Ehrenberg-Bass shows a break from advertising will impact sales
For many brands, the go-to reaction when the pandemic hit last year was to conserve cash and halt advertising. But if there was ever proof needed that this may not be the wisest decision it came this week in the form of a study by Ehrenberg-Bass.
The research, which looks at the media spend and volume sales of 70 brands over more than 20 years, shows that pausing advertising not only leads to a decline in sales, but can also be very difficult to recover from.
When brands stopped advertising for one year sales dropped by an average of 16%, which increased to 25% after two years and 36% after three years.
The impact does differ greatly depending on the size of a business, though, with bigger brands benefitting from a “size advantage”.
All large- and medium-sized brands that were growing prior to pausing advertising continued to grow for one to two years, but all previously growing small brands declined to below their base-level sales.
It may be stating the obvious for those in the industry but it will hopefully add weight to the argument for any marketers looking to justify the need for continued investment.
Deliveroo recognises long-term value of brand
Despite how ubiquitous the food delivery service has become in the UK, Deliveroo is another tech startup which, like Uber, has yet to turn a profit.
Over the first half of 2021 it got close, as orders doubled, revenues grew 82% and gross profit grew 75% to £264m. However, the business sacrificed the opportunity to make its first operating profit by increasing its investment into brand building marketing, designed to drive awareness and “support future growth”.
With the online food industry still at an early stage of maturity, Deliveroo says it is “laying the foundations” to drive long-term value. It’s a smart move, showing that Deliveroo is concentrating on long-term business growth rather than short-term wins.
While co-founder and CEO Will Shu says he expects demand to “moderate” later in the year, the business claims to have a “strong conviction” that the pandemic has permanently moved consumer behaviour towards online food delivery and says it is confident in its ability to capitalise on that.
Similarly, Airbnb this week revealed that it too has increased its marketing expenditure in order to boost its brand building efforts, having found that brand is a much more valuable tool for its growth than performance marketing.
Boots’ TV ad crowned most effective of June
Speaking to Marketing Week last month, new Boots CMO Pete Markey revealed how he is on a mission to “reintroduce” the brand to customers and show them how relevant the brand still is today, after more than 170 years on the high street.
As Kantar’s head of creative excellence Lynne Deason points out, that’s a very tricky brief, particularly for a brand as famous in the UK as Boots. So its new ad campaign, ‘Feel Good as New’, could easily have been a disaster.
But Boots got almost everything right. According to Kantar’s The Works study, it scores well on branding, building love or affinity, and ‘meeting needs’.
Participants particularly enjoyed the diversity and relevance of the campaign, and associated it with words like ‘modern’ and ‘trustworthy’.
In fact, having scored high on both brand building measures and short-term sales potential, Boots’ ad has been found to have been the most creatively effective TV spot of June, joining Walkers and Tesco in the hall of fame.
Importantly, these measures match up to the early results Markey and his team are seeing from the campaign. Online and in-store sales are up, traffic has jumped hugely, market share has moved, and awareness is trending upwards.
TalkTalk plays with in-game advertising
TalkTalk has been experimenting with in-game advertising as it looks to attract the lucrative market of gamers.
The internet provider is exploring how it can advertise to gamers without disrupting their leisure activity, and did so by placing contextually relevant ads within a number of games.
The activity resulted in a 12% uplift in purchase intent, showing the impact such advertising can have in a non-obstructive manner.
TalkTalk head of brand and acquisition Ben Cooper says: “Trialling and trying new things in addition to tried and tested media is always important. We talk to audiences about how they use the internet, how they use that connectivity, to try and get as close to their passion points as we possibly can.”
Paddy Power owner sees profits surge
The pandemic was a shock to the system for all brands, which unfortunately led to many businesses shuttering.
But having braved the storm, one company that has come out fighting is Paddy Power owner Flutter Entertainment, which notched up group revenue by 99% to £3.1bn during the six months to 30 June.
The Euro tournament played a huge part by driving 44% increase in average monthly players across its SkyBet, Betfair and Paddy Power brands.
Flutter Entertainment credits targeted marketing campaigns to enhance the SkyBet in-play experience, while Paddy Power and Betfair have benefitted from innovation in improved ‘Bet Builder’ products. Bet Builder enabled the business to reinvest in enhanced rewards to acquire and retain customers.
The betting operation did not rest on its laurels while the whole world slept, it created centres of excellence to share insights on areas such as pricing and risk management across its brands, to improve product offerings.
Flutter Entertainment chief executive Peter Jackson says: “Our global sports businesses benefitted from further enhancements to our products and the return to more normalised sporting calendars while we sustained our strong performance in gaming despite the challenging comparatives set last year”.