INSIGHTFUL AND ENTERTAINING Advertising Speaker

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Now, in regards to the video that you just saw combining Venus the Bananarama song and Venus the brand of razor blades, I will introduce this talk with one observation. I do not remember any online ads that I saw yesterday. But 30 years after seeing that TV advertisement, I still want to shave my legs whenever I hear the song Venus. And in case you have not noticed, I’m a guy.

So, in that context, I see many marketers today facing many difficult questions when it comes to the media we use. Should we get quick sales or build a brand? Should we be digital-only or does traditional media still have a use? Should we target people individually or reach all buyers of the broad category? Well, I will answer those questions by arguing today that we are seeing the tyranny of both online direct response and short-term results that are hurting our long-term advertising effectiveness. Then, I will use the latest research to show that we need to get out of our bubble and rethink our approach to media planning today.

But first, a brief introduction. After careers in both journalism and marketing, today I write The Promotion Fix column on marketing and media for The Drum and travel around the world to speak about what I report. I use my dual experiences to discuss the marketing industry with the mindset of a neutral journalist with nothing to sell except his ideas.

So, here we go.

I will begin with a little theory. There have always been two main advertising tactics: brand advertising and direct response. Brand advertising builds brands among all potential category buyers for long-term benefit. Direct response, or direct marketing, gets immediate, trackable responses from targeted people.

The benefits of brand advertising are that it is creative and memorable. It’s subtle and not too annoying. People tolerate brand advertising because it is sometimes even entertaining. Again, I remember TV ads that I saw thirty years ago. I do not remember any Google AdWords or Facebook ads that I saw yesterday. But the negatives of brand advertising are that it can be expensive and not quickly and easily measurable. And that rubs a lot of online marketers the wrong way because they are used to immediate, measurable results in some dashboard.

One benefit of direct response is that it can be cheaper. Just think about how often we see online marketers wondering how to do “quick, cheap hacks” for something. Direct marketing is also trackable in a way that is impossible to do in brand advertising or PR campaigns. But the most important negative aspect of direct marketing is that it is annoying. When a campaign is cheap, the ads will also be cheap. People tolerate brand advertising but hate direct marketing. And that negative impression, so to speak, is part of the negative aspects of online advertising.

Now, over the past 20 years, online marketing has gone all-in on direct marketing. Most online ads today are actually direct response and not advertising. Ad tech such as Google and Facebook is all the rage, but those platforms are largely just new ways to do direct marketing.

Now, let’s meet Les Binet and Peter Field. They are two Brits who are probably the smartest marketing academics in the world. They have released many insightful reports based on IPA data from ad campaigns in the UK going back many years.

Some of their important findings compare the results of brand advertising and direct response. Every time that you do a direct response or sales activation campaign over PPC or social media, you will see a quick spike in revenue — the line in yellow. But you always hit an upper limit. You don’t see the results of brand advertising — the line in brown — for months or even years. When you add the two lines together, you will see how both brand advertising and direct response together lead to the best long-term results because activation brings quick but small results while advertising brings slow but large results.

Why is that important? Remember: company valuations — real ones, not those for companies like WeWork, are based on future cash flows, not present cash flows.

Here is a metaphor.

Direct response is picking the fruit — those people have grown, are ripe, are down in the funnel, and ready to buy. Brand advertising is watering the tree so that more fruit will grow in the future. As Rory Sutherland has said, direct response tells people what to do so they will buy today, and brand advertising tells people what to think so they will buy tomorrow.

But here’s how everything went wrong. This part of Binet and Field’s chart at the top right explains the rise of short-termism today. Throw money at direct response or activation, and you see quick, albeit small, results. Start a brand advertising campaign, and you see nothing at the beginning. No dials move. No numbers in dashboards go up. It seems as though the money you spent just disappeared because you have to wait for months or sometimes even a few years to see the big results in the bottom right photo. But Google and Facebook now have a duopoly on online ad spend because they got marketers addicted to quick metrics — but those quick metrics are not always the best metrics.

But let’s go back to Binet and Field’s research. So, to build a brand for the long term and get sales in the short term, they found that the best tactical media spend allocation on average is 60% to brand and 40% to direct response and sales activation.

Now, here is something completely new that few have seen. LinkedIn commissioned Binet and Field to do the same research for B2B. They exclusively released it to me for my column in The Drum. As I said, the overall average is 60 / 40 in favor of brand. But the best mix in financial services, for example, is 80 / 20 for brand. But it’s more even and a little opposite in B2B — 54 / 46 for activation.

