Five key priorities for delivering effective advertising

WARC today releases ‘Anatomy of Effectiveness: 2022 Edition’, a white paper giving brand marketers, advertising agencies and media owners a fresh perspective on the five key building blocks of effectiveness.

Why it matters

Much has changed since WARC published the first Anatomy of Effectiveness in 2019, David Tiltman, SVP Content, WARC, observes: “We’ve had a pandemic that saw budgets switch out of brand investment into performance marketing; we’ve seen the rise of ‘retail media’ platforms that are reshaping the media landscape; and with the impending death of the cookie we see a growing lack of confidence in advertising and media measurement.

“This updated edition of our white paper draws on new thinking and the latest evidence to present the key building blocks required to deliver commercial impact today.”

Five priorities

• Invest for growth

Understanding how factors such as brand size, campaign investment and category dynamics will determine effectiveness are key first steps when it comes to setting budgets and agreeing on objectives. Getting the right framework for investment is crucial if a campaign is to meet its potential.

• Balance your spend

Set the right framework for investment to ensure sustainable success. Whether it is long-term effects vs short-term sales impact, brand-building vs performance marketing, broad reach vs active in-market buyers or upper funnel vs lower-funnel, plan for effectiveness across different timeframes, messaging, audience types and buyer journeys to deliver maximum growth.

• Plan for reach

Campaign reach is becoming harder to achieve as media consumption fragments. This is forcing marketers to reconsider long-held assumptions about reach and frequency management. Factors to be considered include brand objectives, media selection and consumer purchase habits.

• Be creative

Creativity makes a difference and is the most powerful weapon under the marketer’s control. There is widespread evidence that creativity delivers increased effectiveness when it is distinctive, engaging, emotional and has some longevity. Recent research cited in LIONS’ State of Creativity 2022 study claims only 8% of agencies feel confident in convincing clients to invest in high-quality creativity and 12% of clients feel confident in convincing the CFO to invest in high quality creative.

• Plan for recognition

Advertising must be associated with the brand behind it, if it is to work. Planning for recognition involves creating shortcuts in consumers’ minds that make brands more memorable, impactful and easy to recall. Failure to brand communications properly is a common pitfall. Investing in and nurturing distinctive assets will enable quick recognition.

The white paper, launched in conjunction with WARC's Anatomy of Effectiveness hub, features new case studies, expert opinions and over 20 'Evidence' decks. WARC clients can read the full report here. A sample edition is available for all.

Highlights from the white paper will be presented to Cannes Lions attendees today as part of a full week’s worth of content curated by WARC, together with the world’s leading effectiveness experts, covering strategy, media, creative and digital commerce. For more details on WARC x Cannes Lions, click here. 

Consumers increasingly turn to private-label products

Shoppers are reaching for privately owned brands over big-name products, both for lower prices and increased availability during the pandemic, as well as a myriad of other conveniences, according to trade body the Food Industry Association’s (FMI) 2022 Power of Private Brands report.

Why it matters

For consumers looking to save money during the COVID-19 pandemic, private brands posed a viable alternative to national ones. But more than two years after the onset of the crisis, many shoppers are still maintaining a focus on small brands, for the price and value proposition, putting the onus on marketers to make products available and accessible in order to win against the competition.

Takeaways

• Forty percent of consumers have reportedly increased their store-branded purchases since the beginning of the COVID-19 pandemic.
• Three quarters of that portion of consumers said they will continue shopping private labels in the future.
• Sixty-three percent of the study’s respondents who purchase private brands said that they do so because of increased value perceived from the transaction.
• In contrast, 55% of respondents said that they purchase private brands because of lower cost.
• “Less than 2% of shoppers say the only reason they purchase private brands is because other products were out of stock,” said Doug Baker, vice president of industry relations at FMI.
• Additionally, “when asked about 14 product attributes,” shoppers pointed to a handful of essential reasons for choosing private-brand products. 
  These reasons included: taste (42%), quality (43%), meal planning needs (24%), and health needs (20%), as well general interest and curiosity (20%).
• Forty-two percent of respondents said they liked the taste of private-brand products.
• Forty-three percent of respondents reported choosing store-brands for superior quality.

The big idea

“When it comes to taste and quality, shoppers clearly see private brands as a good option, on par with national brands” - Doug Baker, vp/industry relations at FMI.

Sourced from Supermarket News

Why Apple is a guide for modern brands

Apple tends to be thought of as a brand apart – simply on a different level from most others and therefore not really worth exploring – but veteran strategists Tom Morton and James Hurman told the audience at a WARC session during Cannes Lions 2022 that Apple and other digital brands’ experiences are not only useful, but can strengthen existing models of brand growth.

Why it matters

Penetration still matters, but what of the brands that have really grown through loyalty?

What’s happening

Morton, R/GA’s global chief strategy officer, who made this point more fully in an exclusive essay for WARC in May, outlined his idea that the lessons of Professor Byron Sharp’s How Brands Grow remain vital but that there is a different generation of brands and companies, mostly in tech, that have bucked the model and that these ideas should be absorbed into the corpus of marketing knowledge. Without it, we’re trying to fix Google-shaped problems with Tony the Tiger tools.

