By
Michael Cross, Brightblue Consulting
Consider it’s the late 1980s. Marketing
analysts in the U.S. are completing work on a project known as “How Marketing
Works,” studying historical data across 40 packaged goods companies. As part of
this work, the analysts will propose that the so-called long-term impact of
advertising can be considered to be, on average, twice the measured short-term
uplift.
Then spring forward 30 years to today. Many
marketers have been relying on this rule of thumb over this time, in doing so
risking overlooking the key differences that come with variation in creative,
sector, campaign KPI and media channel.
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What is long-term advertising impact?
One way to think about long term
advertising impact is to imagine where some of the world’s largest brands might
have been today had they never advertised. They could never have built such a
large customer base without trust, awareness and repeated messaging that comes
with a history of prolonged marketing activity. Therefore, we define the
long-term impact of media to be the increase in a KPI that has taken place as a
result of all the advertising a brand has run in the past, after any short-term
response in the initial few weeks following activation have been accounted for.
But how can marketing analysts identify
this effect, and what considerations do brands need to be aware of?
1. Clarity Of Project Aims
Firstly, it is important to clearly set out
how we are defining long-term media effect. Whether we are interested in the
impact on sales, purchase consideration, price elasticity or otherwise should
reflect the long-term business growth aims. This is crucial in how we design
our methodology to get the right result and generate actionable insights.
2. Understanding The Consumer Journey
One traditional way to reliably measure
long-term media effectiveness is to consider the impact of media throughout the
consumer funnel. Typically, marketers will look to metrics such as brand health
and social listening to measure the impact of a brand-focused activity.
However, assessing if these metrics also then lead to revenue uplift in the
long term is important in order to identify truly cost-effective campaigns.
We can explore this by modelling the
long-term movement of KPIs at each level of the consumer funnel, identifying
which metrics drive growth in a KPI once short-term factors have been accounted
for. This is what we call analysis of “base” drivers, long-term factors that drive
sales outside of changes in other short-term influences. These models can then
be combined together to produce a holistic view of media impact throughout the
customer journey to conversion.
3. Pairing Micro And Macro Data Sources
We can take our analysis of the consumer
funnel a step further by pairing this analysis with more granular consumer-level
data, offering a multifaceted approach to understanding the full long-term
impact of media. Micro-level data allows us to study groups of consumers based
on shared attributes, which can help us make wider statements about the
population at large.
Consider two examples:
• Is there a statistically significant
difference in the likelihood of an individual to purchase based on their price
perception of our product?
o Assessing whether there is a significant
difference between these two groups may help us understand whether a long-term
increase in price perception is likely to translate into business growth.
• Following our brand’s long-term sports
sponsorship, what is the difference between the purchasing habits over time of
a football fan vs. non-fans?
o This may help us understand how those
exposed to long-term campaigns have changed compared to those who are less
likely to have interacted with this media touch point.
We also can use customer-level data to analyze
retention rate using customer lifetime modelling. One way in which a brand can
typically increase its natural base is to attract new consumers who go on to
repeat purchase. Observing how those who engaged with the brand during a
certain campaign have interacted with the brand over a successive period can
help us understand the impact of different marketing channels in building a
loyal customer base.
4. Trusted Analytics Partnerships
Working with analysts with a wide breadth
of experience and a creative approach to analytics offers the opportunity to
move away from the traditional short-term focus of large marketing studies and
obtain a more accurate read on media’s true impact.
Michael Cross is the founder and CEO of
leading predictive analytics firm Brightblue Consulting. He
is a leading predictive analytics expert with a track record of delivering
double digit improvements in clients’ marketing driven profit. Over the last 20
years, Cross enjoyed a successful career working in various specialist
econometrics, marketing mix modelling and data science roles, helping
organisations to quantify and optimise their
marketing. Cross recognised that many businesses were relying on their
marketing agencies to measure the effectiveness of their own marketing
campaigns. A clear conflict of interest. He
founded Brightblue Consulting in 2012 to offer businesses independent and
unbiased predictive media analytics and started a step change in how analytics
is used in the commercial environment.