But for any brand, the most effective practice is to spend more and more on brand and less and less on activation as time goes on. If anyone would like ​to see ​my column with all of th​is new, unprecedented and​ major research, just email me and I’ll send you the link.

But despite the importance of building a brand over the long-term, Google and Facebook are still pushing us to track people, collect their personal data, and hit them with cheap direct response. They want the world of Minority Report.

Now, a lot of marketers watch that and think, “Wow! When can we do that?” But remember: The 99.9% of people who are not marketers saw Tom Cruise getting scanned for ads and were horrified. Remember, the world in Minority Report is a dystopia. It is a reflection of everything in the world going to hell — including the marcom.

Because if you ask the average marketer, they will say that we should be digital-first or performance-first or social-first or first-first or whatever. But people who say that live in a bubble of their own creation.

Now, say you spend eight hours every day on social media for your company. Everything you read is about social media. Every conference you attend discusses social media. You would have tunnel vision and think that social media is the only medium that matters. Other channels would be the furthest things from your mind – and you would start to assume that everyone else thinks and acts the same way. Well, I have some bad news: You and me and every other marketer are not normal.

93% of marketers use LinkedIn. Among normal people? 14%. 81% of marketers use Twitter. Normal people? 22%. 68% of marketers use Instagram. Normal people? 18%. Remember: The first rule in marketing is that we are not the market. Do the research and be truly customer-facing because the best use of social media might just be selling something to marketers.

As an example, I compiled a list of the top Facebook pages here in Slovenia. Here were the top three. Surprisingly, this is the first time that a local consumer brand made the top three in the countless countries I have studied. Usually, I have to go down the list to number 30 or 40.

Cockta. In a country of 2 million, it has 655,000 followers — meaning that 33% of the total market follows this page.

But that’s being generous because we don’t know how many of those followers are fake.

Roughly 6% of a page’s followers see an organic post, leaving 39,000 people. Only 0.22% will engage with that post, leaving us with 1,400 people.

So, only 2% of the total market sees organic posts. Only 0.02% of the total market engages with posts. And remember: this is the very best result I have seen in every country I have studied. So, is social media truly as effective as people think? Here are two exercises.

First, go and look at your past 100 actions on your personal Facebook account. What percentage involved the pages of brands, and what percentage involved friends, family members, and other flesh-and-blood human beings? Second, enter a supermarket. Ask random people – normal people, not marketers – if they want to “have a relationship” with any of the products in their shopping carts. They’ll probably punch you in the face for being a pervert.

In general, people use social media to catch up on the news, connect with friends and family, and follow celebrities, entertainers and sports teams. The last thing that they think about is brands.

Because contrary to popular opinion, traditional media is not dead — far from it. According to Nielsen, the average adult in the US spends half of his media consumption per day on live TV and radio — what you see in the blue and purple on the left.

And despite all of the new platforms over the past ten years, the number of hours of TV consumed on a TV has remained flat at around 3.75 per day.

Moreover, live TV consists of 40% of all video consumed in the US. YouTube is second with 16%, and Facebook has a paltry 2%.

What does that mean? Pivotal Research Group found that Americans, on average, watch eight times more TV than YouTube videos. Clearly, TV is not dead and we should not be online-only or even online-first. We have to be smarter than that.

Because more and more chief marketers today are realizing that traditional media is still important and that being online-first is not the best answer.

After all, broadly targeted advertising on TV is always extremely effective. Here is the best ad from last year’s American football Super Bowl. If you don’t know, Tide is a soap detergent for washing your clothes.

Of course, not all media is created equal. Some channels are better at doing certain things than others. Let’s take a look.

TV is the media most likely to make people laugh.

Or feel emotional.

And most importantly, people trust the ads that they see on TV. What’s at the bottom of the trust list? Search and social media.

Why is TV so effective? Compared to YouTube and Facebook, TV is the media where the most people watch the ads actively. On Facebook, almost all people see the ads passively. And YouTube is the media where the most people do not see the ads at all. If I’m listening to music on YouTube, I’ve got the sound on while I’m doing something else and not even looking at the browser window with YouTube.

So, most people actively watch ads on TV, and it is also the media where the ads fill 100% of the screen. YouTube is 30% and Facebook is 10%. Don’t discount the effect of screen coverage.

Because of all of this, we see that running an ad on YouTube produces short-term advertising strength of 116 out of a basis of 100. Facebook, 118. But TV is 144.

And speaking of making you laugh.

But of course, it would be foolish to spend money on only television and ignore all other media.

