Research: Binet and Field on marketing effectiveness.
Les Binet and Peter Field recently co-authored a study for Effworks in association with Google, ThinkBox and IPA, delving into media choices and marketing effectiveness in the digital era. Here are the key takeaways.
On young people and social media.
Much like our own JP Hanson, Binet and Field make a point of not making sweeping generalizations regarding generational groups. As they point out, marketers today often assume that what young people do today, everyone will be doing tomorrow. Of course, it’s not as simple as that, because people change as they grow older. When it comes to media consumption patterns, they partly reflect when people were born (cohort effects) and partly where they are in their lives (lifestage effects), but also of course where they live.
Young people spend more time on social media than their parents do, primarily because they have more active social lives. Similarly, they watch less TV (albeit not as much less as people tend to believe), primarily because they spend more time out and about.
Social media remains largely overrated, however, not merely based on engagement rates. Based on their research, people who visit a brand’s social media sites tend to be much more brand loyal than other people, but this does not mean that social media cause brand loyalty to increase. Quite the reverse turns out to be true: people engage with the brand on social media simply because they are already loyal.
Social media’s (in)famous virality effect is also exceedingly rare, as most pieces of content disappear without a trace. Only 4% of IPA campaigns worked by pure viral transmission and IPA data shows that brands only tend to get significant levels of earned media online when they have both owned and paid media in place as well. In other words, to get people talking and sharing, brands need to provide great online content and promote it with some kind of paid advertising.
In particular, paid online advertising is much better at driving the top-line market share growth that is so crucial to profit (this is as true of social media as it is of other online marketing). In fact, according to the IPA Databank, when it comes to social, it is twice as effective as unpaid.
On channel choices.
As we have established previously, Binet and Field notice a clear trade-off between brand and activation effects. Channels that are good at one tend to be less good at the other.
Campaigns that include TV tend to be significantly more effective than those that do not. The data suggests that TV increases overall business effectiveness by around 40%. TV advertising has a particularly strong effect on market share. Brands that use TV tend to gain market share around twice as fast as brands that do not, and again the difference is highly significant. It should be noted that this is not just a budget effect. Share of voice analysis shows that campaigns that included TV produced much bigger market share gains for a given level of share of voice.
Press advertising, though many may consider it a particularly antiquated medium these days, not only still works, but has become more effective over the last ten years. Campaigns that include press in the schedule tend to be more effective than those that don’t, and share of voice analysis again confirms that this is not a mere budget effect – campaigns that use press are more efficient too. Consumer magazines in particular seem to produce surprisingly big effects, given their share of the budget.
Radio remains a strong medium with mobile and online streaming extending reach, making it an effective advertising medium. Share of voice analysis once more shows that this is not just a budget effect. Radio significantly increases SOV efficiency, basically making budgets work harder.
Out of Home does not match the effectiveness of neither TV nor print or radio, but has improved since the introduction of Digital Out of Home (which is much more effective than traditional posters).
Online Display has modest effects and should mainly be used as an activation tool, though it can increase effectiveness by around 12% if added to a larger media mix.
The lion’s share of online activation spend, however, is on search, though the actual figures may be even higher than the IPA data may suggest as search often sits in a completely different silo from the rest of the marcomms budget. It is easy to understand why – it is a very effective sales activation channel (of course, search is not so much advertising as physical availability, so this is not in the least surprising).
On short vs long and destructive trends in effectiveness.
Tight targeting is believed to be more effective, but in fact is only associated with short-term effectiveness.
Unpaid media are regarded as efficient substitutes for paid media, but this is false. As a matter of fact, paid media are becoming more important to effectiveness over time because so too is budget.
Activation is increasingly believed to be the most effective use of advertising, which means that more money is put into activation channels. Again, as we have seen, this is having the opposite effect – it is reducing both effectiveness and efficiency. This is also clearly visible in the data. The average effectiveness of IPA case studies (measured as the number of very large business effects reported) had been rising in the early years of the millennium, but has now fallen to its lowest ever level on a ten-year rolling basis. The increasing efforts to drive sales activation are being achieved at the expense of maintaining the health of brands, as long-term profitability and baseline growth sales are undermined.
If one measure success in the short term by activation effects, it may appear that short-term campaigns are highly effective. When viewed over the long term, however, they are revealed to be highly ineffective. In other words, measuring success in the short-term leads to numerous important false conclusions about effectiveness.
Consequently, one must use metrics to evaluate that are appropriate for the strategic intent. The relentless shift towards short-term metrics in recent times promotes only the activation use of the format, undermining its potential role as a long-term tool. This is now significantly influencing the practice of marketing, damaging developments and, perhaps most importantly, results.