Rethinking brand for the rise of digital commerce
© Copyright WARC 2021. All rights reserved. CONTENTS
Marketing budgets are under unprecedented pressure. The events Contents of 2020 saw deep cuts to marketing investment in general, and brand- building in particular. More than ever before, marketers have to achieve more with less.
If we hold that a strong brand is key to the long-term Page 3 Page 6 health of businesses, we now face a profound risk – both to our commercial prospects, and to the Executive summary Why we need to talk about brand reputation of marketers as drivers of growth.
As the business world looks toward a post-pandemic rebound in confidence and budgets, the marketing discipline needs to rethink the way it talks about brand, media and performance marketing – and Page 8 Page 32 reframe it for a world of digital commerce, algorithms and almighty walled gardens. Brand as ‘future demand’ Building brand advantage in the shift to digital commerce James Hurman argues that we’ve taken the wrong lessons from digital disruptors, David Tiltman argues that brands still and that we need to reframe brand in drive an advantage in digital commerce, terms of future demand but the current industry narrative around brand-building needs to evolve
WARC subscribers can access a series of evidence decks containing research and insights behind these pieces.
Rethinking brand for the rise of digital commerce, WARC, 2021. 2 EXECUTIVE SUMMARY
Brand-building still matters But we need new ways to talk about it 1. 3. Consistent future demand creation The focus of e-commerce, tech and This has led to a growing number of start-up companies on performance companies ‘optimising themselves out • Future demand is consistently built marketing has influenced the wider of effectiveness’ as they efficiently • Demand is converted at a sustainable rate as it’s created marketing world. As larger brands convert all available market demand • Conversion activity continues to work as new demand becomes available pursue digital commerce and attempt with conversion tactics, then see their
to emulate the high growth of performance metrics decline as that DEMAND successful early-stage companies, they demand is exhausted. are switching focus to a shorter-term, SALES performance-based approach. 2. 4.
The ease of access to short-term metrics Brand-building can be considered like cost-per-acquisition is intoxicating the creation of future demand. when compared with the relative Future demand is created when new TIME difficulty and expense of measuring customers become aware of a brand the commercial return on investment in and add it to their consideration set. brand-building. The idea of ‘brand’ has At this point they become more likely accrued much baggage. Connotations of to respond to performance marketing fluffy, unmeasurable, vanity-based and efforts. Before this point, converting wasteful marketing abound. them can be difficult and expensive.
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7. 2.
Four drivers of brand advantage Start-up tactics have limited effectiveness A review of the literature points to at for mature brands, for whom there isn’t least four ways that well-supported that pool of pre-existing demand to brands still enable effective outcomes FAME MENTAL AVAILABILITY efficiently convert. Mature brands grow in digital commerce. These can be most efficiently by focusing on sustaining termed four drivers of brand advantage, Am I aware of it? Would I consider it? existing demand and generating new and communications plans should be demand. developed with these in mind.
8. • Fame and mental availability (two RECOGNITION PERCEPTIONS OF VALUE linked concepts) both matter. Pre- Converting existing demand and existing knowledge of a brand helps creating future demand are both search outcomes, and consideration Do I know it when I see it? Do I think it’s worth the price? critical to sustained growth. They’re of a brand during the ‘active’ stage compatible and should happen of a purchase journey is a huge concurrently. But they require different advantage. marketing approaches. • Recognition also matters – 5. 6. Brand advantage distinctive brand assets help both to ease recognition on the digital in digital commerce Converting existing demand with For good companies, starting up is shelf and to maximise the impact of performance marketing is predicated relatively cheap and easy – there’s a 1. performance advertising. on targeting customers already in pre-existing demand for insightful, the market. Creating future demand innovative, new products, which can To make the case for building brands • Perceptions of value, built requires the targeting of customers be efficiently converted with strong as companies shift into online sales, via functional and emotional who aren’t already in the market, by performance marketing. Scaling up marketers need to be confident that associations, help support pricing. standing out with engaging advertising, is much harder, as that pre-existing brand strength still delivers some form of and creating an emotional connection. demand has been exhausted and advantage in online purchase journeys. companies need to create future demand.
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3. 2. 4. 2.
But research also points to the The result in the current business Given these trends, brand-building The emerging study of attention will be limitations of communications. Strong climate is that marketers are trying to (creative and media approaches that key for brand managers as they look to brands risk an ‘expectation gap’ if the achieve more outcomes on challenged build future demand) and performance prioritise media and assess emerging reputation they build is not matched budgets. Media channels and platforms (conversion of demand) need to be formats. New research connects in the experience they deliver. Brand- are responding to these needs with planned together to leverage the attention with mental availability, one building communications, product and new products that blend brand and connections between the two, and of the key drivers of brand advantage experience (both online and offline) performance – for example, ‘full- maximise the impact. The channels that for online sales. There is potential must work together. funnel’ platforms that offer a range of convince marketers they can support in the idea of an ‘attention strategy’ formats and buying options, including both will attract investment. that reflects a company’s objectives ‘shoppable’ opportunities. and takes account of existing brand Challenging the strength. brand-building ‘silo’ 3. Finding the right media opportunities 1. This challenges industry assumptions on the role of different channels – 1. Research suggests brand investment for example, the outdated view that should be three times that of The assumption that online sales require traditional channels drive brand while performance for brands selling online online ads also needs to be challenged. digital channels drive performance. – but that is not what is happening in All channels have an impact across online As digital channels mature, and as the market. One explanation is the and offline sales. The opportunity lies traditional channels digitise, there theory of ‘digital rent’, which suggests in understanding how combinations of will be more opportunities to build the advertising budget is having to channels might work together to support brands in what have been thought of absorb new responsibilities to support specific brand objectives. For example, as performance channels, and drive the shift into online sales. This would there is a long-established relationship performance from brand-building work. include search spend on the platforms. between TV and search which can This trend complicates the brand/ arguably be under-leveraged if brand and performance equation. performance are planned separately.
Rethinking brand for the rise of digital commerce, WARC, 2021. 5 WHY WE NEED TO TALK ABOUT BRAND
Why we need to talk about brand
2021 investment has shifted heavily Post-pandemic budget cuts The past year has seen a step-change As money has flowed into formats into performance media, including largely fell on brand-building in purchasing online. The peaks we’ve like Amazon search or paid social, e-commerce and retail media and related expenditure seen at the height of lockdown are the cutbacks have been to brand unlikely to last, but development has investment – across advertising, How do you expect the balance Where are budget cuts being made? been accelerated. Companies in a sponsorship and associated costs. of your investment to change in the slew of categories have been forced The upshot is a stark shift towards what coming year? to invest in new infrastructure, and are termed ‘performance’ channels – there is a clear direction of travel. those that drive short-term, measurable Toolkit 2020 Toolkit 2021 60% 80% sales impact. 70% For media owners, the biggest winners 67%
51% have been the companies that span That shift away from brand is an 45% 60% 53% 49% both digital commerce and advertising. acceleration of a long-term trend. 40%
This is a global trend. It includes In 2019, standing on the WARC stage 30% 40% 32% Amazon, Alibaba, Shopee, Lazada and at Cannes Lions, the researcher Peter 29% 28%
other marketplaces around the world, Field declared a crisis in creative 15% 20% 20% 14% 13%
the emerging retail media sector, and effectiveness. Marketers were failing to 5% in performance in Increased investment in brand Increased investment change No increasingly social platforms such use creativity to build brands and drive 0% 0% advertising Brand Agency and vendor fees Sponsorships & partnerships New creative development Tech investment marketing Performance Other as Instagram and TikTok that enable growth, he argued. commerce. Incredibly, at a time when intangible In WARC’s Marketer’s Toolkit 2021, we assets make up 90% of the S&P 500’s asked our global audience how these market capitalisation, marketers trends had affected their budgets. appear to be losing faith in their core contribution to those assets.
