structure’, so that when these folk do decide to buy the category, your brand is top-of-mind.

2. Why advertise diapers to non-parents?

Simon uses a good example of diapers. “Why you would ever pay to advertise diapers to households without a baby”, asked Eric Schmidt, Chairman of Google’s owner, Alphabet Inc.

The reason Pampers does advertise broadly, not just to current parents, it to build fame and awareness. When a couple do finally have a baby, Pampers will stand out amongst the flurry of targeted advertising that will appear in their social media feeds or Google search results.

The importance of brand building marketing is shown by touchpoint analysis across the consumer decision journey done by McKinsey (below). ‘Traditional’ advertising remains the key driver of building initial awareness, the memory structure I referred to earlier.

3. The 60:40 rule

So, what should brand owners do?

Some practical advice comes from research done by Les Binet and Peter Field, using the IPA effectiveness data base. This shows that the most effectives campaigns have a rough balance of 60:40 between ‘brand-building’ marketing and ‘activation’ marketing.

This way, a brand can benefit from tightly targeted, digital marketing that drives short term sales. At the same time, brand building marketing creates distinctive memory structure that gives you a longer term advantage.

Without this strategic, brand building component, marketing becomes a battle of efficiency where cheaper own label brands are competing on almost equal terms. Simon quotes Motorola CMO Jan Huckfeldt, who said,”If you want to revive a brand, if you bank on social and digital, it’s not going to work.”

He also uses the example of Pepsi pulling its annual Super Bowl campaign in 2010, re-focusing the TV budget on a social media campaign called the ‘Pepsi Refresh Project.’ “It achieved millions of likes, re-tweets and followers, but Pepsi lost a painful 5% share in a year and returned to the Super Bowl,” he explains.

4. Brand-led business

My issue with the 60:40 rule is that it can lead to a ‘polarisation’ of marketing: ‘brand building’ on the one hand, and ‘activation’ on the other. This can lead to supposed brand building campaigns that are more like ‘sponsored entertainment’: flashy films with little or no link to the product or service being advertised. I posted here on a recent example from Uber that fell into this category.

We believe that all marketing should build the brand and help you sell more stuff (SMS), even if some effects are longer term. We call it ‘brand-led business’. A good example is Airbnb’s Live There campaign that I posted on here. This shows how to build emotional connection by telling a story that weaves in a product message.

On the other hand, the best forms of so-called ‘activation’ can build the brand, not just drives. Lay’s global ‘Do us a Flavour’ activation is now a digitally-led campaign designed to drive short term buzz and sales. But it also reinforces the brand’s taste credentials and distinctive personality.

In conclusion, digital marketing per se is not killing brands. The problem is the resulting focus on activity that drives short-term sales results, as Simon points out. Perhaps take time to review how you are investing your budget to check the balance between brand building and sales driving is right. And where possible, shoot for magic marketing that manages to build your brand AND your business.

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