The COVID-19 pandemic is changing many aspects of human life, as we all know. Some changes may only be temporary, while others will likely last forever.
In reality, much of the second group (the forevers) is an acceleration of behavioral shifts that were already well underway. From a consumer standpoint, a dramatic increase in online shopping and video streaming are primary among them.For marketers, many changes were also well underway that are likely to only accelerate.
Among the most fundamental, many brands are developing direct customer relationships and exhibiting a greater reliance on data for decision-making across every aspect of marketing.
The industry's interpretation of the consumer purchase path (the consumer decision journey, or purchase funnel) has been undergoing changes for the past 20 years. Largely altered by a digital ecosystem, the two biggest changes to date have been:
1. From defining the consumer purchase path as V-shaped (hence the original funnel) and linear -- moving from top to bottom -- to viewing the journey as much more circular and complicated, kind of like a bowl of spaghetti.
2. From a brand-driven process to a consumer-led process.
Now a third big change is coming, which will accelerate as marketers reset coming out of this crisis. Drumroll please...
3. The Funnel Gets Skinnier
The consumer decision process will likely still be considered by most to include all the same basic steps: awareness, consideration, intent, trial, loyalty, etc.
What will change, as budgets reset, is the definition of a brand's audience target. Gone soon are the days of mass marketing, to mass targets with proxy metrics for a broad desired audience.
Brands will still try to understand and market to a consumer's purchase journey (or funnel) -- but there will be a much narrower interpretation of the desired consumer.
This change will occur more drastically for categories with access to more data (auto, tech) than those with less (CPG, QSR), but make no mistake: marketers will be forced to tighten up their definition of targets -- from mass to high-value.
The new question on everyone's mind -- from the Fortune 1000 C-suite to the day-to-day media executioners -- will be: what's my true high-value audience (HVA)? Why is that?
Brands will be faced with a new reality of having to do more with less. This time it won't just be talk, and for many it will not be incremental. Many brands will simply be allocated a reduced marketing budget at the outset from senior management, with the expectation of continued sales growth -- a "do more with less" like never before.
As brands tighten their belts, the funnel will be forced to get skinnier. How can this be accomplished?
Answer: less waste and more precision.
In the upcoming recovery phase, brands will place greater reliance on granular data sets to make all decisions. This more granular data will not just influence, but will directly drive, targeting and analytics across all spend in the relatively near future.
Those who are fully leveraging existing first-party data will win faster. Those without it will have to work harder, relying on scaled third-party data and data science capabilities to mine it.
This new approach will become what marketers focus on over time and what will drive their decisions.
Most agencies have been recommending this pivot for the past few years. Now it becomes a much easier sell. Some clients are already there. In a post-crisis reset, countless other brands' marketing playbooks will be following right behind.
The first movers have already changed their planning process, using people-based metrics to make marketing decisions and exploiting advanced data sets including their own first data to develop smarter, tighter targets -- data that captures vital elements about consumers. This data is also helping those first-mover brands gain deeper insights about that specific audience that is informing both creative and media decisions.
As a result, brands will begin to move away from trying to reach, for example, 114 million adults 25-54. Instead, they will focus only on the 17.4 million specific actual people who make up the tightest definition of their high-value and most-likely-to convert HVA audience. The goal will be spending as close to 100% of their budgets as possible against only that group.
That's a game-changer -- moving away from a broad interpretation of the target to a refined core group: their core target audience.
This means combining disparate data sets, creating one persistent ID they can fully depend upon to define who their customer actually is -- a group that can be already precisely messaged to in many media channels -- and getting the balance of Reach and Frequency right against their new target audience.
What comes next is applying a digital mindset to all their media spend -- more precision and less waste. Perhaps they were forced to, and now they will have to, across the entirety of the spend.
In this pivot I believe the funnel remains intact -- it just gets skinnier.
Facing the new realities of driving business growth with less budget, brands realize they cannot simply shift all their budgets to lower-funnel performance media, because they know that won't work in the long run.
Instead, they will desire many types of media (brand and performance) that can be purchased in a more precise way. And all of it going forward will be evaluated against stricter, more performance-oriented metrics.
Some channels will be responsible for sales, and others for driving increased brand sentiment and engagement behavior. Every layer of the funnel will be measured in near real-time on its ability to deliver measurable value.
The media that wins increased share moving forward must satisfy marketers' needs for more granular target definitions and delivering measurable outcomes against the groups that matter -- as the winners of the past decade (Google, Facebook and Amazon) have already been doing.
The shift from broad-based linear TV to CTV/OTT and addressable TV will continue unless the legacy media can get there quickly. They are certainly trying -- most now as sprawling multiplatform media organizations with a burgeoning tech stack recently built to attempt to engage in this very way. So too must local broadcast, out-of-home, radio, and print.
Most advertisers still believe premium content and live sports are critical to both brand equity and brand development for customers and their supply chain. Brands will have to pick and choose the premium environments that offer the highest-performance concentration of their HVA.
In the spring, brands might need to decide between tennis or golf based on who has their HVAs. Decisions about where to invest in the fall between college football, pro football of MLB Playoffs will also come down to the specific nature of each property's granular audience metrics.
But didn't D2C disruptor brands made the funnel obsolete five years ago? Let's quickly look at that hypothesis. D2C brands started with much tighter target definitions and entered the market relying solely on performance media like Search and Social.
I would call that starting “skinny” and working from the bottom up. Just look at them now -- virtually all moving up the funnel, picking and choosing premium channels that deliver a combination of the highest audience concentrations and the most responsive actions from their specific HVAs.
Many D2Cs, with advanced analytics and an e-commerce business model, see who is available by channel and who is converting.
Five generations after that famous John Wanamaker quote, marketers might just be able to rewrite it very soon. “I finally know which 50% of my advertising is NOT wasted now .......I’m going to just do that.”