Source: WARC Marketer’s Toolkit 2021 Source: WARC Marketer’s Toolkit 2021
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There is arguably a Their work is now commonly By labelling brand-building and • A need to invest in formats like Amazon disconnect between the referenced. But in the retelling, a lot of performance marketing as entirely search as sales shift online and brands power of brand at a business the nuance around these two ‘types’ of distinct, even opposite, we appear need to maximise their presence close level, and the everyday communications is lost. to have missed the connections to the point of sale. This requirement between the two, and siloed brand- will become more acute over time as activities of the marketing • What we call brand-building building as a long-term endeavour digital commerce grows. department. communication (reaching beyond that requires a leap of faith to invest in. ‘in-market’ consumers, often with • A lack of confidence in or As James Hurman points out in this Commentators such as Tom Roach and a form of emotional messaging) understanding of brand-building and paper, brand-building is seen as Mark Ritson have made the point that should still drive sales in the short the effectiveness advantage it gives fluffy and unaccountable by those the importance of doing both activities term. It may not always do so as to marketers, particularly in terms of outside the marketing department. simultaneously seems to have been effectively as targeted performance driving digital sales. Commentators like Scott Galloway talk lost. And as Professor Jenni Romaniuk ads when measured over a short of the Ehrenberg-Bass Institute wrote about the end of the ‘brand age’. This white paper examines these timeframe, and its full payback on WARC in January: “One of the challenges and explores some ways to This has not been helped by some of occurs over a longer period. But if biggest own-goals of the advertising respond. the narrative over recent years. it isn’t working in the short term, it industry is the invention of the ‘brand- won’t start working in the long term. building’ campaign.” First, James Hurman argues that UK effectiveness researchers Les Binet we’ve taken the wrong lesson from and Peter Field have rightly become • Performance marketing works better digital disruptor brands. He lays out an industry names on the back of their if it comes from a strong brand. The shift into digital alternative way of thinking about brand analysis of IPA case studies. One of This is clear in a recent Facebook commerce is laying bare and performance that helps bring the the most important contributions they study that showed how cost per these issues. There are at two closer together as complementary made was to recognise that marketing acquisition for one brand fell as least three challenges to techniques. communications have two roles – awareness rose. So for marketers brand-building budgets: who scrutinise cost-per-acquisition, delivering sales in the short term, and Second, David Tiltman assesses the brand should be a key factor. building brands that can deliver sales • A shift into performance spend, current evidence for the role of brand in the long term. From that flowed the at the expense of brand budgets, in digital commerce, and how to plan 60:40 rule and the idea of a ‘two-speed’ driven by the economic shock of the effectively in a fast-changing landscape. marketing plan. pandemic.
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Brand as future demand How advertisers are optimising themselves out of effectiveness, and why brands need to create future demand while they convert existing demand
by AndrewJames Hurman Geoghegan GlobalFounding Consumer Partner Planning Director DiageoPreviously PLC Unavailable
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1. Introduction The focus of e-commerce, tech and start-up companies on performance marketing has come to strongly influence the wider marketing world. What gets measured gets managed – and the ease of access to performance metrics like cost per impression, click and acquisition, when contrasted against the relative difficulty and expense of measuring brand marketing, means that our management efforts (and therefore spend) are becoming skewed toward performance.
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The rise of Yes, the darlings of the start-up world Within ten years, Andreessen Horowitz performance marketing are seductive. They invent exciting expects all but 20% of those incredible products, then have a surgical ability to companies to have failed and closed Large brands in mature categories get people to buy those products in a their doors, or be limping along barely are seeking to use performance way that sees them grow very quickly delivering a return. Like A16Z, most VC marketing to emulate the high growth while spending far less on marketing. business models are predicated on the of successful early-stage companies. Who wouldn’t want that? majority of their investments failing, while 20% return so much that they pay On one hand, this is constructive. The trouble is that the majority of those for the rest. Why not learn from how successful, companies fail in the longer term. innovative companies are managing The Googles and Facebooks of the the effectiveness of their marketing? world are among a handful of lonely Why not experiment with their tactics Emulating the losers outcasts thriving in a monumental to find out if they work just as well for Andreessen Horowitz, one of the graveyard of literally hundreds of our brand? biggest and best venture capital (VC) thousands of dead companies. firms in the world, invests in around On the other, trading the proven Seeking to learn from the best is 20 out of every 3,000 companies that longer-term effectiveness of strong admirable. But deciding how to Deciding how to steward apply to them for funding. That is, they brand marketing for the primarily steward a brand by emulating the invest in the most incredible 0.7% of a brand by emulating the short-term, performance-based approach of a sector with a 0.1% companies. approach of a sector with approach of early-stage start-up success rate is ludicrous. a 0.1% success rate is companies is incredibly risky. Those companies are almost always The clear outtake is that high rates of experiencing high growth, and use ludicrous. short-term, early stage growth are a very performance marketing in a way poor predictor of the future success and that shows a low cost of acquisition, sustainability of a company. supported by other impressive performance metrics.
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Running out of customers
Studying these companies, They just need the solution put in Anecdotal reports suggest it’s become clear that they are front of them. The company uses this usually happens around So why do these extremely good at converting cost-effective digital marketing to three years from launch. demand for their product into get their solution in front of those companies, with consumers. It goes brilliantly. Growth What happened? sales. such strong early happens exponentially, and at a very Those companies deftly created a performance, almost But they’re terrible at creating what low cost. VCs and the media pile in. product for which there was pre- we’re calling ‘future demand’. Techcrunch goes wild. always fail in the end? existing, unmet demand. They skilfully We see the pattern repeat again Then something strange happens. New converted all of that demand. And they and again. A company launches an customers become more difficult and ran out of customers before they’d innovative new offering to market. It expensive to find. Growth slows. Cost done the critical job of creating future solves a very real customer problem in per acquisition begins to rise – and demand. a totally unique way. There is a naturally keeps rising, to the extent that their occurring group of consumers who will business model (which was predicated pay to have that problem solved. on very low marketing costs) is no longer valid. The path to profitability suddenly looks long and treacherous. Eventually, the whole thing peters out.
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How big tech changed its tune on advertising FAANG global adspend, $ billions
Facebook Apple (e) Amazon Netix Google
25 While there is clear value One of the factors is brand. “Has it to activating available built a brand that people love and 20 customers, and doing trust?”, she cites as one of her key 15 so expediently, where considerations. “White label a Glossier/ Chanel/La Mer product, and chances performance marketing 10 are women won’t covet them nearly as lacks is in its ability to build much, even if the contents inside are 5 a relationship with future the same.” customers. 0 And she advocates against an over- 2013 2014 2015 2016 2017 2018 2019 2020 Li Jin, General Partner at VC Atelier reliance on performance marketing to Ventures, which has backed companies Source: WARC Data scale. “It’s unsustainable to rely heavily like Patreon and Substack, stated: on paid acquisition channels to grow, as “there are over 400 startups trying to One of the biggest clues that brand- Jeff Bezos has even admitted he had the margin ends up being bid away.” be the next Warby Parker, but history building remains important in the digital “changed his mind” about the value shows that 90%+ of e-commerce economy is the fact that the digital of advertising as Amazon has seen companies will fail. What separates the commerce natives are now major competition increase. successes from the failures?” investors in advertising. As this chart shows, the FAANG companies have Others are following in their wake. In a significantly increased advertising recent earnings call, Etsy’s CEO eulogised investment in recent years, and now about the power of its emotionally-driven account for around 4% of total global TV campaign when run alongside a direct- adspend, according to WARC Data. response push. In other words, companies like this need strong brands built outside their algorithms.
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2. The case At any single point in time, there is a finite amount of demand for a brand.
for future That is, there is a certain amount of people who have need of the brand’s product category, are aware of a brand and who demand would consider buying it if the right offer were put in front of them.*
That finite amount of demand is available to be captured and converted to sales with sales conversion or performance marketing activities.
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But as that demand is exhausted, sales conversion and performance marketing activities become less effective, less efficient and more expensive.
Eventually, at saturation point, when * Yes, it’s true that consumers will often all demand has been converted, the results jump at a novel product that solves a real from sales conversion and performance problem in a highly unique and compelling marketing activity plateau completely. way, without needing to be aware of the We have, often very effectively and efficiently, brand in advance. But, (a) there is still a finite captured and converted all of the available amount of these customers which will at demand. some point be exhausted, and (b) while we all think our baby is beautiful, in reality At this point, the only thing left to do is to very few products are novel, unique and generate new demand, which then becomes compelling enough to have a pre-existing available to convert into sales. demand pool as big as the sales ambition of the company and its investors.
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The demand valley of death
While converting existing continues for as long as it takes for a It’s at this stage that start- base is much greater, which can mean demand to sales can happen new set of customers to go through up and scale-up companies the business model no longer functions very quickly – sometimes that process of being introduced to hit the skids, lose investor profitably – often meaning game over, immediately and with a single a brand, then becoming familiar and confidence, and turn from or a significant pivot, or a sustained trusting enough in it to be sufficiently period of losses ahead. strong offer – creating new high-growth darlings into ready to be converted. demand takes longer. dead brands walking. In mature organisations, scale and This period is usually traumatic inertia mean that the business doesn’t The process of becoming sufficiently Start-up business models are often and destructive for a business. normally face an existential threat – aware of, familiar with and trusting of predicated on marketing costs As sales slow down, the stance of but does face an agonising period a brand to truly turn into ‘convertible observed during an early period when a business changes from one of where momentum is lost, faith in demand’ rarely happens in the space pre-existing demand is being efficiently growth, confidence, momentum and management is questioned, layoffs of one ad, campaign, or interaction converted. This can create a false investment, to one characterised happen, fingers are pointed, and culture with a brand. understanding of the future marketing by a sudden absence of growth, is compromised. costs needed to sustain the business. Familiarity and trust are created over organisational anxiety, confusion Our CPA looks fantastically low – we It’s not enjoyable for anyone – not the course of several interactions with and budget cuts. In this tailspin, it’s only need to spend $5 to convert shareholders, management or staff. a brand across a duration that may difficult to coordinate and invest into existing demand – so we assume we’ll Nor customers, who suffer the be weeks, months, or even years in the types of marketing activities that only ever need to spend $5 to acquire a consequences of cost cutting affecting categories like luxury and automotive will generate new demand. Usually, out new customer. areas like service and support or goods. For this reason, if we wait until of desperation, we continue to try to product quality. all existing demand is exhausted before wring new sales out of our exhausted In reality, once that demand is pool of demand – an expensive and we begin to generate new demand, we exhausted, we face the cost of These avoidable outcomes happen often pointless process that only experience a painful period where sales creating new demand PLUS the cost as a result of failing to create future causes more scepticism in marketing’s flatline or drop, or become extremely of converting that new demand. The demand while existing demand is effectiveness, leading to more anxiety expensive to activate. This period business suddenly realises its cost being converted. and budget pressure.
