A presentation on architecture

As information architects, I believe that there is a lot that strategists can learn from designers. I gave this presentation to the Planning team at iris as part of our McPhilo sessions; a bi-monthly initiative overseen by Suj Summers where we take a topic that’s not directly related to advertising and give a 20 minute presentation. It was also an opportunity for me to have a bit of a rant about the working environment at iris Towers…

Putting the Long & Short of It through the Mum Test

a.k.a. Why does John Lewis keep trying to make me feel all the feels?

 

So Mum, just so you don’t get caught out on the ever-important topic of brand equity, here goes:

In advertising, we often need to show how the communications we put out into the world relate to the amount the company has spent on this work and the profit they make or sales of their product or service that arise off the back of it.

A couple of highly regarded consultant strategy types; Les Binet and Peter Field, wrote a seminal document called Marketing in the Era of Accountability, where they analysed hundreds of case studies of different advertising campaigns in order to create a definitive, industry standard for evaluating the effectiveness of campaigns.

Through this paper, they advocated that brands need both short-term objectives, in order to get people to buy now but also longer-term objectives that focus on building the positive perception people hold of the brand. Knowing that successful brands show a balance of both, they wrote a new paper called The Long & Short of It, which explores how companies can balance these two objectives in order to increase revenue.

Short-term & Long Term

The growth of the internet has meant that there are a lot more ways in which businesses can talk to potential and existing customers. They can also get instant feedback on how these communications are received and with a ‘Buy Now’ button that’s active 24/7, they can sell to more people than ever before. This has led companies to focus their attention on short-term results. Promotional offers (e.g. buy one get one free) are the easiest way to achieve these short-term results.

However, it is important to understand that all brands, not just the biggies, are now able to create a whizzy website, so businesses must not forget the importance of building the appeal of the brand in order to differentiate from their competitors and so that it comes to people’s minds quickly, or becomes the automatic choice at the supermarket shelf.

This is why, as well as focusing on the short-term results, we shouldn’t lose sight of the long-term results whose impact won’t be evident until later (a matter of years rather than a few months).

Brand Response

Unfortunately, most companies divide each year into quarters and have to reach targets at each of those four-month increments. They also have to show improvements year after year. So what to do to meet both of these objectives?

Well, by analysing around 1000 effectiveness case studies of advertising campaigns, which is the most reliable way of measuring cause and effect, Binet and Field discovered that the most effective way of making a profit was to balance short-term ‘activation’ with long-term ‘brand-building’ to create, what they call ‘Brand Response’.

Brand Response campaigns prove to be almost as effective at activation (sales) in the short-term as those campaigns that only focus on activation and almost as effective at brand-building in the long-term as the campaigns whose sole objective was building the brand. Best of both worlds.

Here’s a chart that explains that:

L&S chart01

These clever chaps even discovered the optimum ratio between brand-building and activation: Ideally you should aim for a 60:40 split. That’s 60% of communications focused on brand building and 40% on promotions to make the perfect ‘Brand Response’ campaign.

L&S chart02

Brand Response is ideally 60% brand-building, 40% promotions

Does that make sense?

Audience

Another very trendy topic to talk about in advertising at the moment is whom you should be aiming your communications at. Do you:

  1. Go after your existing customers and try and keep them loyal
  2. Cast your net wider and talk to a broader mix in the hope of acquiring new customers

The answer is B. Although existing customers are seen as highly valuable, it is in fact those that sought new audiences that benefited from greater sales. Again, these effects tend to show more slowly so the received wisdom was to opt for A.

Book name to drop on customer loyalty [or the non-existence of]: How Brands Grow – Byron Sharp

This chart shows how going after your existing customers is great in the short term but when it comes to getting bigger paybacks, you need to be casting your net much wider.

L&S chart03

The perceived familiarity and popularity of the brand amongst the many enhances its appeal to the one

Still with me?

Tugging at the heart strings

Ever wondered why car adverts are all slick and shiny on TV but the campaign takes on a more factual, car lingo, tone when it comes to other types of advertising? This is because the commonly held understanding is that cognition merely rubber-stamps our emotional decisions. We are led by our hearts, often referred to as our System 1 brain, only taking the time to rationalise our decision with the hard facts that come through System 2 (slow) thinking. Why do we do this? Because thinking is hard! We tend to avoid it wherever possible; and that’s not just you and me, Mum.

Book name to drop on the subject of balancing head and heart: Thinking Fast & Slow – Daniel Kahneman

The effects of emotional campaigns build slowly but last much longer than rational campaigns, which are inherently unmemorable. As with promotions and brand-building, they both serve a purpose but to achieve best overall results, a combination of the two is required. Oh look, another chart:

long & short

The principle of the aforementioned Brand Response effect is that emotional priming has the benefit of making people more receptive to rational messages and less sensitive to price in the long run, meaning that companies don’t have to resort to ‘timely offers’ (when the purple line gets higher than the greeny-yellow line).

Shouting, Fame & Creativity

A couple of points to finish on, that may seem like no-brainers to you; the first is that if you spend more on advertising than your competitors, even the really big’uns (proportionately), you will see growth over the long term. Final chart to express that:

SOV

The second, and final point is that fame and creativity have a positive effect on advertising campaigns. The campaigns that make people feel differently in a way that inspires them to share their enthusiasm (making it famous) are usually surprising in some way. Embedding surprise into a campaign requires creativity and that, Mother, is why I have a job.

Any questions?

Predictably Irrational

This is a summary presentation of Dan Ariely’s fantastic Predictably Irrational. Some marketing books can be a bit of a bore to get through; a lot of people get the gist in the introduction and leave it there. This isn’t the case with Ariely’s book. His writing style is really accessible and if the points made in this presentation interest you, I wholeheartedly recommend reading the entire book.

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