In the 1980s there was much talk and writing about how advertising, marketing and mass communication really works. Today the discussion is about how different media channels work, with focus on the digital and social ones. We think we know what the rules of good marketing are and know what is good and bad marketing – but what if we are wrong? What if there are fundamental flaws in the assumptions that most marketing people work by.
In a reseach of almost 1000 marketing campaigns sent to IPA Awards were analyzed looking at what drives the selling and winning, not what marketing gets prizes. The result kills many myths and assumptions that we have of marketing.
It was analyzed how the marketers and advertising agencies normally plan and value marketing activities. They created a “Common sense model” for how we think the marketing works and thereafter it was analyzed what kind of advertising correlates with positive business results.
The result was that many of the most common marketing strategies were the least effective and what the branch does and what works are two different things. The assumptions in the “The Common Sense Model” were more or less wrong.
Marketing works by increasing sales
Marketers assume that the goal is to increase sales. But the analysis shows that sales-focused marketing is far from being the most effective. The relative profitability will be considerably higher if the marketing instead focuses on increasing people’s price tolerance. Only 20% of the marketing that focuses on increased sales results in significant profit growth, compared with 37% for the marketing that focuses on price sensitivity.
In addition to “increase sales” and “reduce the price sensitivity”, also marketing with the aim of “defending market” and “increasing market share” were analyzed. They created a significant profit increase in 26% of the cases. It is therefore, statistically speaking, almost twice as profitable to market to reduce people’s price sensitivity than to market trying to sell more – but few marketers understand it. Only 4% of the analyzed campaigns focused on price sensitivity.
Marketing works by increasing brand loyalty
A brand can grow in two ways: increasing penetration (reaching more) or increasing loyalty. Common sense and a significant part of the brand literature advocate the latter. The number of campaigns that focus on loyalty is about double compared to the number of campaigns that are trying to reach new audiences.
The marketing analysis points to the opposite. Campaigns aimed at increasing the penetration are three times as effective as campaigns to increase loyalty. Also: Most loyalty promotions that resulted in large or very large profit growth made it to the increased penetration, not to increased customer loyalty.
It is, therefore, statistically speaking, almost twice as profitable to do marketing that reduces peoples price sensitivity than doing commercials trying to sell more. But only 4% of the analyzed campaigns focused on price sensitivity.
That loyalty campaigns are ineffective marketing can be explained by that we humans are rarely inclined to question our loyalty. That they are so common can be explained by the financial logic behind the loyalty-enhancing advertising is beyond reproach.
If you could increase brand loyalty, then you would indeed make a lot of money. But that’s a bit like saying that you would make a lot of money if you could turn lead into gold. It’s true, but it’s not a very practical strategy.
Brand awareness and image are keys to a strong brand
According to the analysis, the knowledge, “brand awareness” and the image are the things usually measured by marketers and advertising agencies. And certainly there is a correlation between knowledge of a brand and what we think and feel about it and positive business results. But the correlation is weak. It is actually so weak that of all brand metrics there is, knowledge and image have the the weakest link to efficiency.
The strongest link is the “fame”.
The fame of a brand is so much more than just awareness and image. The brand has achieved fame when people are actively thinking about it and like to talk about it; when the brand has become a part of people’s lives and therefore of our culture.
The analysis shows that ‘fame’ is a key factor in increased profitability and especially if a celebrity generates “word of mouth”. In each measuring range the campaigns that get people talking about the brand generate far better business results than any other kind of marketing – they are nearly twice as profitable. And the reason they are so profitable is that the kind of marketing seems to reduce peoples price sensitivity. We simply pay more for the brands that are talked about.
Marketing works through communicating a relevant message
This myth seems to be the most popular but also the most erroneous. It is the myth of the relevant message that makes us who work with marketing and advertising to make our biggest mistakes. The analysis shows that, in contrast to how most campaigns are designed, the most effective advertising does not have any brand-related messages. Advertising that has content designed solely to arouse feelings turn out to be twice as profitable as advertising of any kind of rational offer. And the more the emotional prevails over the rational, the more profitable advertising seems to be.
In short, advertising does not seem to affect us all by getting us to think, but by making us feel.
Advertising must attract attention to function
It sounds logical that advertising, to work at all, must first attract attention. Still, the correlation to business results is weak. That advertising attracts attention, communicates and convinces has very little to do with how effective it is. The most important thing in marketing is that the right people like it.
The analysis shows, opposite to how most of the campaigns are created, that the most effective marketing has no brand related message at all. Marketing that is solely targeted to arouse feelings is twice as profitable as marketing with some sort of rational offering and the more the emotional may win over the rational, the more profitable it becomes.
The conclusion can be that it is the emotions that are the message, not the message and that advertising is not at all suitable for spreading ideas but good in arousing emotions so good advertising is not what gets the attention of the people, only what makes them feel good:
EVERYTHING YOU KNOW ABOUT ADVERTISING IS WRONG
It is good to think about what you think you know about advertising and if your knowledge is about smart theories and nice-looking models – or is it based on that you really measured what you did – attached to what really drives the sales and generates profit. How much does the advertisement show, how many understand it, how many remember it?
There is research that suggests that advertising that is not tested is considerably more efficient than the not tested and that could be because testing simulates rationality and reduces the scope for emotions in advertising.
Marketing is created with creativity and as funny as it is, it looks like the best marketing most often is not the marketing that we most often create.