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Crossing the valley
When future demand creation and Plus, because creating demand takes It also should be noted that demand existing demand capture happen longer and is more expensive than creation with brand-building activity How do we avoid concurrently, growth is sustainable converting demand, it means we need doesn’t lead to an absence of sales in and sustained. We have a well-oiled to spend more on demand creation the short term. The data are conclusive hitting these skids? marketing machine that’s creating than demand conversion. that brand marketing still provides a demand and then converting it in a reasonable level of short-term sales, The answer’s a stable and sustainable way. This is why the data show that the most but unlike performance marketing, also simple one. We effective brands spend more of their generates future sales. Because converting existing demand overall budget (60%) on brand-building need to be creating and creating new demand both cost than sales activation activity (40%). future demand at the money, this necessarily means either This ratio is even more pronounced spending more, or transferring some for online-only brands – Peter Field same time as we’re spend from conversion to creation, and and Les Binet have shown the optimal accepting slightly lower rates of short- mix to be 76% brand and 24% sales capturing existing term growth. activation for online brands – demand demand. conversion is very efficient online, while brand-building is a little more difficult.
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3. The principle The need for investment in building brands as well as to pursue performance marketing can be rethought as creating of future ‘future demand’ versus harvesting ‘existing demand’. The relationship between the two is key.
demand Based on existing research and case studies, we can build the following models.
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No future demand creation
• Demand for the brand stays flat • Sales plateau when demand is exhausted • Conversion activity stops working as there is no more demand to convert
Every brand has a ‘demand ceiling’ – in short, the amount 1. of people in the market who have a need for the category
product / service and won’t reject the brand in question. DEMAND
SALES
TIME 2. Demand conversion activity cannot convert demand that doesn’t exist. Future demand creation after the fact
• Sales plateau when demand is exhausted • Future demand builds slowly over time • Demand can only begin to be converted efficiently once sufficient future Creating future demand takes longer than converting existing demand – demand has been created 3. therefore when a brand starts creating future demand only when existing demand is exhausted, there is a period of sales stagnation. DEMAND
SALES
Flat sales period while future demand is created
TIME
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Consistent future demand creation
• Future demand is consistently built • Demand is converted at a sustainable rate as it’s created • Conversion activity continues to work as new demand becomes available
DEMAND
When future demand is created consistently, 4. SALES sales growth can be maintained sustainably.
When future demand activity is reduced, sales will TIME 5. continue at first before decaying – temporarily creating an illusion that brand-building is unimportant to sales. Future demand activity reduced
• Brand-building actively is reduced or stopped • Sales do not immediately drop, as prior brand-building activity has created future demand • There is an initial false sense of security that brand activity is unimportant • Sales then decay
DEMAND
SALES Misleading period when sales hold up
TIME
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4. Creating Future demand means people who are not yet ready to buy – but may realistically come into the market or future the category in the future. That leads to both media and creative considerations, demand as what will win the attention of somebody in the market may not be enough to do so for future buyers.
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What do we mean by ‘demand’? Essentially, a brand’s demand is the amount of people who (a) have a need for the brand’s product category and (b) would consider satisfying that need with a product from that particular brand.
At any single point in time, this is a finite Future demand is a second group of people number of people. These people are in a who don’t yet have a need for the product position to respond to an offer from the brand. category (or who aren’t yet ready to switch They are ‘demand’ that can be immediately from whomever they’re currently buying from) converted. So sales conversion activity – be but who are aware of and would consider that a conversion ad on Facebook, a price buying from the brand if and when the need promotion in the supermarket or a direct arises or they decide to switch. response TV ad – is likely to succeed in getting them to buy the product. In their case, sales conversion activity won’t work. At least not immediately. They’re not ready to buy yet. But they are primed, and so future sales conversion activity will work on them as they enter the market.
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Influencing demand The rise and fall of demand is influenced by many variables.
At a category level, demand is often Of course, demand isn’t one-and- interested in that particular feature or governed by things like the weather done. If Nike went off-air for a period, style, they’ll plateau. Unless, along the (ice cream), trends stimulated by and other brands seduced those Nike way, they’ve created future demand by the media and consumer culture customers effectively, Nike may well fall generating awareness, familiarity and (environmentally sustainable products), off the consideration set and see future trust among a new set of consumers global pandemics (video-conferencing), demand for its brand decrease. who they can then convert. or macroeconomic shifts (home loans). In some cases, category demand is In the case of a brand new shoe It’s this ‘new set of customers’ that are ubiquitous (electricity, clothing). Some company, they will initially only be able critical. Not the customers already ‘in categories (e.g. collagen powder to convert a very small amount of the market’ and ready to buy. Hence supplements) have quickly grown as a pre-existing demand that’s currently the evidence from the Ehrenberg-Bass result of many, many brands working un-served by others like Nike. They’ll Institute that focusing on penetration Do not be seduced by the together to make collagen ‘a thing’. probably do this by creating a product (i.e. targeting as many consumers as idea that it is wasteful to talk with unique features or styling. If they’re possible, regardless of whether they’re Within categories, individual brands successful, they’ll appeal to a small an immediate conversion prospect) to people who are not about command a share of the overall segment of the market that’s been is more important than focusing on a to buy. It is vital to do so. category demand. Within footwear waiting for that unique feature or style tight ‘buyer’ segment if the brand is to (ubiquitous category demand), a brand to come along. With a great product, grow. As Peter Field notes, “do not be Peter Field like Nike commands a very high share it’ll be relatively easy to convert that seduced by the idea that it is wasteful of that demand. Most people are aware existing demand with performance to talk to people who are not about to of Nike, and a large proportion would marketing. But once they exhaust that buy. It is vital to do so.” consider a pair of Nikes. pre-existing demand pool of people
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How to create future demand
Prior research from the Ehrenberg- Paying for impressions is not As the last 20 or so years of Bass Institute and the IPA has shown the same as standing out or behavioural economics and Future demand is created that brands grow over the longer earning consumers’ attention. neuroscience has proven, human term when advertising reaches broad decision-making primarily happens when we do three things: audiences (rather than tight segments), As Professor Karen Nelson-Field, an emotionally. We make around 95% of stands out and is well branded with expert in the field of attention, says, our decisions with our ‘System 1’ brain 1. Target large and creative that cuts through, and engages “at the moment, media is sold on – intuitively, subconsciously, and guided new audiences our emotions rather than trying to opportunity or potential to view rather by emotion. And we make just 5% with persuade on a rational basis. than whether someone has actually our ‘System 2’ brain which considers 2. Stand out seen the ad or not. As it turns out, rational factors in a ‘pros and cons’ It isn’t that it’s impossible to generate many don’t see it, yet advertisers still way and makes a conscious evaluative 3. Bond emotionally new demand with tightly targeted and pay.” Research from Lumen shows that decision. rational product comms. It’s just much only 9% of digital ads are viewed for harder and much more expensive. more than one second. Performance We usually make decisions emotionally, Product ads don’t tend to stand out marketing that stands out, captures and then those decisions are ‘rubber as much as big or catchy brand ideas. and sustains our attention is rare – stamped’ with the rational part of They seek to engage the rational part despite the billions spent each year on our brain. Humans don’t like to make of the brain with information. And tight impressions. rationally stupid decisions, and so targeting tends to limit the amount of this rubber stamping ensures that our new demand you’re creating to a set of emotional decisions aren’t entirely people who may already be customers foolish ones. or already demand the product category or brand.
