ROI
The Only Number that Matters to CEOs
Proving the value of marketing means showing that the investment is paying off in faster business growth. The only number a CEO cares to hear is the incremental growth rate attributable to marketing. The rest is mumbo jumbo.
Growing ROI with YouTube ABCDs Creative Effectiveness Guidelines
Ariane Le Port – Global Creative Effectiveness Lead, Google
Arthur Anglade – Advertising Research Manager, Google
Ignacio Mamone – Manager, Nielsen
Key Takeaways
- Creative is the main driver of sales and represents a competitive edge.
- Ads following the ABCDs creative best practices on YouTube consistently see stronger ROI and sales response across markets and categories, according to MMM meta-analyses. However, few advertisers are currently optimizing their ad creative for YouTube.
- There are market, category and geographic nuances, as well as varying levels of best practices adoption and sophistication, in applying this framework.
- Combine art and science to maximize sales and ROAS.
NYCU: Perspectives on the Future of Advertising
When two industry heavyweights meet and talk about the future of the advertising industry, it's worth it to stop and listen. Marla Kaplowitz, President and CEO of the 4A's for the past five years, probed industry issues earlier this month with Philippe Krakowsky, a 20-year veteran of IPG who recently completed his first year as CEO. This is an edited interview (Ms. Kaplowitz asks the questions, Mr. Krakowsky replies):
- The biggest industry challenge? I would say that it's keeping pace with the changes that technology is driving in every facet of our lives.
- The talent issue? We want our people to be in a company that innovates—a company that cares about inclusion and diversity, a creative business that on the media side takes a point of view and a stand on media responsibility. So, it's a mix of a lot of things. I don't think there's a moment where you can solve this issue.
- The myths? I don't think about myths.
- The future agency model? The future agency is more precise, more impactful and accountable, with a greater ability to understand the audiences that clients are trying to connect with or impact or engage with. But it's not one thing; there is no future model.
- Core growth areas for agencies? Healthcare's been really strong, and I think it probably stays that way. There's an opportunity for all our creative agencies because they're more and more connected. I don't see any places where you can't get to. There are many interesting places for growth.
Source: Farmer, M. (2022, February 15). Marla Kaplowitz Engages Philippe Krakowsky At 4A's Decisions 2022. MediaVillage.
NYCU: ARF Members’ Priority Issues
The ARF’s Knowledge Center answered 471 member questions in 2021. These provide good insights into the issues that are most important to our members. The heaviest users of the Knowledge Center continue to be marketers (41%), followed by agency members (26%), media (15%) and research companies (7%). Most member questions in 2021, as in previous years, were unique to the very specific business needs of the member. Many questions were about various marketing and media research issues, target audiences, the impact of COVID-19, creative issues and testing and media issues (such as the use of and impact of different platforms). Here are some other questions asked:
- What are the latest trends, challenges and best practices with in-house agencies?
- What are the opportunities of reaching consumers through the connected home?
- What are the positive effects of corporate brand campaigns on underlying product campaigns?
- How are brands today and tomorrow engaging and connecting with culture and consumers?
- What is the optimal average frequency for an ad campaign? What is under-exposure?
- Does advertising on platforms focused on wellness have an impact on brand ROI?
- What channels and ad formats are seeing increased or decreased prioritization in ad buys?
- What are best practices for CPGs during inflation?
NYCU: Do Analytics Contribute to Growth and Profit?
Business Professor Oded Netzer finds that many Chief Marketing Officers (CMOs) don’t think analytics contribute much to the bottom-line and offers a strategy to align analytics with business goals. In a recent paper in the Journal of Marketing, Oded Netzer, the Arthur J. Samberg Professor of Business and a Chazen Senior Scholar, points out that increasingly rich data from a dizzying array of sources allow marketers to capture more information on customers and competitors today than ever before and use that data to drive actionable insights. However, he finds that a 2020 survey of CMOs shows that despite steady increases in spending on analytics over the past eight years and even higher expectations for increased spending in the future, the contribution of marketing analytics to company performance has been, on average, fairly low. The disconnect comes down to this: marketing data collection efforts and analytics do not always align with growth strategy. According to Netzer and his colleagues, firms should align their data and analytics with three growth levers, informed by the customer equity framework, which suggests that a firm’s growth comes from acquiring profitable customers, making more money from existing one's customers, and retaining profitable customers:
- Customer acquisition: Harvesting social connection data gives marketers the ability to identify potential customers who are connected to existing customers and/or have preferences and motivations similar to existing, profitable customers.
- Customer development: Using clickstream data and other business intelligence data, companies can go beyond simply tracking a customer’s purchases with their firm and estimate how much that customer spends with competitors. Firms can leverage that data to increase their share of customer expenditures in a given category or industry (often referred to as customer share of wallet).
- Customer retention: Firms have traditionally relied on purchase and usage data to predict customer churn, but little attention has been given to mitigating it. Underutilized data sources, including unstructured data and causal data, are more difficult to gather and work with than traditional transactional data, but can be extremely useful in identifying impending customer churn and mitigating it.
