When marketers question their own assumptions about channels, data reveals advertising delivers more long-term ROI than previously thought, particularly from cross-channel campaigns
2 December 2022
It is easy to fall into unchallenged assumptions in marketing. Accepted wisdom has long suggested that TV is the long-term option for building brands, while online works in the short term to drive up sales.
In truth, with effective creative execution a variety of channels can perform each task. Someone watching a TV ad might make an instant purchase while second-screening, whereas another might become more favourable towards a brand because of a timely ad on social media.
The problem is that marketers are often under pressure to justify returns on a short-term basis, and so they fall back on the immediate availability of digital campaign metrics, at the expense of understanding how all channels are contributing to longer-term brand growth.
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By Albert Abello Lozano, head of automation, Treatwell
Why cross-channel campaigns are the way to build profitable brands
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A new report from Meta – combining five European studies conducted by Nielsen, Nepa and GfK – highlights the importance of looking at marketing effectiveness in the long term, to factor in the impact of brand building in addition to short-term performance marketing. Using advanced econometrics and marketing mix modelling, the research found on average 60% of total ROI from advertising campaigns was delivered over the long term in the countries and categories studied.
Majority of ROI comes from long-term activations
When brands expand their time frames, their strategies and results are transformed, as Heineken in Spain recently discovered.
It wanted to understand both the short-term and the long-term effectiveness of its advertising strategy. So it examined activity from January 2018 to July 2022 and found that 13% of its sales in the period resulted from brand associations built up through cross-channel activity – 1.7 times higher than it previously believed.
Drilling down, it found that once a longer period was considered, the ROI on Facebook and Instagram advertising was 71% higher than it thought.
Similarly, research by Kantar and the University of Oxford’s Saïd Business School discovered campaigns could be 2.6 times more effective with a different allocation of spending on channels. As their report’s name suggests, there is “no silver bullet” to guide marketers on the composition of the marketing mix, but the researchers are clear that the division marketers place between traditional and digital channels is a “false dichotomy”.
How to optimise the marketing mix for long-term growth
Total ROI across all media channels (including long-term effects) is
higher than the short-term ROI
Source: Meta Marketing Science, The short- and long-term
impact of advertising, research by Nielsen, Nepa, GfK, 2022.
The average campaign could be
more effective with a different allocation of spend
Source: Oxford University, Saïd Business School and Kantar, ‘No Silver Bullet’
Source: Meta Marketing Science 2022. Analysis conducted by Nepa 2022 (6 brands in the Nordics, Retail online and offline, Telco).Methodology: Marketing-Mix Modeling. Insignificant results treated as zero. Number of data sets: 6, except TV: 5, Direct Marketing: 3.Data: 2015 to 2021. Analysis commissioned by Meta. Share of budget (on average across brands in the analysis): FB & IG: 10%, OLV:11%, Search: 17%, TV: 25%, Display: 10%, Print: 8%, DM: 8%.
40%
60%
Long-term ROI
Short-term ROI
Average across studies and categories
FMCG
Tech and durables
Retail and telco
42%
76%
59%
Retail online and offline, Telco
Total ROI, indexed ROI, direct and indirect through brand building
Source: Meta Marketing Science 2022, The short- and long-term impact of advertising, research by Nielsen, Nepa, GfK. Average calculated across results from three independent studies. Data: 2016 to 2021. Methodology: Marketing-Mix Modeling. Analyses commissioned by Meta.
On a recent episode of Meta's Insights Live video series, famed marketing effectiveness expert Les Binet noted: “Any kind of marketing communication, whether it is advertising or direct marketing, has two kinds of effects: short-term effects which work very quickly, which are sharp and very easy to see, and long-term effects which are harder to see but will last longer.”
Results vary between sectors, perhaps due to the differing lengths of buyer journeys: 76% of advertising ROI in tech and durables was delivered in the long-term, for example, compared with 42% in FMCG. In general, these long-term ROI contributions can often take the form of new customer acquisitions or price premium effects, which link directly to profitability.
The report also reveals significant long-term contributions from Facebook and Instagram, demonstrating the fallacy of labelling digital advertising as a short-term tactic. The two channels outperformed total media and TV on total ROI in four of the five studies, and according to one study of the retail sector, brands could achieve 57% higher ROI long-term through brand building on Facebook and Instagram.
Overall, the research demonstrates that the long-term impact of advertising is not fully understood and is usually far higher than marketers assume. Evidence from successful campaigns shows campaign set-up is crucial, suggesting marketers should be using a range of media channels to reach broad audiences with multiple ad formats over longer time frames.
As Binet summarises: “It’s not that any one media channel is just capable of doing one thing. Actually, most channels can be used for short- or long-term impact, depending on how you use them.”
Roisin Donnelly: We need to really understand what the customer wants. What does the customer need? Who is the customer? What do we need to do to make it easier for the customer? I hope we can educate them better – we must be absolutely customer-obsessed in everything we do.
Michael Inpong: The number one rule for personalisation is delighting the customer. And part of delighting them is answering their desire for privacy. ■
Instead, the report found that combining channels is the best way to improve the four attributes of branding – awareness, association, consideration and motivation. It shows TV is currently used as a major channel in all four stages of the most successful campaigns; whereas Facebook is typically used as a major channel in the campaigns that are most successful at building association and motivation, and a minor channel in those most successful at raising consideration.
The analysis concludes that TV, although a ‘bedrock’ of campaigns, is being too heavily relied upon and should be down-weighted at each of the four stages of branding to optimise effectiveness. A more balanced marketing mix was found to be more effective than a mix which relies too heavily on one channel. Digital media should be used at all four stages, the report argues, including being up-weighted at either end of campaigns to drive both more awareness and more purchase motivation.
All the studies make clear that individual channels should not be stereotyped as good for only branding or raising short-term revenue. Instead, cross-channel campaigns are the key to delivering the most profitable outcomes.
However, these campaigns also need to be measured in the long term, which requires a mindset and analytical shift. When looking at the fuller picture, marketers may realise that they have been ignoring 60% of the potential ROI of advertising by focusing too much on short-term outcomes. Instead, building brand perception in the long term and planning campaigns with the most effective cross-channel marketing mix should be marketers’ North Star. ■