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Lessons from the Messy Middle
However, as the Google Messy To create and convert demand we need A recent report from Google and the Behavioural Architects underlines the challenges Middle research (opposite) shows, to align with this reality of how the brain brands face in online purchasing environments – but also their ongoing power. we will still often forego rationally far works: superior products and propositions In this experiment, they tried to get consumers to switch from their first-choice brand in favour of inferior ones from brands 1. Create an emotional bond among to a fictional brand they had supercharged with behavioural nudges like user reviews that we are emotionally closer to. a very broad audience, especially and money off. In most categories, most consumers were willing to switch. Emotional connection gives brands a those who are not already ‘in But it also shows quite considerable numbers of consumers sticking with their first- valuable buffer against competitors the market’ with advertising that choice brand in the face of all available evidence. with cheaper or technically better primarily exists to stand out and be 1st choice brand Fictional brand offers. noticed by people unfamiliar with the brand (creates demand) 100 28 43 44 48 49 50 50 50 51 53 60 60 62 63 63 63 63 64 65 71 73 73 75 75 76 78 79 79 82 86 87 The data evidence is significant that 2. Follow through later with rational people who feel emotionally close to 75 a brand are more likely to buy it, more offers to those who are ‘in the 72 market’ and ready to notice and likely to accept a price premium, more 57 56 50 52 51 51 50 50 49 likely to accept a functionally inferior respond to rational offers (converts 47 40 40 38 37 37 37 37 36 35 demand). 30 product. 27 27 25 25 25 25 22 21 21 18 Again, the take-out is not that 14 13
emotional advertising to broad 0 Cereal Flights – Long haul Car (SUV) Whisky Detergent Smartphone Face moisturiser providerMobile network Cat food Clothing Children’s toy Laptop Cinema Shampoo TV Fitted kitchen Mortgages Power drill haul Flights – Short Make-up Energy provider Broadband provider Package holiday Credit card Car hire Hotel Sofa ISA Bathroom suite Mountain bike Car insurance audiences doesn’t create any sales in the short term – it does. Even better, it also generates future sales.
Transfer of preference from first choice to fictional brand – bias supercharging analysis, all categories.
Source: ‘Decoding Decisions’, Google & The Behavioural Architects (2020)
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Click-through rates were higher for a brand supported This is supported by Direct Line Performance marketing is by advertising vs. a brand with no ad support. only sustainable when future Group’s 2018 winning IPA Effectiveness paper ‘They went short. We went long.’ demand has been created Privilege click-through rate Churchill click-through rate In that case, ad click-through rates were New research by Professor Jenni twice as high for Churchill – the brand 12.1% Romaniuk at the Ehrenberg-Bass that had invested in brand advertising Institute, and a separate study by consistently over past years – than researchers at the New York University Privilege – the brand that had cut ad Leonard N. Stern School of Business, support to zero (see chart opposite). 9.4% shows that consumers gravitate towards noticing and interacting with So – if we want to grow by getting more brands that are already familiar to them. consumers to respond to our digital 5.7% Prior knowledge or usage of a brand advertising in future, we’ll make it vastly easier for ourselves if we have built up is a much stronger predictor of choice 2.9% familiarity with the brand in advance of than the design of a digital asset (e.g. 1.8% colours, images, fonts). If we’re a new targeting them with those ads. 2.7% 1.2% brand, this suggests it doesn’t matter 1.4% We will have created future demand 0.8% how well designed our ads are – it’s 0.5% that can then be converted at a much much more important to focus on Rank 1 Rank 2 Rank 3 Rank 4 Rank 5 more efficient rate. building familiarity with the brand than it is to neglect familiarity and just focus Source: Direct Line Group: They went short. We went long. IPA Effectiveness Awards, 2018 on tweaking the design elements of ads.
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Demand at different company lifestages
A. Start-ups
The role of an innovative start-up Creating a truly unique and superior The same is true for Tesla, Facebook, is to understand where there is product is a far faster way to early Uber, Amazon and all the other start- The way demand is existing unfulfilled demand. That is, a market traction than creating a parity ups that captured their markets without customer need or problem that isn’t product and attempting to differentiate the initial use of brand marketing. created and captured being adequately served or solved by it with brand. is very different across any other brand or product. It should be noted, however, that innovative start-up When Google was created, there was creating a product this good is Capturing that demand relies on an unserved need for relevant internet extraordinarily difficult. These products companies, scale-up creating a product that compellingly searches. With their superior search represent a fraction of a percent of companies and mature serves that need, in a unique or engine and algorithm, Google served all start-up products. Though we brands. objectively better way. that need far better than competitors might aspire to create a product like AltaVista or Ask Jeeves. Millions as good as Tesla’s or Google’s, it’s When that’s done right, cost of of web users chose to use Google vanishingly unlikely that we will succeed acquisition is very low because all not because it was a brand that they – especially if we are working in a marketing needs to do is make people were familiar with or had any particular corporate environment where politics, aware the product exists. Customers affinity with – but solely because the consensus decision-making and other already have the need, and the product product performed so well, and was such impediments to good innovation is the only one that’ll solve it. free to use. The role of marketing in exist. Google’s early days was simply to make This is the simple reason why start-ups the world aware of Google.com, which are (and should be) so product-focused. was an objectively far superior product.
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B. Scale-ups
Scale-ups face a creative challenge As companies move from start-up to power of their brand to insulate them scale-up, the playing field tends to against a raft of competitors who level. Competitors arrive, often with regularly bring out products with new similar or even superior products. features well ahead of Apple. And 2.2 2.2 Customers have a range of ways to yet their customers are prepared to solve their problem, from a range of wait, and to pay more for, the Apple 1.9 different brands. equivalent. Star Rating 1.7 1.7 58%
The main danger for performance- During scale-up, marketing’s role is no 49% 50% Brand Fluency 48% focused start-ups is that the longer simply about making people 44% relationship they develop with their aware of the product – but making them 1.06 customers is solely based on product believe the brand’s product is the best 1.02 Spike Ratings 0.92 features. When this is the case, the one for them. 0.88 0.86 scale-up stage is made difficult by Total demand becomes shared Year 1 Year 2 Year 3 Year 4 UK customers who will eagerly shift to a 193 ads 120 ads 86 ads 46 ads Total competitor who brings out a better among a number of competitors, all feature set. of whom are acquiring customers and exhausting that demand at a far greater Source: System 1, cited in ‘Scaling up without screwing up’ by Tom Roach Whereas, start-ups who establish an rate than before. Scaling up requires emotional connection tend to breed maintaining product superiority as best Scale-ups tend to take time to adapt to When scale-up brands first go on TV, customers who will stay with them we can, but also building awareness brand-building media like TV, according they try to advertise like they do online even when competitors close in. This is and consideration among those who to UK research. It takes on average – with the kind of rational, product- something Apple has excelled at from will be future customers of the category four years for a new-to-TV brand to focused ads that worked for them as their earliest days – using the emotional and brand. reach ad scores comparable to more a start-up. It takes them a number of experienced TV advertisers, according years to make more emotional, brand- to Tom Roach and System 1. centric ads that work much harder. This process could happen much faster if scale-up brands properly understood the role of marketing at their lifestage.
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C. Mature companies
In mature categories, we usually see a wide Marketing is about making sure the product range of products that are only superficially is physically available and priced right – differentiated at a product level. As and future demand creation is all about marketers, we might kid ourselves that the creating ‘mental availability’ and an emotional TV, bank or biscuit we’re selling is better, connection with consumers that will make but the reality is that consumers won’t see it them choose your pretty-much-the-same that way. Ehrenberg-Bass Institute research product over all the others. featured in the book How Brands Grow shows that across major categories, an average of 17% of buyers of a product see it as being different or unique.
In mature categories, people do not buy products because they see those products as being superior. They buy them because they will adequately serve their need and are either the most convenient option, the cheapest one, the one they trust the most, the one they feel emotionally closest to, or just simply because they happen to feel like that one at that moment.
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If you’re not a monopoly, don’t market like one
In most categories, it’s of value platforms. This is why it’s extremely expected by single players in traditional to customers to have a range of difficult for marketplaces like eBay to categories. competing brands and products. We’d be challenged by competitors, and never want there to be just one wine extremely unlikely that a VC would fund In these situations, demand becomes brand. Or one shoe brand. Or one an eBay competitor. ubiquitous and very easy to maintain hotel brand. – because competition is naturally Amazon, Google, Airbnb, Uber, Spotify, repressed. The need to create future But in some circumstances, it’s in Facebook, LinkedIn, and Netflix have demand in order to compete is vastly customers’ interests that one company all benefitted from this same reality. lower, and instead these companies establishes a monopoly position in their It’s in our interests as consumers to turn to brand-building activity to category. have one giant online store, one search maintain their social licence and In these situations, demand engine, one holiday rental marketplace, acceptability as a monopoly. becomes ubiquitous and Take eBay. As consumers, we want one ride-sharing app, one source of there to be one place where we can all music, one personal social network, In categories where competition is very easy to maintain – search all second-hand goods in one professional social network, and rife, and success means consumers because competition is one go. Were there ten competing one all-encompassing TV streaming choosing your brand over others, naturally repressed. platforms, we’d need to search service. companies would be foolish to try to ten different websites to find what emulate the marketing approach of we’re looking for. This would be time Even though competitors have Airbnb, Amazon or LinkedIn, which consuming and annoying – and so emerged for most – those major simply isn’t fit for purpose in traditional the market naturally sticks with one players have maintained far greater categories and would most likely see major player and rejects competing market share levels than could ever be them fail.
