It’s not uncommon to come across seductive sounding claims about the power of digital media these days. There’s always some numpty proudly boasting that you can get better marketing ROI with micro targeted campaigns. Crucially, this leaner, meaner marketing spend usually comes at the expense of the money you were going to “waste” on brand building and advertising.
Don’t get me wrong marketing ROI is important. As a basic way of knowing how your marketing is doing it can be really useful. But it’s also a short-term efficiency metric. As marketing effectiveness guru Les Binet says that “a lot of people in management find the short-term argument seductive. They are judged quarter by quarter, and they want results quarter by quarter.” In other words, many managers expect a direct cause and effect between marketing activity and sales.
That’s why marketing ROI has a dark side.
The dark side of marketing ROI
One of the reasons ROI is so popular as a measure is that it’s a lot easier to have a conversation in the C-suite because it makes marketers sound sales and profit driven. And given that marketers face a consistent battle to be taken seriously, it’s not surprising that it makes plenty of appearances in emails and around the boardroom table.
“An ROI of 150% on a $1 million dollar campaign is $500,000, while a 500% ROI on a $10,000 campaign is only $40,000”
The problem with ROI is when it starts to be the only filter you use to make decisions with. By nature it teaches you to only look for the easy wins and ignore the harder, but much more rewarding long term marketing activity that will help grow your brand. That’s because marketing ROI usually goes down the more you spend. At this point, many marketers choose to stop spending, or to shift their money into targeted digital media.
But recently, some of the biggest brands in the world have found that short term wins and micro-targeting might not be all they’re cracked up to be…
In 2016, the worlds biggest advertiser P&G announced that it had over-invested in targeted digital media. CBO Marc Pritchard said that “we targeted too much, and we went too narrow” which led to the company slashing its digital budgets. A company rebalancing its marketing budget is hardly news. But what happened next is.
Despite cutting digital spend by 50%, incredibly P&G’s sales went up by 2%. And they aren’t the only ones to experience this. Big brands like Tesco, Adidas and Pepsi all flirted with the promise of social media before losing market share or sales. Perhaps it’s no surprise that they all shifted significant amounts of money back into brand building and creativity, usually with great success.
The battle for better marketing
So what we see here is a battle. But it isn’t a really battle between digital and traditional media. Or between marketing ROI and fluffy creativity. It’s a battle between the short and the long term. It’s a battle between effectiveness and efficiency.
The truth is that brand building is long term by nature. It takes years to do properly, and it’s almost impossible to measure in the same way that you can with digital media tools. All that probably explains why it’s so hard to sell to a skeptical boardroom that’s leaning on efficiency to deliver growth.
But before you give up on the idea of brand building, consider the story of Nike.
Earlier this year Nike did what they’ve been doing for the last three decades when they launched the latest in a long line of successful brand campaigns. This time it was the now infamous and controversial ad featuring Colin Kaepernick. The ad was a viral sensation, filling column inches and social media timelines across the globe.
You can decide for yourself whether you think this kind of advertising works or not, but the evidence is pretty clear. Millions of people (many of whom have no interest in Nike) noticed, remembered and talked about this campaign. It’s no accident that doing this kind of brand advertising has turned Nike into one of the biggest brands on the planet. That’s why they charge megabucks for running shoes while the competition fights over the scraps for second place.
The long and the short of it
To win more customers you’re going to need to attract people who are not currently buying your brand. To grow your market you need to build preference of your brand with customers who don’t care about the thing you make or sell. And if you want to raise prices, you’re going to need to communicate why your brand is worth that little bit extra. And one of the best ways to do all those things is with brand building creativity.
That’s why building a brand is a long game. It requires risk taking, bold thinking and big ideas. The focus on marketing ROI alone is a trap, because it doesn’t matter how efficient your marketing is if it isn’t effective in the first place.
As the great management thinker Peter Drucker once said “efficiency is doing things right. Effectiveness is doing the right things.”