At the other end of the scale, many young digital startup brands delude themselves that their low-cost acquisitions will continue indefinitely; James Hurman, founding partner of Previously Unavailable, and a long-time WARC collaborator, outlines how an idea of future demand should become part of the startup lexicon if they are to emulate ecosystem brands like Apple.

The ideas

How Brands Grow has had a colossal influence on marketing, but much of it is based on cases from CPGs or “replenishment” buying brands that grow because their products are bought by increasing numbers of light buyers. In this way, loyalty is at best overrated and at worst a harmful myth. Penetration is what you need.

However, HBG doesn’t include many cases from streaming services, DTC, search engines or subscription businesses – which tend to be the biggest contemporary companies. R/GA, the tech-focused agency that Morton joined six years ago, works on these kinds of brands and spotted an opportunity to add some useful caveats. 

In response, Prof. Sharp maintained that it is still user growth that matters most, with the example of Netflix showing how higher revenue per user was not enough to stem the effects of user decline. 

Apple

Between 2016 and 2020, Apple grew its total customers by 16%, but revenues grew quicker at closer to 27%.  The reason, explains Morton, is an explosion in unit sales, which tripled. This is the beauty of an ecosystem: “you can start to add products and services that fit nicely together. And you can start to find growth that a specific product-penetration alone model wouldn’t find.”

Targeting before broadening

Many startups grow first by finding a specific, niche audience. Startups “should expect to go through a targeted growth phase before they target the general market,” explains Morton. It’s not because they’re “dumb or immature” but early on you need to achieve product-market fit before progressing to the general market.

But then the opportunities broaden. “If you’re a disrupter, your product isn’t fixed,” he points out. “You can actually harness product innovation to grow your penetration in a way that, respectfully, I don’t think the standard brand model accounts for.”

Future demand

However, startups need to be aware of the existing demand trap. James Hurman explains that startups tend to follow a tested pattern. The company has a solution to a problem that an existing-demand audience already have (especially in B2B). The problem is that these are a vanishingly small group. And usually within about two years those buyers are exhausted and you need to grow future demand.

Those ready to buy now need product and price, but the future demand audience doesn’t need any of that. “What it’s all about in terms of driving those future customers is building a brand in a way that makes it familiar to that big group. They become familiar with you, and they feel positively towards you.”

Effectively, you need an eye on both – in the style of Apple – so that brands are able to build demand that they can convert at a sustainable rate. “This is really the answer to creating sustainable long-term growth”.

A better definition of brand building

If you’re looking for a good definition of brand-building for a non-marketer, the following is key: brand advertising is about building the company’s reputation and name “among an audience who aren’t necessarily going to buy from us right now but will in the future”.

Reported by SPT [Image: Apple]

Coca-Cola's three key marketing metrics

The Coca-Cola Co., the soft drinks giant, is focusing on weekly consumption levels, brand equity and the profit from its investment as it tracks the impact of its marketing programs.

Coca-Cola’s pivot to experience

• Manuel Arroyo, global chief marketing officer at The Coca-Cola Co., told the dbAccess Global Consumer Conference that its marketing was transitioning into a “world of experiences”.
• This involves connecting shopper passion points – like music, gaming and sports – with specific “consumption occasions” for the company’s products.
• “Consumption occasions are basically about explaining, to someone that doesn’t drink our portfolio today, when, where, and why they should consider one of our brands in a unique way,” Arroyo added.

Weekly consumption within the “consumer base”

• One key metric in tracking success is looking at penetration rates within the consumer base.
• The typical person has 50 “beverage occasions” a week, and anyone who “repetitively” drinks one of the firm’s brands once per seven days is included in its “consumer base”, Arroyo said.
• At present, on this metric, the consumer base for Coke stands at “slightly below” 500 million people, from a global population, Arroyo noted, of 7.7 billion people. “So, the growth potential is just phenomenal,” he continued.

Marketing effectiveness rises

• A second “critical metric” for The Coca-Cola Co. is the effectiveness of its marketing communications, according to Arroyo.
• “We look into, particularly, how much profit are we driving per invested dollar in marketing,” he said.
• This metric improved by 7% last year, he noted, suggesting it has made tangible progress in this regard.

Brand equity is a pricing proxy

• The equity of the assets within The Coca-Cola Co.’s portfolio is another important indicator, not least as it gives the company potential space to raise prices in inflationary times.
• “Equity is very important, because it … is what we define as ‘earning a right’ to take pricing,” Arroyo said.
  
• “Moving forward, you will see how we move more into ensuring that we first drive our consumer base, but also increase our equity at least in line or more than inflation.”

Final thought

“We’d love to invest more and more in marketing. We’ve going to make sure, first, that the base of our marketing investment, which is very substantial, is as effective and as efficient as it should be” – Manuel Arroyo, global chief marketing officer, The Coca-Cola Co.

Sourced from SeekingAlpha