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5. Conclusions Converting existing demand with performance marketing is easy. It’s also one very important part of any marketer’s job. But that demand eventually runs out. And when it does, it’s impossible to get around the need to create future demand. Demand conversion activity cannot convert demand that doesn’t exist. Creating future demand takes longer than converting existing demand – so if a brand starts creating future demand only when existing demand is exhausted, the platform is already burning. But – when future demand is created consistently, sales growth can be maintained sustainably.
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Understand the trade-offs Don’t assume ‘thinking Monitor Next steps of performance marketing like a start-up’ means ‘future demand’ advertising like one It’s a valuable tool for converting Use brand tracking research to ensure existing demand, but ill-equipped Consider the evidence that high your brand is growing its awareness to create future demand. Review short-term growth and strong and consideration, and thereby building your budgets in terms of demand performance metrics are a very poor future demand. Understand the conversion and demand creation, and predictor of the future success and cost of creating this awareness and take company life stage into account. sustainability of a company. consideration growth, and what type of advertising best shifts the dial. Factor these costs and learnings into future Think carefully business-modelling, planning, and before reducing spend budget setting. on brand-building
The evidence is overwhelming that this is destructive in the mid-long term.
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Building brand advantage in the shift to digital commerce
by David Tiltman VP Content WARC
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That means a commitment in terms 1. Does brand still matter in What follows is a summary of the of messaging (creative, emotional) digital commerce (and if findings, and what that means for James Hurman has argued and media (as broad an audience so, how)? marketers in companies shifting into of potential category buyers as can digital commerce. A fuller series of that the example of digital reasonably be bought or otherwise papers will be published for WARC disruptors is misleading accessed), in addition to the powerful 2. How do you balance brand- subscribers, bringing together the for medium- and large- techniques that convert existing building and performance evidence we’ve found. size brands. Even in the demand into sales. marketing to optimise digital sales? The focus is on sales through world of digital start-ups, The assumption is that the result of this marketplaces and platforms, rather sustained growth involves brand-building will be an advantage than direct-to-consumer, though many once those consumers become ‘active’. 3. Do you need online ads to of the lessons should apply across building future demand. drive online sales? different models. But, in a world of algorithmically-driven recommendations, how do those brands confer an advantage? And what do brand managers need to do to unlock that advantage?
To unpack this topic, WARC has been working with leading researchers and practitioners around the world to address three questions that our clients are asking us:
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1. Does brand There is no consensus here – and conflicting advice. In his book Post Corona, Scott Galloway talks of a shift from the ‘brand age’ matter to the ‘product age’. In this new age, he argues, brand and reputation are secondary to user reviews and convenience. A carefully crafted brand narrative can be undermined by a better product backed by social proof.
It’s a very rational view of consumers – that given perfect information, we’ll make better choices. Brand in this worldview is seen as something fluffy and unaccountable.
“The losers”, Galloway states, “are the media companies that provided platforms for the big and bold brand-building advertising of the brand age, and the creative-driven ad agencies that made them.”
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The pushback to that point of view comes So is there any research from people like Martin Weigel, Head of to back this up? Planning at Wieden + Kennedy Amsterdam. Talking on the WARC stage at Cannes Lions In recent months we’ve been reviewing a in 2019, he stated: “We’ve been suckered number of new studies, working with experts into believing that we don’t need to build all over the world, as well as reviewing the memories.” existing literature on WARC. Overall the research supports the idea that brand still The important point here is that brand is about matters in online purchasing, and that brand- memory. The benefit of having a strong brand building communications support this. has, arguably, been the ability to nudge people towards a purchase, or pay a little bit more, It does so in four ways. We can call these four based on knowledge and associations built up drivers of brand advantage – the factors that over time. should help strong brands overperform during an online purchase journey (with a focus on Anecdotally, there is a sense in the industry buying on marketplaces or other platforms), that brand should matter even more in a and deliver positive commercial outcomes. world where physical cues are lacking and purchase journeys are compressed. Simon Peel, Senior Director for Global Media at adidas, made this point late last year after several years experimenting with what works for digital commerce. “If anything, the laws and rules of marketing and communications are Martin Weigel of Wieden + Kennedy speaking on the WARC stage more important than ever when it comes to at Cannes Lions 2019. e-commerce.”
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Four drivers of brand advantage
Strong brands retain an advantage in digital purchase journeys in at least four ways
FAME MENTAL AVAILABILITY RECOGNITION PERCEPTIONS OF VALUE
Am I aware of it? Would I consider it? Do I know it when I see it? Do I think it’s worth the price?
Why it matters: Why it matters: Why it matters: Why it matters: ‘Prior knowledge’ is an Being easily recalled in buying ‘Distinctive assets’ allow Rational (value for money) and advantage in search. situations is a major advantage as recognition in crowded digital irrational (emotional/aspirational) it aids branded search (either on commerce environments. associations justify pricing and ‘Common knowledge’ helps general search or within platforms). help resist commoditisation. buyers justify purchase decisions. Easily recognised assets aid the Measures: correct attribution of advertising In certain cases this may support ‘Network effects’ • Salience or mental availability at – and help make performance subscription or membership are prized by VCs. ‘category entry points’ marketing more powerful. models. • Share of search Measures: Measures: Measures: • Unprompted awareness • Distinctiveness of assets in • Brand equity research • Organic (non-paid-for) traffic relevant commerce sites • Price premiums into site or branded properties • Correct ad attribution • Percentage of sales at full price
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Fame
As former strategist and author But fame arguably goes beyond Paul Feldwick has recently argued, awareness. It’s not just knowing about a successful brand-building is brand – but knowing that other people about creating fame. And there know about that brand. This is called are a number of benefits to being ‘common knowledge’. The ability to well known that extend to digital embed a brand ‘in culture’ – whether commerce. A recent academic paper at a mass level or among a certain on the smartphone sector from the audience or community – remains New York University Leonard N. important. Stern School of Business showed that familiarity with a brand is one And the ability to generate fame Look at the proportion of of three factors that improve search matters to the backers of digital people who come direct to your outcomes and purchase decisions businesses. Venture capitalists look for website versus the proportion (the others being prior ownership ‘network effects’ in their investments, and prior experience with product in other words, the ability to reach that come through paid features). potential new customers cheaply. The activation or intermediaries like reason they look for these is that they price comparison sites. If you’re So top-of-mind awareness remains are aware that cost per acquisition will important – and the CMOs we spoke to rise as the ‘easy’ demand runs out. a strong brand, people will for this paper still count awareness as a actively seek you out. ‘base’ metric for brand-building. There Gymshark and Peloton are often cited is also growing interest in using forms as examples of brands that excel at this. Their fame is built on community, Les Binet, adam&eveDDB of organic (i.e. not paid-for) traffic as a way to assess interest in a brand. partnerships and advocacy as well as communications.
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Mudit Jaju, Global Head of E-commerce, Mental availability Wavemaker
Then there’s what the Ehrenberg- Small consideration sets mean Bass Institute calls mental availability. marketers need to build bias In the US, nearly half of Brands should come to mind easily and be associated with purchase online purchase journeys occasions (“category entry points” now start on Amazon in the Institute’s phrasing). Building A larger majority (62%) of online buyers This is important because people when consumers have a those associations is a key job for already know which brands they want to consider very few brands in the active communications. buy compared to offline buyers (59%). stage. When buying a smartphone specific product in mind. In almost every category, online buyers for example, people merely consider In Asia, Shopee has seen Research by Wavemaker (opposite) have higher bias for the brands they 2.1 brands; and even for a considered branded searches double confirms the ongoing importance of bought than offline buyers. purchase like laptops, it is only 2.8. between 2019 and 2020. this work for online sales. The rise of If consumers are actively looking at branded search is also telling here. The There are of course many steps so few brands, it is mission critical to recent interest in share of search as a between bias and purchase, but give your brand the best chance to be proxy for market share reflects the link building strong bias before a consumer considered. Clearly this must be done between branded search and purchase. begins an online shopping journey by building brand bias and not just So a major part of the battle is getting massively improves a brand’s odds of excellence in search execution. people to search for a brand, rather being considered before purchase: than the category. by 14x. Read the full article by Mudit Jaju In fact, recent US research indicates that branded search on e-commerce sites is a better predictor of eventual ‘add-to-cart’ actions than generic search terms.
