Why you need a strong brand to win in e-commerce: Adidas' Simon Peel

In 2019, Simon Peel made headlines when he gave an in-depth account of his brand’s attempts to make its media investment more effective. Here, the Senior Director – Global Media at adidas speaks to WARC’s David Tiltman for the Marketer’s Toolkit 2021 about what’s changed during the pandemic, and how media strategy will evolve in 2021.

What changes in consumer behaviour have you seen in 2020?

People are more health conscious, or are appearing to be more health conscious. I think initially, with COVID, there was kind of an alarm that went off with people: suddenly, health and wellbeing were probably more important than they were previously. The sporting goods industry definitely benefited from that increased focus

Loungewear was flying off the e-commerce shelves, so to speak. Jogging bottoms, jogging tops, slides, socks – basically, anything that makes you feel comfortable around the house was doing fantastically well. Activities or exercise people can do by themselves increased as other areas of fitness were made inaccessible – stuff like running, cycling and yoga – so related products have seen a great deal of success

Are you seeing consumers buy direct from brands as well as buying via marketplaces and online retailers?

Yes, definitely. As stores have shut, we've seen a massive jump in sales on e-commerce. It doesn't quite capture the total demand that existed previously. But you can see that there's a spike that has directly correlated with stores being closed.

People talk about how COVID-19 has demonstrated inequality. I think it's also true in branding and e-commerce. Depending on the industry, market leaders are probably doing even better than they were before with online sales because of mental availability. Whereas companies that were struggling within their categories before are probably finding the whole thing even more challenging.

That’s interesting, because e-commerce is often seen as a lower-funnel numbers game. Do you feel that the strength of a brand is really key in these online environments?

More so than ever. You just have to look at Amazon's success in this environment to see that at play. Their media investment over the last couple years has been heavily focused on big broad-reaching media – to attract more customers and retain top of mind awareness. It’s similar with other companies that make a lot of money from online commerce – there has been a refocus on broad reach channels such as TV, out-of-home and print, as well as online, in order to ensure those brands come to mind when people buy online.

I think the reason why e-commerce has been associated with only lower funnel tactics is because of the way some companies have focused so heavily on performance advertising, instead of better balancing their investments with brand – possibly because of the misleading and bias results from attribution models.

What appears to be the case with the likes of Amazon is that they have balanced their investments wisely and probably see their brand as fundamental to their business success. Basically, if you don't have a brand, you don’t provide a mental shortcut for consumers, and you become a commodity. So, it's important to protect and invest in brands to help e-commerce flourish. If anything, the laws and rules of marketing and communications are more important than ever when it comes to e-commerce

A year ago, you talked about the importance of getting the balance between brand and performance right. Has your thinking evolved on that at all in the past year?

When lockdowns were initially implemented and cash flow was a problem for everyone, there was a deep incentive for all companies to go very short-term. Because suddenly you needed cash, otherwise you were going to go out of business. That’s possibly true for most organizations. Such a short-term mindset was not just an automatic response, it was a necessity. 

As companies got used to the situation, and consumers’ behaviour normalised, balancing both long-term and short-term thinking seems to be back to the top of the agenda for marketing teams. It has helped having the likes of Les Binet, Peter Field, Mark Ritson, Tom Roach and Orlando Wood promoting long and short-term thinking during COVID.

We’re heading into what's potentially a huge recession, so companies are probably trying to use previous evidence from economic decline to make informed marketing decisions. That data is going to tell us to balance brand and activation and to invest as heavily as possible so we have more chance of success on the other side. And to do so with a mix of emotional advertising that makes the brand memorable and easy to identify, along with rational messages that explains why we should buy.

Simon Peel, Senior Director – Global Media, adidas

Turning to the media world, what are the measurement challenges you really want to solve – or at least make some progress on – in 2021?

I think the biggest one is ROI, as it’s so misleading. Naturally, you’d think the higher the ROI, the better. But ironically, the channels with higher ROIs are often the ones with lowest potential revenue or profit, and those with the lowest ROIs are the ones that will generate more money for the business. So, chasing higher ROIs can often be detrimental.

