Previous research and this

How does the context

the brand operates in
influence strategy?

500 digital era for-

profit cases
120 not-for-profit
cases
 Two ways marketing works
Short-term sales activation Long-term brand building
 Two ways marketing works
Brand building
Long term sales growth
Sales activation
Sales uplift over base

Short term sales uplifts

Short term effects dominate ~6 months Time

Source: Binet & Field 2013
Why do we still need brand building
advertising?
 You need brand and activation
2.5 2.4
Number of very large business fx

2.0
2.0
1.5
1.5

1.0 0.8

0.5

0.0
Low Brand, Low Low Brand, High High Brand, Low High Brand, High
Activation Activation Activation Activation
Balance of brand and activation effects
Source: IPA Databank, 1998-2016 for-profit cases, based on scale of activation effects and number of brand effects
 Brand building boosts short-term effects
45% 42%
% Reporting very large activation fx.

40%
36%
35%
30%
25%
20% 17%
15%
10%
5%
0%
0 1 ≥2
Number of very large brand effects reported
Source: IPA Databank, 1998-2016 for-profit cases
The power of brand building: Direct Line
insurance
Direct Line TVC
 Direct Line growth

Source: Direct Line IPA case study 2016

 Why TV?
“We could find compelling evidence for both the long-term and
short-term effectiveness of media lines such as TV and radio. By
contrast, our research did not support continued investment in
a number of programmatic digital media lines even on a short-
term basis.”
Direct Line 2018 IPA case study
The principles of balance
 Brand-Activation balance matters
Peak at 62% brand

20% loss of effectiveness

Brand remains strong

56% loss of effectiveness

Brand weakens

Source: IPA Databank, 1998-2016 for-profit cases

When activation is easy, up-weight brand
100%
90%
Optimum Brand/activation split

80% 39 31 Activation
70%
60%
50% Brand
40%
30% 61 69
20%
10%
0%
Low consideration High consideration
Nature of purchase decision
Source: IPA Databank, 1998-2016 for-profit cases
 When brand building is easy, up-weight
activation
100%
90%
24
Optimum Brand/activation split

80%
45
70% Activation
60%
50%
40%
76 Brand
30%
55
20%
10%
0%
Low High
Role of emotions in purchase decision
Source: IPA Databank, 1998-2016 for-profit cases
Flexing the rules by context
 Online research makes activation easier
100%
35%
32% 90%
26

Brrand/activation optimum
30% 27% 80% 45
V Large Activation fx

25% 70%
60%
20%
50%
15% 40%
74
10% 30% 55
20%
5%
10%
0% 0%
Low research High research Low research High research
Brand Activation
Source: IPA Databank, 1998-2016 for-profit cases
 Online selling makes activation easier
100%
45%
40% 90%
40% 26

Brrand/activation optimum
80%
V Large Activation fx.

35% 45
30% 70%
30%
60%
25%
50%
20%
40%
74
15%
30% 55
10%
20%
5% 10%
0% 0%
Offline brand Online brand Offline brand Online brand
Brand Activation
Source: IPA Databank, 1998-2016 for-profit cases
 What about Big Tech?
Major tech firms spend on traditional brand media
£200,000,000

£190,000,000
Audited adspend (UK)

£180,000,000

£170,000,000

£160,000,000

£150,000,000

£140,000,000 Source: Nielsen

Brands: Amazon, Google, Apple, Facebook, Twitter, AirBnB, Uber, Spotify

£130,000,000
Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul
2013 2014 2015 2016 2017
Year ending
 Innovation makes activation easier
100%
45%
40% 90%
40% 28

Brrand/activation optimum
80% 39
V Large Activation fx.

35%
28% 70%
30%
60%
25%
50%
20%
40%
15% 72
30% 61
10%
20%
5% 10%
0% 0%
No innovation Any innovation No innovation Any innovation
Brand Activation
Source: IPA Databank, 1998-2016 for-profit cases
 Brand building is easier for new brands
100%

2.0 1.9 90%

Brrand/activation optimum
80% 37
Number of Brand fx.

1.6 44
70%
1.5
60%
50%
1.0
40%
30% 63
56
0.5
20%
10%
0.0 0%
New brand Established brand New brand Established brand
Brand Activation
Source: IPA Databank, 1998-2016 for-profit cases
Beware the inflection point with launches
100
90
80 43
Optimum budget split %

70 Activation
65
60
50
40 Brand
30 57
20
35
10
0
Launches in the first two years Launches after the first year

Source: IPA Databank, 1998-2016 for-profit cases

 Brand is the key to premium pricing
12%
100%
price sensitivity reduction
% Reporting very large

10% 90%

Brrand/activation optimum
80% 36
43
8%
70%
60%
6%
50%
4% 40%
30% 64
57
2% 20%
10%
0%
0%
0 1 2 3+
Value/mid-market Premium
Number of very large brand effects recorded
% brand % activation

Source: IPA Databank, 1998-2016 for-profit cases

How does this affect sectors?
 Brand building always
drives long-term effectiveness
3.0 Number of brand effects reported
2.5 0 1 ≥2 2.6
Number of very large business fx.

2.5
2.0 2.1
2.0 1.8
1.6 1.6
1.6
1.5 1.3
1.2
0.9 1.0
1.0 0.9 0.8 0.7

0.5

0.0
Durables FMCG Financial services Other services Retail
Sector
Source: IPA Databank, 1998-2016 for-profit cases
 Brand & Activation potential vary widely
Short-term activation effects 2.5 Brand effects
50% 2.1
44%

Number of very large brand fx.

45% 2.0
1.8
40% 1.7 1.6
36%
Very large activation fx.