NYCU: Mastering Media Complexity
A report by Nielsen recommends that marketers focus on “three pillars” to simplify measurement in light of increasing complexity. Marketing budgets have always been subject to scrutiny, but the pandemic’s arrival and its presence almost two years later continues to spotlight the need for efficient and effective spending. That, in turn, has intensified the importance of accurate and holistic measurement, especially as brands increase their usage of new platforms and channels for their marketing efforts. In addition to navigating new platforms and channels, marketers have notably increased their spending this year, mostly across mass reach channels (after a pullback during the first half of 2020). That spending aligns with sentiment from marketers surveyed for Nielsen’s 2021 Annual Marketing Report, which cited customer acquisition and brand awareness as their top priorities. As spending increases, so does the focus on tracking ROI. And unlike digital, conversion-oriented marketing efforts, which can be measured with current martech solutions, mass reach efforts are often viewed by marketers as more challenging to correlate with actual, long-term sales. Now, while Nielsen’s experience base shows that on average, a 1-point gain in brand metrics such as awareness and consideration drive a 1% increase in sales, marketers surveyed for Nielsen’s annual marketing report aren’t confident in their existing marketing technology. Importantly, the introduction of new platforms, devices and channels—along with enhanced privacy considerations and the depreciation of third-party identifiers—increases the complexity that martech solutions need to account for. As complexity rises, Nielsen believes brands should focus on three pillars:
- Trust: Measurement that is from an independent third party (not a media seller) and which is funded by the advertiser (lending full transparency to the advertiser directly) is critical.
- Comparability: For the largest components of a media budget, brands need to be able to accurately compare channels with consistent methodology, to facilitate a clear understanding of relative performance.
- Adaptability: For the largest components of a media budget, brands need to move from measuring what happened at the executed level—to what could be achieved. This will help brands improve, instead of simply validating that marketing strategies are working sufficiently. For the smaller components of media budget, brands will need a way to test and learn to ensure that successes can be scaled and investments in shortcomings can be appropriately limited.
Source: Nielsen. (2021, October 27). Media is complex: Three pillars can simplify measurement for marketers. Insights: Media, Nielsen.
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NYCU: More Media Channels = Misleading Metrics? -- SPONSORED CONTENT from Analytic Partners
As Number of Media Channels Grows, Some Metrics Can be Misleading Marketing has always been complicated, but the level of complexity reached over the last several years have brought us into an unprecedented ecosystem. The long-standing debates about the role of marketing in driving business performance has compounded with an ever-evolving landscape that includes traditional, new and constantly emerging forms of media. On top of the age-old performance questions, business leaders are also facing increased fragmentation and new challenges brought on by data deprecation. Simultaneously, a multitude of new marketing channels is being leveraged and measured by marketers, offering both opportunities and challenges in understanding which channels are truly making an impact. A recent ROI Genome Intelligence Report from Analytic Partners takes a deeper dive into the complex marketing ecosystem of today to clarify what marketers need to know about the impact of media, to push past misleading performance metrics and find real value. For example, the question of “when” media makes an impact has become increasingly tricky to measure without a holistic framework in place, leading to misplaced budget and unclear ROIs. The truth is any piece of advertising will have both an immediate and delayed impact. This is true on many levels and can be measured with a high degree of confidence when the appropriate data and methods are utilized. Advertising can have an immediate, in-the-moment impact, a gradual delayed impact such as later in the day or week, or a further delayed impact. These combined are what are commonly referred to as short-term impacts, which tend to be the impact that an advertisement has on the next purchase cycle for the category, product or service. In addition, there are long-term impacts when customers repeat purchases and longer-term behaviors change. In fact, two-thirds of the impact of advertising happens after the first week of exposure. The impact that advertising has over time also behaves differently than other forms of marketing like promotions, coupons and emails, which have more immediate and lesser delayed and sustained impacts. Additionally, ROI Genome shows that video advertising has twice the half-life of non-video advertising, and its cumulative impact after the week on air is 160% higher than non-video advertising. These impacts happen usually within a few weeks - not months - and this is true of both in-store and ecommerce impacts. Use this link to read more.
Member Only AccessNYCU: Are Advertisers Wasting Money on TV?
A new study argues that many advertisers are running their campaigns too long, undermining ROI. On Tuesday, Sept. 21, a panel at the ARF's AUDIENCExSCIENCE conference will debate a controversial new study entitled, "An Economic Analysis of TV Advertising Profitability." The study, by SCHOLARS from the University of Chicago and Northwestern, who analyzed four years of advertising and sales data for CPG brands. They found that, in the current environment, marketers may be running campaigns for too long, undermining their campaign ROI. Their analysis shows negative ROIs for over 80% of brands, implying over-investment in advertising by most CPG firms. The presentation of the study will be followed by an expert panel discussion. In addition, attendees will be invited to participate in follow-up ARF research on changing advertising economics. AUDIENCExSCIENCE 2021 will take place September 20-22. To learn more and register, visit the ARF website.
Member Only AccessNYCU: What Happens When Advertisers “Go Dark”?
While a new ARF study explores the long-term impact of different advertising strategies during last year’s pandemic, a new paper in the Journal of Advertising Research provides evidence on a specific strategy: “Going Dark.” “When Brands Go Dark: Examining Sales Trends when Brands Stop Broad-Reach Advertising for Long Periods” is the title of a new paper in the Journal of Advertising Research (July 2021). Their study examined the sales performance of beer, cider and spirit brands that advertised intermittently over almost two decades. Of 57 cases, 34 stopped mass media advertising for more than a year. The researchers analyzed changes in sales for the years when brands stopped advertising relative to the last advertised year. Their findings:
- On average, brand sales declined immediately in the first year and every subsequent year without advertising.
- The sales decline was faster for smaller brands and for brands that already were declining in sales before advertising cessation.