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Professor Jenni Romaniuk, Ehrenberg-Bass Institute for Recognition Marketing Science Why distinctiveness Next, brands should be easy to matters in digital commerce recognise – whether that is recognising the brand on the digital shelf, or An often-cited benefit of online Clutter takes different forms and we correctly associating an ad with a shopping is the range, which is great often underestimate its extent. Even brand. A new study by Professor Jenni for the category buyer, but challenging more controlled environments such as Romaniuk at the Ehrenberg-Bass for the brand. Sales, thy enemy is a brand’s own website or app still have Institute confirms the importance of clutter. Plentiful, distracting, mental environmental clutter that the brand so-called ‘distinctive brand assets’ in and physical clutter takes away our needs to cut through to succeed. If you crowded digital environments. concentration capabilities and visual don’t have a visually cohesive portfolio, A lot of digital experiences But this remains an area where many faculties, making any one particular your very own brand’s portfolio can add are the same. What’s important companies fall down. A Facebook study brand hard to find. to the clutter, making it hard to find any of ads on its platform found that 57% one item you are selling. is finding the unique digital Other brands, images (such as of brands managed to drive awareness promotions), words (such as reviews), Read the full article experience for the brand and uplifts for their competitors through combined with a distracted buyer brain by Jenni Romaniuk having a bit of stickiness or their advertising – largely because of a means your brand is fighting an army lack of recognisable branding. friction in the experience if it for attention. makes it different, memorable And this failure to brand runs into the and worthwhile. world of digital experience, where a set number of templates on a small number Brent Smart, of tech platforms has led to ‘bland’ Chief Marketing Officer, rather than ‘brand’. IAG
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Patrick Miller, Co-President Digital Commerce, Perceptions of value Ascential
And of course, brand-building should Some VCs talk about brand as a Display and search work together help reassure consumers that the form of ‘defensibility’ for digital start- product is worth the price, by creating, ups – that is, the ability to resist new WARC has been working with its sibling If we dig deeper we can actually look reinforcing or modifying functional and entrants. This concept of ‘defensibility’, company Flywheel to explore some of at the change in purchase rate for emotional associations. originally applied to start-up tech, has the ways brand strength might work customers that view DSP and click on potential in the world of brand – though within digital commerce platforms. Sponsored Products vs. customers Brand equity research is a common way there may be variations by category. to track this, but the ultimate goal is to who just click on Sponsored Products. James Hurman flagged the Messy‘ Our analysis has been driven by diving look at price sensitivity for a brand, and In these instances we see a Purchase Middle’ research from Google and the into the Amazon Marketing Cloud what proportion of its sales are sold on Rate increase by an average of 4%. Behavioural Architects (“Lessons from (AMC), Amazon’s clean room, where we a discount. This is especially important the Messy Middle” on (page 24). In can look at the relationship between Both of these data points show how for companies that need to maintain a some categories it was hard to make mid- to upper-funnel tactics like DSP display and search work together and price premium online – particularly if consumers switch from their preferred and lower funnel tactics like Sponsored how mid- to upper-funnel investments they want to extend into new models brands; in others it was relatively easy. Products. can improve lower funnel tactics. like subscriptions or membership. It’s important to note these four We’ve observed that 20% of Sponsored There’s an interesting example of this drivers are mutually supporting. Fame Products clicks are preceded by an at play in a case study from Direct Line and mental availability are related; Amazon DSP view. This helps prove Group and Ebiquity, which looked at a catchy tagline or brand character the efficacy of display advertising and the link between brand and pricing in might help drive fame as well as helps brands think through fractional price comparison websites. Even in a recognition; perceptions of value are attribution. Amazon has last touch- market with relatively low emotional reinforced by familiarity and visibility. attribution, but click trumps view. AMC engagement, a well branded product allows us to build our own fractional could command a price premium over attribution to see how these various a near-identical product that was not media types interact. supported by advertising.
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The ‘expectation gap’ Relationship between brand reputation and click decision. Predictive Margins with 95% CIs
Research also shows the limitations of communications. .70
.69
Extra nuance comes through from a .68 new piece of academic research. While brand reputations This looked at the correlation between .67 are still useful on what they call brand reputation and e-commerce platforms, several core digital metrics: click .66 0 1 2 3 4 5 6 7 8 9 10 they might asymmetrically decision, browsing time and purchase. Brand Reputation Source: ‘Seller marketing capability, brand reputation, and consumer journeys on e-commerce platforms’, set up high expectations, The study, which was focused on the Jifeng Mu & Jonathan Z. Zhang, Journal of the Academy of Marketing Science (2021) which may lead to post- smartphone category, found that as brand reputation rose, so did the impact purchase frustration. on those three metrics – to a point. levels there is a danger of a mismatch power of its brands, the quality of its There is a clear benefit for unbranded between brand reputation and the products, the strength of its logistics, or ‘medium strength’ brands to invest in experience on-site, during delivery and the investment it makes in building their brands. and post-purchase. For any brand experience – not just online experience, But for all three metrics that impact with aspirations to be premium or but ‘real-life’ efforts such as detergent tailed off or even declined at the upper super-premium, it’s confirmation packaging specifically designed for levels of reputation. that product and experience matter delivery. alongside brand. The conclusion the researchers came So have we truly left the ‘brand age’? to was that stronger brands raise That’s exactly the conclusion drawn by In the words of one venture capitalist: expectations that are not always Procter & Gamble in recent earnings “The losers are big brands who can’t fulfilled. They argue that at these calls. It attributes its success to the win on the basis of brand alone.”
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What’s changing? There are a number of emerging areas that need greater scrutiny.
1. 2. 3. 4. Brand and recurring revenue Automated purchase Category variation Platforms-as-brands
Many companies are trying to build The implications of pre-set shopping The Google ‘Messy Middle’ data The platforms are themselves investing subscription or membership models lists have yet to be assessed. How do suggested that there could be heavily in building their own brands. That to capitalise on the strength of their consumers (or algorithms) construct significant differences in the stickiness creates a tension between the platform products and trust in their brands. The such lists, and how can a brand be of brand preference depending on brand and the manufacturer brand – relationship between brand and these added to one if a competitor is already category. Sometimes related sectors but ultimately the platform controls the models (in terms of acquisition rates, on it? How does this work in non-text appear to have different dynamics – algorithm. How can brand-building help churn, customer lifetime value) is yet to environments like voice? flights and hotels appear at opposite manufacturers resist commoditisation? be researched. ends of the chart on page 24. What And when can a strong brand sell direct drives these differences is yet to be to consumers to mitigate this risk (see: fully researched. Nike and Amazon)?
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The biggest challenge on e-commerce is brand-building. The CMO view It’s the most important challenge for marketers. How do you build your brand for e-commerce and not be a brand within e-commerce? Because by being a brand within e-commerce, you’re always going to be at the mercy of the channel, not the other way around.
Dhiren Amin APAC CMO, Kraft Heinz Experience is everything – irrespective of the brand or product, consumers are demanding personalised, highly engaging and differentiated digital experiences. Added to this, hyper convenience is crucial. Immediate, friction-free shopping has become the minimum expectation.
Tamara Rogers Chief Marketing Officer, GSK Consumer Healthcare
Strong brands do well in e-commerce. The convergence of media, entertainment and commerce offers many exciting opportunities for brands to grow... Brands need to provide unmissable services, content and experiences.
Conny Braams Chief Digital & Marketing Officer, Unilever
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Make brands fit Watch the Use offline as well Next steps for digital commerce ‘expectation gap’ as online experience Brands still matter in the world of Communications can’t do Delivery and unboxing are digital commerce, particularly for everything. And at the upper relatively untapped moments for large organisations that operate levels of reputation, a strong branded experience. DTC brands at scale. Creative and media brand may raise expectations realised this early; now larger plans should consider the four a company can’t fulfil. For players like Procter & Gamble are drivers of brand advantage and this reason, the rise of digital rethinking packaging for digital look to build and refresh them commerce has been described purchase journeys. over time. as a ‘back to basics’ moment that forces marketers to consider all ‘four Ps’.
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2. How do you If we know that we still need strong brands in a world of digital commerce, and that communications play a role by building and invest in refreshing the four drivers of brand advantage, then the question is how to invest across current and future demand. There aren’t easy answers here – but as James Hurman has already argued, brand and rather than thinking of these as siloed techniques, we can see them as complementary approaches that work together to performance? create the conditions for growth.
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Online brands should skew towards Optimum split between brand-building and sales activation brand-building
UK ad researchers Les Binet and Peter Field included analysis of online brands in their work with the IPA. Their findings underline the importance % of brand-building in an environment where product information is very easy % 74 to access. They argued that brand investment should be roughly three % times that of performance investment 55 for brands selling online. 45 % It’s safe to say that’s not what’s happening in the market, where we’re 26 seeing marketers lean more heavily into performance marketing as sales shift online. How do we explain this?