There are also problems with different ROIs from different measurement systems. All media measurement is flawed, but some more so than others. A system that only measures the success of its own silo to its own benefit, excluding all other channels around it, should not be trusted as a source of truth.

Going into 2021, many more companies and brands are probably thinking about implementing the correct measurement frameworks. Market mix modelling is likely to play a much more significant role as attribution begins to fade with cookie erosion. Hopefully that means both short-term and long-term econometric models will become more widely used, as we try to get the balance right. Likewise, brand tracking and a focus on top-of-mind awareness is likely to feature highly as it has such an important role in commerce. Basically, the more you come top of mind, the more likely a consumer is to think of you when buying, especially online.

I also think attention metrics are going to be much more important than they have been previously. So, the work that companies like Lumen, Adelaide, and Amplified Intelligence are doing, will probably become more integrated into measurement frameworks.  

What is it about attention that you think can bring a different layer to measurement?

Attention indicates that someone actually sees an advert, particularly online. Viewability alone is quite a blunt metric. It doesn’t indicate if someone saw an advert, only that it was in a place where it could be seen. In the same way we used to use impressions, clicks, views or engagements as a measure of success, viewability will probably head that way – a proxy that can be gamed. With attention, as it’s still relatively new as a media metric, it probably hasn’t been widely gamed yet.

With attention there is quite a lot of evidence that shows there's a high correlation between attention and sales or brand uplift. Which sounds obvious but it’s scary how little some organisations or functions care about verified impressions, let alone attention metrics.

Ultimately, you need people to see an ad for it to be able to have any effect.

You talked about attribution and the death of the cookie. What are the implications of that?

For a while, if you’re as daft as I am, attribution may have seemed like a valid source of truth for e-commerce. But it never was. If anything, attribution modelling probably misled advertisers so much that they left money on the table by overinvesting in the wrong areas.

Attribution will probably die with cookies. Cookies were theoretically a way of looking across online platforms and publishers alike. They gave a relatively even view of performance, if skewed towards desktop and mobile advertising. Facebook changed that a few years ago when they removed third-party impression trackers. That built a reliance on Facebook to report on its own success. If you were a huge Facebook fan, you probably believed it. If you thought more critically, you probably didn’t trust the data so much. The same will happen across the rest of the platforms and publishers, making walled gardens the source of their own truth, in turn making them more biased and invalid.

As a consequence, attribution is likely to change from a measurement technique to an optimising one within the platform – where it helps optimise the tactic. Only an idiot like me would think it would be a good idea to use it as a source of truth and make large budgeting decisions on it.

Are we looking at a much more closed web of very powerful platforms, with less scope to understand audiences across the internet?

Yes, potentially. If you’re reliant on the platform now, you’re likely to be more reliant on the platform after cookies come to an end – requiring the platform to provide the data on audiences and how campaigns performed.

That is unless you apply a more holistic and measured approach, which is why market mix modelling will probably increase in importance as it’s less susceptible to bias from the platforms.

Smart advertisers, that may have tech stacks in place with certain platforms now, are probably also reviewing those in an attempt not to be squeezed by those platforms into a distorted view of online advertising.

Do you think brands are becoming more conscious of where they place their money in terms of the types of media that they want to support?

Yes, 100%. The Facebook boycott in July was not necessarily aimed solely at Facebook. It was also an indication that brands are sick and tired of the whole ecosystem of hate, misinformation, discrimination and bias. We don’t want to be funding it. We don’t want to associate our brands in those environments.

Sadly, the model as it stands keeps perpetuating the worst of human nature. Brands that are desperate to hit certain KPIs like impressions or clicks at the lowest cost are funding it. Platforms that are trying to increase revenues are facilitating it. Nefarious organisations are feeding off it. And if anything, the current regulation isn’t strong enough to protect consumers and journalism. It needs to change and advertisers have a large responsibility in that. The work the WFA are doing with the Global Alliance for Responsible Media goes some way to helping, but advertisers could do more by divesting away some platforms and tactics to investing more in appropriate and diverse content.