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:
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.