O ine brand Online brand
IPA Databank, ‘Effectiveness in Context’, Les Binet & Peter Field (2018)
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Why ‘digital rent’ explains the disconnect
There are plenty of theories for why Kite argues that ads like search and The point here is that the advertising marketers have not heeded this affiliates are essentially a cost of budget is straining in order to cover advice. Maybe risk-averse marketers selling online. They are ways to direct more areas. It is having to cover forms are hooked on the ‘fast data’ from existing demand to your brand. This is of physical availability (what might performance techniques. Maybe the what the digital platforms do brilliantly, in offline retail have been a shopper platforms have done a superb job on because they locate the demand marketing or trade marketing budget) developing and selling their formats. signals. Professor Byron Sharp has as well as mental availability. called search ads a form of physical But one theory, put forward last year availability – it’s about being easy to If that’s the case, marketers have found by the econometrician Dr Grace Kite, is buy, rather than about being easy to themselves in an unfortunate position more subtle. It’s called digital rent. recall. – their advertising budgets aren’t going Perhaps advertisers up, but they have to achieve more from have been forced to So as companies sell more through them. It also complicates the equation marketplaces, they will need to invest when it comes to budget-setting across devote too much budget to maximise their presence on those ‘brand’ and ‘performance’. For this to activities that don’t marketplaces. As we’ve already seen in reason Kite advises that ‘digital rent’ be drive incremental sales. Google’s Messy Middle research, this is moved to a different budget altogether. important as consumers can still switch during the ‘active’ phase. Grace Kite
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The issue of digital rent underlines one of the biggest problems in ad research – working out what has driven incremental sales, versus sales that would have happened anyway.
With the death of the cookie likely to brand and PR. CEO Brian Chesky has argued undermine some forms of attribution that the role of marketing now is “education”, modelling, the need for a better read on rather than an attempt to “buy customers”. what is working and what isn’t will likely spur renewed interest in econometrics and Most brands do not have the advantages media mix modelling. of an Airbnb. But some considerations in search marketing might include: But sometimes there is a more blunt way to test what is working and what isn’t – turn • Do you need to invest in pay-per-click something off and see what happens. on your own brand name if you have strong SEO? This is what has happened by default at Airbnb – it switched off its performance • Are competitors bidding on your brand advertising during the pandemic and found terms – and if not, do you need to? that 95% of its traffic came back anyway. It has now refocused its marketing spend on Airbnb has refocused its marketing budget on brand-building campaigns.
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What’s changing? Our assumptions around brand and performance will be challenged over the next five years by the evolution of the media market.
1. 2. 3. 4. Online as a brand builder Full-funnel platforms Blended approaches The evolution of performance
There’s been an assumption that Platforms are expanding into full-funnel Marketers under extreme budget pressure Performance marketing is evolving fast online formats drive performance operations, developing formats that help are looking for solutions like this, as they too. The term already covers at least two while offline works best for building build brand. They will sell themselves on need to achieve both demand harvesting techniques – ‘always-on’ formats like search, brands. That distinction is out of date – the ability to connect brand and activation and demand creation with reduced and temporary, targeted promotional there is growing evidence some video – including livestreaming and so-called resources. Brand and performance campaigns. The death of the cookie may force formats online are effective brand shoppable formats. The point here is that will need to work together much more a rethink for marketers that have been heavily builders. The interplay between online you can increasingly build brand in what closely. The platforms and channels that invested in data-driven techniques to identify brand advertising and endorsement by have been thought of as performance make this case convincingly will reap the existing demand. This may leave them more influencers or creators is another area channels, and drive performance straight benefits. This will give added impetus to dependent on platforms with first-party data. that will grow in importance. from brand-building work. If a TikTok broadcasters to develop connected TV It may also spur use of modelled techniques video can lead straight to a purchase offerings. like the ‘movable middle’. opportunity, is that brand or performance?
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Adam Epstein, VP Growth, Learning from Perpetua the Asia experience
Asia is ahead of Western markets click-based performance tools to How Amazon is fusing in terms of digital commerce maximise conversion potential. development. As WARC’s China Editor video and performance Jenny Chan points out, the shift to a And Tmall itself has been doubling ‘full-funnel’ approach is now several down on its short-form video offering to years old. upskill its branded-content capabilities. Amazon’s advertising team participated Let’s unbundle that, because it’s in IAB’s NewFronts, with a star-studded honestly profound: Amazon is Other e-commerce players like JD “China’s digital commerce giants lineup to promote its video ambitions. leveraging its vast balance sheet to have entered the fray, with a ‘closed have been blurring the lines between Some highlights were: original content acquire exclusive AVOD content, which loop’ embedding features like social brand and performance since 2017 for IMDB (an AVOD service), expansion allows advertisers to granularly target sharing, community management, and when Tmall first released its ‘OAIPL’ of Amazon’s NFL partnership (also viewers based on their purchasing livestreaming into the sales process.” consumer journey operation model. AVOD), greater access for Twitch behaviour on Amazon.com, and then OAIPL stands for Opportunity, Those trends toward entertainment inventory (AVOD), and the ability to creates a closed loop environment to Awareness, Interest, Purchase, Loyalty. and video built into digital commerce create actionable video ads which allow purchase new products direct from the viewers to “add to cart”, “add to Alexa video ad itself via its voice technology. The blurring will become even more platforms are seen outside China too. shopping list”, “buy now” or “shop now” Only Amazon is capable of this. pronounced in 2021. Both Alibaba Singapore-based Shopee has launched an in-app livestreaming feature, with – directly from the ad using their voice and Bytedance’s platforms are Read the full article 4,500 livestreams from brands a or Fire TV remote. offering more opportunities like by Adam Epstein videos, livestreaming, photos from all month. It is developing its own content angles, shopper reviews, seller ratings programme, including a Korean culture and gamification tactics, while still convention featuring a week of K-pop facilitating transactions with advanced concerts.
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Marketing is no longer just about balancing the short and the long term. The CMO view Digitisation is enabling us to serve both long- and short-term marketing and sales objectives in the same place, because media channels are becoming commerce channels and commerce channels are becoming media channels. If you look at retailer platforms, they are now media platforms where you can both build brands as well as drive conversion.
Conny Braams Chief Digital & Marketing Officer, Unilever We don’t think about shoppable media per se, as not all media should be shoppable. We think about what call to action is appropriate – based on the point in the shopper’s journey, the brand, the time, weather or shopper’s implied intent or interest. Within that context, we may add a shoppable component to our creative as we serve an ad, but we may not if awareness media is what is needed.
Doug Straton VP & Chief Digital Officer, Hershey The e-commerce space is becoming increasingly blurred within social channels, and is long past being a channel focused entirely on sales, becoming more emergent in brand-building, reaching consumers in all stages of the user journey.
Tamara Rogers Chief Marketing Officer, GSK Consumer Healthcare
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Plan brand and Pick your battles Minimise ‘dead ends’ Next steps performance together Those trade-offs may mean being The blurring of the lines allows more The reality is marketers will have to choosy about which forms of ‘digital opportunities to look for ‘next steps’ make trade-offs to cover all the jobs rent’ are most necessary. Econometrics beyond the ad exposure. Sometimes they need to do within the advertising may be able to help identify the ads that might be a direct shoppable budget. Marketers will need to plan truly delivering incremental sales. opportunity. Or it might be knitting brand and performance together (as in The other, more blunt and probably together channels like TV and search. James Hurman’s ‘consistent demand brave approach is to test and learn by Part of the campaign planning process creation’ approach), with more explicit turning things off and assessing the should be to map these routes. links between the two to generate consequences. maximum impact.
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3. Do online The third question we sought to answer was the relationship between different channels and outcomes in digital commerce. sales need There has been an assumption that a move into online sales requires a shift of advertising budget into online channels. While that is true to some degree, there is far more nuance in the research. online ads? And that means there are a number of opportunities for marketers to gain advantage by understanding some of the dynamics of the emerging media landscape.
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The short answer is yes… and no
Average sales impact by marketing channel As we’ve seen throughout this paper, And as we have seen, this investment maximising your presence close to can be thought of as ‘digital rent’, a E-commerce Brick and mortar the point of purchase – in the form form of ‘physical availability’, or as a
of advertising, product pages and means of harvesting existing demand. Affiliates more – is an important factor in driving Paid search online sales. That’s clear in the Google So the shift into online sales does mean Digital audio research. It’s also clear in a recent some shift into online ads. study that found viewing a brand’s Social There is more nuance when we come product page or branded search on Digital display to consider the channels that work to an e-commerce site is a much better OLV build what James Hurman terms ‘future predictor of purchase than visits to a demand’. Print brand’s website. TV
When looking at digital sales, the Radio problem we’ve had is the way PR attribution modelling has favoured OOH those digital channels close to the Cinema Halo impact is really point of purchase. Typically, search will be overemphasised in attribution 0% 20% 40% 60% 80% 100% important to understand if models, masking the impact of offline we are to be effective with channels, and also taking credit for Source: Analytic Partners ROI Genome our marketing dollars. customers who would have bought a product anyway. Research company Analytic Partners have an impact on sales both online Mike Menkes The hard part is working out what has studied this problem and found that and offline. Even ads on Amazon can influenced people before that point. all channels have a ‘halo effect’: they have an impact on offline sales.
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TV and web behaviour go hand in hand
Here’s an interesting example from an omnichannel health retailer, analysed by Analytic Partners. The headline finding is that TV had a bigger impact on website traffic than store traffic. And maybe that shouldn’t be a surprise. When you watch TV you tend to have a smartphone by your side.
