NEWS31 October 2016

Marketers too short-term in their ad choices

News UK

UK – Brands that use paid media typically grow three times faster than those that rely on owned and earned media alone, according to new research from the IPA.

However, adding owned media typically increased the effectiveness of a paid campaign by 13% and earned media by 26%. This is also true online: paid online media is much more effective than unpaid.

As owned and earned online media have proliferated, many marketers have questioned the need to spend money on paid media and mass reach, but the research led by Les Binet and Peter Field, drawing on IPA TouchPoints data, refutes this.

Their report found that maintaining the 60:40 brand building/sales activation ratio is required to build profits. But often short-term activation strategies still win at the expense of long-term brand building and subsequent effectiveness. The average proportion of budget spent on activation objectives now exceeds the optimum, increasingly from 31% (average percentage of comms budget) in 2014 to 47% in 2016.

Another report finding was that adding television increases effectiveness by 40%, making it the most effective medium. It is also the best for generating top-line growth that drives profit, with a 2.6% average market share point gained per year when using television advertising.

Les Binet, report author and head of effectiveness at Adam & Eve DDB, said: “This latest research provides empirical evidence that our industry is focusing too much on the short term. The pendulum has swung too far in favour of brand activation, yet for truly effective advertising, we must continue to invest more in long-term brand building.”

Peter Field, the report author marketing consultant, said: “What underpins these new findings is that budgets matter more than ever in the current media landscape. To gain fame and top-line growth, brands need media with mass reach and scale, for which – as these findings reveal – television and video are the key ingredients.”