The age-old advertising question: Is it better to show an ad once to two people or twice to one person? The best research yesterday and today has always concluded that the answer is the former. Each additional time that a person sees an ad, the persuasive power decreases. It has a diminishing effect. Reach is much more important than frequency and is the primary way that brands grow.

And that is another reason why social media is not that effective. Those who follow you are those who already buy from you. The whole point of reach is to communicate to people who do not buy from you. That’s how you grow.

But of course, again, we want to build brands tomorrow but also sell stuff today. So, should we target individuals or all potential category buyers? Yes. Should we use direct response or brand advertising? Yes. Should we think in the short-term or long-term? Yes.

We have a set of two goals that need to work together, so we need two strategies that are completely different but still occurring at the same time. For each goal, we need to think about our tactical media mixes because — again — different channels are better at different things. To build long-term brands, you need broad reach and mental availability that are driven by emotion. For direct response and sales activation, you need to target the people lowest in the funnel with rational information and communicate physical availability.

It’s important to note that many in the B2B and online worlds especially think only about the right and never about the left.

Here is Binet and Field’s plot of how each media performs. At one end, sponsorships are not good for immediate activation but they deliver the greatest long-term brand effects. Online video, news coverage, TV, and radio are similar. But closer to the activation end of the spectrum, we see print media inserts, SMS, e-mail, paid search, and social media.

Here is a similar map from the company Analytic Partners. Short-term efficiency is the X axis, and long-term efficiency is the Y axis. But remember that efficiency is not the same as effectiveness.

Analytic Partners also shows whether a given media is best for short-term or long-term results. Short-term is red. Long-term is blue.

So, what should we do? Of course, every company and brand should have a different media mix. That’s what makes the practice so interesting but so frustrating. I would generally advocate what I call a TV-plus media mix. For any large consumer brand, TV is a no-brainer and the obvious place to start. The interesting part comes when deciding whether to combine TV with print or online video or social media or outdoor or something.

Here’s one example. TV plus online video leads to greater business effects and market share gains than using either one alone. The same may hold true for TV plus other types of media, but the planning needs to determine what that should be.

Analytic Partners also found that combining offline and online leads to the greatest benefits — and that combining television specifically with online video maximizes results virtually in every industry.

So, reach is important and different media are best for short-term and long-term goals. The obvious solution must be to throw money everywhere online and offline, right? After all, most studies show that greater benefits come with the use of more channels. See the left.

If only it were that easy — first, your budgets are not infinite. Second, interest in products rapidly declines and annoyance increases when people see an online display ad, for example, more than twice. See the right. And remember the difference between gross reach and net reach. If I see an ad on TV and Facebook, the gross reach is two but the net reach is one. The greatest brand growth comes from increasing net reach. And that is one of the main problems in media planning: maximizing net reach while avoiding duplication. If anyone can solve that, you will be a very reach — sorry, rich — person.

But still, my own opinion is skeptical of online platforms such as Google and Facebook because of what I call the ad tech middleman.

Online marketers have always assumed that reaching perfect individuals returns better results than reaching all potential category buyers. But that has never been proven, and I think I know why. Ad tech did not cut out the middlemen. Ad tech merely replaced one set of middlemen with another.

Based on data from the World Federation of Advertisers, we get only 25% of the value for which we pay because any ad must be sent through agencies, exchanges, and platforms within microseconds before it appears in front of consumers. And every agency, exchange, and platform takes a cut and marks up the price. In effect, advertisers pay $4 for $1 of advertising. But that is only the beginning.

Let’s look at it the opposite way. An advertiser starts with $1. After ad tech middlemen, ad fraud, non-viewable impressions, the few impressions actually seen by human eyeballs, and the few who actually watch an ad for more than three seconds, we get three cents of real value for every dollar that we spend. Online ad platforms such as Google and Facebook are good for direct response, but I’m very skeptical of their advertising and brand building effectiveness.

That is average data. Here’s a real world example. The Guardian bought its own online ad space in a test. And what happened? The Guardian got only 30% of the money that they paid to themselves.

And why is that? In general, I agree with Nielsen’s new CMO Report, which found that traditional media is best for brand building at the top of the funnel, and online media is best for direct response and sales activation at the bottom of the funnel.

But if I could summarize with one thought, it would be this: While we need sales today, we must never forget in our media planning that long-term brand building will lead to the greatest long-term results. Ad tech platforms and the marketers who use them focus so much on how to transmit and target ads that they never think anymore about how to create good ones.