Cannes We Talk About Effectiveness?

by Thomas Henry , Op-Ed Contributor, July 25, 2016

Arriving at Cannes this year, you could be forgiven for thinking you’d booked the wrong plane and mistakenly stumbled into CES.

Technology is the subject du jour in our industry. While there’s nothing new about the presence of tech brands at a gathering of ad folks, it finally feels that we’re willing to ask ourselves just what technology is actually doing for our industry.

This is best illustrated through a question I heard repeatedly at Cannes: “Is technology contributing to or hurting effectiveness in advertising?”

This is an important question, though to answer it we need to first define effectiveness as the bottom line effect on your client’s business. Or as W+K Amsterdam’s Martin Weigel puts this, using evidence from efficacy research leaders Byron Sharp from the Ehrenburg Bass Institute and Les Binet and Peter Field from the IPA in London, advertising works by overcoming the indifference of new buyers, not fostering the loyalty of current buyers.Advertising helps brands grow by attracting new purchasers to its value proposition, rather than increasing an inherently limited value from current customers.

In other words, there is no “customer” who can be loyal, only a buyer faced with purchase decisions.

Readers are more than welcome to consult 30 years of binomial distribution analysis on the subject, but the easier fact to remember is that the bigger brand, the one with higher penetration, the one that overcomes indifference most often, sells to most of your customers even if you didn’t think they were a competitor of yours. For example, via How Brands Grow by Byron Sharp:

Sunkist shares most of its customers with Coke — not Fanta

Vacheron shares most of its customers with Rolex — not Patek Philipe

Lyft shares most of its customers with NYC — not Uber

What has this to do with technology?

In order to justify short-term campaigns, marketers focus on engaging those who know about the brand already in an attempt to stimulate loyalty rather than reaching new, indifferent buyers. It turns out too much misused technology limits our ability to reach a new audiences and create new revenue streams for our clients.

In fact, Field and Binet announced this year at Cannes that in their most recent research, creatively awarded campaigns are now half as effective as they used to be, based on a comparison of data between their 2011 work, The Long and Short of It, and the last five years.

Binet and Field drew a causal relationship between the number of short term digital campaigns winning creative awards between 2011 and 2016 and this massive decrease in overall effectiveness.

At this rate, it will only take 10 years to wipe out the business advantage of creativity in advertising.

Loyalty and engagement usually measure the rate at which sales are brought forward from those who would likely have bought the brand anyway. A double waste of money, which when combined with the reduced rate of investment that short-term thinking brings, explains this drop in effectiveness.

To underline the point, the winner of The Cannes Creative Effectiveness Award for the past two years has been tje John Lewis Christmas campaign. Now in its sixth year, the campaign has shown commitment to long-term brand building in established mediums where TV and online video play a lead role, while the campaign does still find room for useful digital innovations (such as Monty the Penguin’s iPad story book).

This long term, relatively traditional campaign has grown John Lewis's market share from 22% to over 30% in just six years. The ROI is now more than 8:1.

Of course, not everyone can guarantee an 8:1 return, but if marketers and agencies continue to prioritize short-term digital engagement over long term brand building, you can guarantee that effectiveness is going to continue to drop, clients are going to ask tougher questions and maybe there’ll be less cash to flash at parties on the Croisette.

No one wants that.

3 comments about "Cannes We Talk About Effectiveness?".

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Ed Papazian from Media Dynamics, July 25, 2016 at 8:25 a.m.
Most studies that attempt to track the impact ( sales ) of ad campaigns find that they serve primarily ( about 60- 70% of the effect ) to remind current users to stock up or simply to reinforce their existing brand loyalty preferrences while the next biggest correlation ( about 10-20% of sales ) draws in totally new customers taken from rival brands, The remainder merely stimulates sales for the entire category with all brands benefitting proportionately. Of course, there are variations by product class and for individual brand situations, but it is dangerous to assume that brand loyalty doesn't exist and that it's a new ball game every time a consumer is exposed to an ad message regarding the expected ---or hoped for---result.
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Thomas Henry from Mother New York replied, July 25, 2016 at 8:45 a.m.

Hey Ed, always good to hear a different perspective :)

I'd be interested in seeing the studies. For total transparency, a lot of the data I quoted was taken from the IPA and Enhrenburg Bass Institute.

Of course it's a very big topic and hard to cover all the nuances in 500 words, but the sources I mention above tend to agree that while usage of a brand has a definite impact on your likelihood to remember and therefore by the brand, it is not positively correlated with a desire that we may describe as loyalty. It might better be described as apathy - path of least resistance.

So it's not that the buyer has NO mental structures built for your brand are usage, they absolutely do, but the evidence from the leading effectiveness experts seems to (and of course it is a young discipline) suggest that you have better results marketing to the whole category of buyers (customers and non customers) as a way to both retain and increases market share.

By way of anecdote, there's never been an IPA effectiveness award winner that increased loyalty without increasing penetration first.

Ed Papazian from Media Dynamics, July 25, 2016 at 10:33 a.m.

Thomas, I'm not suggesting that an advertiser advertise only to current brand users---even if there was a way to do that. As a matter of fact every brand in a competitive product category has a combination of current and former users to target as well as those who have heard of the brand but never tried it and, finlly, those who are totally unfamiliar. For example, a brand which has a current user base of 7% probably has another segment of former users that totals around 15-20% and yet another segment that is familiar with its brand name but never bought at around 30-40%. Obviously, the current users are most likely to buy again, ex-users the next most likely to buy, etc. It could well be that category user newbies, who never heard of the brand are, indeed worth targeting, perhaps with different ads and, maybe, via other platforms---digital, for example---to minimize ad exposure duplication and confusion.

As regards the studies, It's well established in TV ad recall studies that current brand users score well above total category users ---about 15-25% higher, typically. Aslo studies such as those conducted by UPC scanner panels have indicated that a very high proportion of the evident short term sales response to many TV ad campaigns comes from current users.