Brand Y Example
Drivers of store trac Drivers of website trac
Display1% 3%OTT 1% Z Search Display3% 18% 3% 7% 35% TV OTT STORE WEBSITE OLV TV 3% 11% Social TRAFFIC TRAFFIC PR 1%PR 4%Social
8%Radio 13%Search
1%OLV 1%Radio Source: Analytic Partners ROI Genome
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Opportunity 1: Finding the right ‘recipes’
TV sponsorship extends peak traffic period on-site Marketers that understand these And these findings tie in with another combinations, and are capable academic study that has just come New user traffic onto site by hour during a single month of planning across brand and out. Said Business School analysed performance, can start to do thousands of campaigns tracked by Month in 2021 Month in 2020 interesting things. Data from an Kantar to look for the best ‘recipes’ Australian TV research company of media based on client objective. It called Adgile show how a retailer found that the best channel mix could used a TV sponsorship property at vary depending on the job to be done, a particular time to extend its peak and concluded: traffic period and bring more new users into the site. • Division of ‘traditional’ vs. ‘digital’ channels is a false dichotomy
• Companies should exploit a range of attention types
• TV is an effective bedrock but shouldn’t dominate investment
There are clearly still huge opportunities for marketers in learning how these channel combinations can work together.
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Hour Source: Adgile
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Opportunity 2: Using attention to identify the opportunities
The path from attention to brand growth/decline The other opportunity for marketers the channel mix, and maximise the lies in the work being done around impact with strong creative work. ‘attention’ as a media planning tool. One of the biggest issues in terms 2. Research companies Lumen of planning activity across different Partners and Ebiquity argue that Increase in channels has been the lack of a brand managers should start Brand common framework for assessing thinking in terms of ‘attention Mental growth Availability media opportunities. By measuring strategies’ that plan attention Memory attention across different platforms around the communications Attention to Retention and formats, researchers hope to objective and the pre-existing advertising create a better approach to planning strength of the brand. A brand with (Market share gain) media. little recognition, such as a new launch, may need to emphasise Two new studies are relevant for high-attention channels. A brand the planning of channels for digital with strong distinctive assets that (Market share loss) commerce. can be recognised with relatively Attention to small bursts of attention may find advertising 1. Professor Karen Nelson-Field and Memory its optimum investment mix looks Retention the team at Amplified Intelligence Mental different. Availability have uncovered early evidence of a link between attention and mental What all these studies have in common Decrease in Brand availability. If we accept mental is that the distinction between online availability as a key driver of brand and offline becomes redundant, and decline advantage in digital commerce, that media and creativity need to
then the findings of the research work closely together to maximise the Source: ‘Linking attention to mental availability: early findings’, Karen Nelson-Field (2021) are significant: optimise attention in opportunities across channels.
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The advent of retailer media puts all sorts of things in play. The CMO view In general, Hershey continues to invest as we always have – where it makes sense for the overall goals of our company and brands. The mix will follow effectiveness and ROI. This means regardless of media channel, we plan and measure holistically, not in silos.
Doug Straton VP & Chief Digital Officer, Hershey
We’re focused on where the consumer is. Our media mix is always changing based on the job to be done, rather than one media versus another. As the number of consumers increases in retail platforms, and as and when these consumers become addressable via responsible retailer media options, we will see industry investment increase.
Conny Braams Chief Digital & Marketing Officer, Unilever
The relationship between awareness and purchase is evolving and therefore how we plan needs to be approached in an integrated way. Given the strong shift to e-commerce across all categories and channels/ properties, we are seeking to balance our investment along the consumer experience journey. The weighting depends greatly on the category, current brand awareness and strategy.
Tamara Rogers Chief Marketing Officer, GSK Consumer Healthcare
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Ditch channel assumptions Look for the combinations Pay attention to attention Next steps and start with consumers The research suggests there is still The research around attention holds If all channels have an impact across much to learn about combining a lot of promise. In particular the both online and offline sales, it channels to best effect. For example, link between attention and mental makes more sense to start with the there’s nothing new about TV and availability points to a way to plan media habits and behaviours of the search working together. But if channels that will deliver a key driver of target audience rather than making brand-building and performance are brand advantage for digital commerce. assumptions about channels. managed independently it’s the sort of combination that can be under- leveraged.
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Conclusion: Rethinking brand
The purpose of this report has been to make the case for investing in brand-building as the global economy recovers from the impact of COVID-19, and as organisations in a host of categories get to grips with the requirements of digital commerce.
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Changing the language • Being clear on the role of brand- • It’s also important to • It will finally be time to drop the building at different points in a acknowledge what brand-building distinction between ‘digital’ and To make the case fully, it has been company’s growth trajectory – start- communications can’t do. Managing ‘traditional’ media, and consider necessary to look beyond some of up, scale-up and mature brand – will the ‘expectation gap’ requires a combinations of channels that are the language and assumptions in the be important as digital disruptors focus on product and experience. right for a brand, its audience and its market. grow. For this reason it is clear that Investing close to the point of objectives. the advice for big brands to ‘act purchase within the platforms • As James Hurman has argued, the like a start-up’ should come with a will be necessary to survive the • New measurement models term ‘brand’ has acquired negative health warning when it comes to ad ‘messy middle’. This may even be like attention will gain traction connotations. At a time when the investment. considered a cost of doing business as marketers look for the best language and worldview of tech on those platforms, or a form of opportunities across different companies dominate, marketers risk ‘physical availability’. channel types and ad formats. alienating C-suite colleagues if they Understanding cannot articulate the value they are the role of brand driving in terms those colleagues will Joining the dots Pulling the research together for this understand. For marketers at companies selling through platforms and marketplaces, It has also become clear that a siloed report has underlined the challenge • Reframing brand-building and the case for brand-building must approach to brand-building and marketers face in responding to the rise performance as an integrated show how a strong brand still confers performance is counter-productive. of digital commerce. There is a lot to approach to managing future an advantage in online purchase The two are clearly different achieve, and a lot of research still to be demand while harvesting existing environments. That means stripping approaches and different mindsets. done. Ultimately though, there is still a demand is one way to achieve this. back some of the thinking to focus on Indeed, they might be different teams. need for balance: between harvesting the elements that really matter. But they need coordination to maximise current demand and creating future their effectiveness. demand. The marketers that align the • The report outlined four drivers two, and understand the connections of brand advantage in digital • Changes in the media market make between them in a changing media commerce, based on research to this need more acute, as digital landscape, will prosper. date, that communications (creative commerce platforms make a pitch and media plans) can support. for ‘full-funnel’ ad investment across the purchase journey.
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Go deeper
Join us for a WARC Talks 360 WARC subscribers can go deeper into the data and insights behind series of three webinars, featuring this document. They can access new thinking from the Ehrenberg-Bass many of the expert contributors Institute, Facebook, Wavemaker, Amplified Intelligence and many more, to this report. plus extended CMO interviews.
The WARC team will also be releasing three ‘evidence decks’ pulling REGISTER HERE together the main data points around the following questions:
• Does brand matter in digital commerce?
• How do you balance brand-building and performance for digital sales?
• Do you need online ads to drive online sales?
Rethinking brand for the rise of digital commerce, WARC, 2021. 62 Who we are
At WARC, our purpose is to save WARC is part of Ascential: a Product Design: WGSN Digital Commerce: the world from ineffective marketing specialist information, data and Consumer product trend forecasting, Flywheel, Yimian, Edge, DZ, by putting evidence at the heart analytics company that helps the data and insight to create world-class Intellibrand and Perpetua of every marketing decision. world’s most ambitious businesses products and experiences Measurement, optimisation and win in the digital economy. Our execution for digital commerce growth We believe that effective marketing information, insights, connections, Marketing: is based on facts and not opinions. data and digital tools solve customer Lions, WARC, and MediaLink Retail & Financial Services: problems in four disciplines: Services and tools to measure Money 20/20, Retail Week Since 1985, we’ve brought confidence and optimise marketing creativity, and World Retail Congress to marketing decisions through the media and platform effectiveness Events, data and tools to improve most trusted research, case studies, and efficiency performance and drive innovation best practice, data and inspiration. in retail and financial services Today, we help 75,000+ marketers across 100+ countries. Our clients include the world’s leading brands, advertising and media agencies, Our Offices media owners, research companies and universities – including the top- London New York Singapore Shanghai five largest agency groups and top- 20 Air Street 229 West 43rd Street 5 Shenton Way Unit 05-08 five largest advertisers in the world. London 7th Floor UIC Building #10-01 31/F Garden Square W1B 5AN New York, NY 10036 Singapore 068808 968 West Beijing Road Want to get access to WARC? United Kingdom United States Jing’an District, Get a demo +65 3165 4600 Shanghai 200052 +44 (0) 20 7467 8100 +1 212 201 2800 [email protected] [email protected] [email protected] +862161978692 [email protected]
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