35% 31% 30% 1.5

30% 26%
25% 1.0
1.0
20%
15%
10% 0.5
5%
0% 0.0
Durables FMCG Financial Other Retail Durables FMCG Financial Other Retail
services services services services

Source: IPA Databank, 1998-2016 for-profit cases

 Up-weight brand in Financial Services, down-
weight brand in Other Services
100
90 20
80 42 40 36 Activation
49
Optimum budget split %

70
60
50 Brand
40 80
30 58 60 64
51
20
10
0
Durables FMCG Financial services Other services Retail

Source: IPA Databank, 1998-2016 for-profit cases

 What about the NFP sector?

100%
90%
80%
Optimum budget split

70% 57 56 56
Activation
60%
50%
40%
Brand
30%
20% 43 44 44
10%
0%
Charities Government All NFP

Source: IPA Databank, 2012-2016 not-for-profit cases

 The optimum balance is shifting
100
90 24
80
45 43 37
Optimum budget split %

Activation
70
60
50
Brand
40 76
30
55 57 63
20
10
0
98 to 10 00 to 12 02 to 14 04 to 16
Period
Source: IPA Databank, 1998-2016 for-profit cases
The Activation Tide
 Short-termism has risen, especially amongst
40%
online brands
% campaigns that were short term

35% Online

30%

25% Offline

20%

15%

10%

5%

0%
2002 2004 2006 2008 2010 2012 2014 2016
6 years ending
Source: IPA Databank, 1998-2016 for-profit cases
 Short-termism has grown most in high online
research categories
40%

35%
% campaigns that were short term

High research

30%

25%
Low research
20%

15%

10%

5%

0%
2002 2004 2006 2008 2010 2012 2014 2016
6 years ending
Source: IPA Databank, 1998-2016 for-profit cases
 As short-termism took off, effectiveness fell
2.0 30%

1.9
Effectiveness 25%
1.8
Avg. no. VL business effects

% cases short-term
1.7 20%
% short-term
1.6
15%
1.5

1.4 10%

1.3
5%
1.2

1.1 0%
2002 2004 2006 2008 2010 2012 2014 2016
6 years ending
Source: IPA Databank, 1998-2016 for-profit cases
 Sectors that went short lost out
20%

10% Growth of short-termism

Retail
Loss of effectiveness 2014-16 vs. 2006-08

2014-16 vs. 2006-08

0%
0% 50% 100% 150% 200% 250% 300% 350%
-10%
Other services
-20% Durables

-30%
FMCG
-40% 76% Correlation
-50%

-60%

-70% Financial services

-80%
Source: IPA Databank, 2006-2016 for-profit cases
Brand-building media are becoming more
important
 Established brand media are working harder
45%
40%
business effects from adding

40%
% increase in avg. no. VL

35%
30% 27% 27% 27%
25% 22% 22%
20%
13% 14%
15%
10%
5%
0%
TV Press Radio Outdoor

Source: IPA Databank

*Outdoor = 2012 - 2016
Web 1.0 (1998 - 2006) Web 2.0 (2008* - 2016)
 TV is still best for market share growth
3.0%
2.6%
Avg. market share points

2.5%
gained per annum

2.1%
2.0% 1.8%

1.5%
1.1%
1.0%

0.5%

0.0%
No TV TV sponsorship DRTV Brand TV

Source: IPA Databank, 2014-16 cases

 Reach and Viewability drive growth
3.5%
3.1%
3.0%
2.6%
Avg. market share
gain per annum

2.5%
2.0%
1.5%
1.1%
1.0%
0.5%
0.0%
TV only Both Online video only

Source: IPA Databank, 2014-16 cases

 TV consistently outperforms online video
across 2017 research studies
3.0
TV performance vs. Online video
2.6 x
2.5 2.4 x 2.4 x

2.0

1.5

1.0

0.5

0.0
Share growth - IPA Short-term sales - Karen Long-term ROI -
Nelson-Field Ebiquity/Gain Theory
Sources: IPA Databank ‘Media in Focus’ , Professor Karen Nelson-Field PhD ‘Media Attributes that (really) Matter’ ,
Ebiquity ROI campaign database & Gain Theory ‘Profit Ability: the business case for advertising’
Reversing the activation tide

The AA case study

The AA focus on ‘hard working’ activation
Impressive profit growth
 Case study: AA Roadside Assistance
• Brand activity cut in favour of “hard working” activation
• Initial discounts used to entice new members
• Renewal price hikes used to make up profit
• Highly profitable in the short term
BUT…

Source: AA 2018 IPA case study

AA brand metrics in free fall
Commoditisation: AA branded search
Unsustainable AA pricing model
 Case study: AA Roadside Assistance
• Brand activity cut in favour of “hard working” activation
• Initial discounts used to entice new members
• Renewal price hikes used to make up profit
• Highly profitable in the short term
BUT…
• Brand metrics in free fall
• Whole category becoming commoditised
• Angry customers, churn increasing
• Bigger and bigger discounts required
• Market share declining
• Complete collapse predicted in five years

Source: AA 2018 IPA case study

 AA market share decline

42%
Share of membership (%)

42%

40%
39% Complete collapse
40%
39% predicted in five years

2011 2012 2013 2014 2015 2016 2017

Year
SOURCE: AA
AA Roadside Assistance
 AA market share recovered rapidly

42% 42%
Share of membership (%)

42% Brand metrics improved

Branded searches increased
Acquisition increased
40% Retention increased
Despite less discounting
39%
40% 2017 ads
39%

2011 2012 2013 2014 2015 2016 2017 YTD

Year
SOURCE: AA
 Conclusions
• Invest more in brand building where it is difficult
• Invest more in activation where it is difficult
• Brand building is becoming more important: the 60:40
rule is shifting further to brand
• This is making brand-building media more important
• We need to restore balance to budget deployment:
allocate the recommended balance for your brand’s
context
Thank you