Source: Les Binet: What is (not) effective in marketing today
I gonna talk about what’s ineffective. I gonna talk about the mistakes and the myths and the things that don’t work. Believe me there’s lots of that in marketing. Lots of that in the advertising world. There is so much bullshit in what we do, we constantly tell ourselves little stories about how advertising works and about how to make marketing work better. We kid ourselves with this nonsense these myths about how all works. As a result we end up doing things that don’t work very well. I’ve been in this business for 32 years now and I’ve seen awful lot of nonsense in that time. So much so, that together with my friend Sarah we decided to write a book about all the nonsense How Not to Plan Advertising, How Not to Plan Advertising, the subtitle is 66 Ways of Screw It Up. We counted 66 really big mistakes that stop people producing good work. I’m gonna give you just 10 of them. The great thing about mistakes is that you can learn from mistakes. In a way I hop this is gonna be 10 mistakes but also 10 lessons about how to do marketing better.
Marketing Mistake #1: Maximize Brand Engagement & Loyalty
The first mistake is really to start with the wrong objectives. Here’s a really common one, maximize you brand engagement and increase loyalty. How doesn’t want to do that? I mean surely that’s the point of what we do. Well actually if you start out with that goal then the chances are you gonna fail. In fact I can tell you pretty much automatically you are going to fail because ordinary people don’t want to engage with brands. Ordinary people don’t engage with brands. Ordinary people do not care about brands. We (marketers) care about brands a lot but ordinary people don’t. Just look at the numbers.
This chart shows the response rate, the typical average response rate to different kinds of marketing communications.
|Channel||Average Response Rate|
For example mobile messaging, the average response rate is 0.2%. That’s for every 1,000 messages you send out on a mobile you get 2 responses. That’s pathetic. Yet actually that’s quite a good result isn’t it? Look at the rest of the data. The main lesson from this is actually people don’t engage with advertising. People very rarely engage with advertising. Actually this particular number “Social Media 0.1%” that’s an exaggeration because that’s the number of people who engage with the brand on Facebook at all. Actually the active users on Facebook people who really engage within there about 0.1% of that 0.1%. About 1 in 10,000 people. If you look at a brand like Coca Cola 1 in 10,000 people who drink Coca Cola engage with the brand on Facebook.
Now if you think that the way to make marketing work is to get this strong engagement, you’re clearly not gonna get that. If you think that you’re gonna increase you sales by getting really strong brand loyalty, you won’t get that either. I’m sure many of you have heard of Byron Sharp and his colleagues at the Ehrenberg-Bass Institute, they have decades worth of data going all the way back to the 1950s in different categories and different markets around the world and what they tell you again, and again, and again, is that brand loyalty doesn’t change very much. It’s very hard to improve brand loyalty. There are no examples of brands who had been successful primarily through increasing brand loyalty. Campaigns that focus on increasing brand loyalty tend to under perform. We find the same in our own data. The work I’ve done with IPA in London has shown again and again that loyalty first strategies under perform. They produce smaller sales effects and make less money.
The way that you make marketing successful and profitable is not to focus on a small number of people and get them to really strongly engage with your brand, is you talk to everyone. You talk to everyone who buys the category. You go really really broad and you get them just to very slightly prefer your brand a bit. That’s how marketing works.
Marketing as Ehrenberg said is a weak force. Marketing does not work by converting people and getting people to engage and becoming strongly loyal. Marketing works by just nudging people a bit. But lots and lots of them. Marketing works through scale and size and vast numbers of people, but getting them to very slightly change their behavior a bit.
So, you gotta be realistic, you gotta set the right goals. If you don’t understand that you’ll never produce an effective marketing campaign.
Marketing Mistake #2: Put Communications First
The next thing to think about is to use the right tools. The common mistake at this point is people think that marketing is about communication and that communication is the heart of marketing. It’s not. Communication is the thing you should think about last. I give you an example.
Somebody in the agency comes up to you and says: “I’ve got a really cool idea”. This happened to me once. I was sitting in my pathetic little office in the agency working my spreadsheets which is what I like to do best and a planner came up to me said: “We got a really cool idea for this beer. What we gonna do is we gonna design an app and this app is linked to the weather data and when the day gets hot, when it’s really hot, when the temperature goes over a certain threshold we gonna give people discounts on the beer. We gonna get our most loyal customers to download the app to track the temperature and then the hotter the day the less you pay. This will increase brand loyalty.”. OK. I think you can see two things there. First of all this was a loyalty campaign so I knew it wasn’t gonna work. The second thing here is you’re going to get your most loyal customers the ones who already drink your beer, the ones who are already probably heavy drinkers of your beer, and on the days when they most likely to buy your beer and when they really want a beer and will buy a beer any price you gonna cut the price. I said to him, please don’t do this. I said it wouldn’t work and if it does work, the best you can hope for is that it doesn’t work, but if it does work it will lose you shitload of money. He said: “it’s too late, we’re doing it already.”. Because ultimately I wanna win a cam, you know. They did it, and it lost money and the client was furious with us. Actually they made a very clear ruling that nobody in that company in any of their European markets was ever to run anything like this ever again. The only thing that saved us was that not very many people downloaded the app because of course people don’t engage with marketing very much. If they had downloaded it then they would have lost even more money.
The lesson there is marketing is not about communications. It’s not about cool ideas. It’s about hard business realities and the most important thing of all is price. It you don’t get your price right, you can sell all the beer you want and you won’t make any money. Get the product right, get the price right, get the distribution right and only then think about communications. Don’t let some idiot in your advertising agency knock you off course with a really cool idea.
Marketing Mistake #3: Maximize Efficiency
So, you got, hopefully, the right goals and the right tools, obviously what you want to do is to maximize your efficiency. Wrong! What you want to do in marketing is maximize effectiveness first, not efficiency. I give you a nice example of a brand that got this very wrong.
We worked with a company the Automobile Association. It’s a membership organization, you join and then you get free breakdown cover if your car breaks down. It’s been around for about a 100 years, very well known, very well loved brand. About 5 or 6 years ago they decided that they wanted to be more efficient. The wanted to get rid of all the wasteful brand activity that they were doing and just focus on the hard working performance marketing, the stuff that really works. They cut their brand budget to zero. Big savings. Reduced their activation budget. First of all they got rid of the direct mail. They eventually just got down to outbound emails. The most efficient bit of their marketing. Lots of price offers. Note that again, cutting prices again. Really really tightly targeted outbound emails with offers. This works really well in one sense. It was extremely efficient, really really high ROI and they kept pushing the ROI up. Let’s maximize ROI by cutting a bit more of the wastage out. Brilliant. They never had such a high ROI. Unfortunately their brand started to collapse. People no longer really knew what the company stood for, many of them actually forgotten it existed at all. They certainly didn’t like the brand anymore. Their market share was going down. ROI was brilliant but market share was going down. They did a projection and they said we never had such efficient marketing and in 5 years time we will go out of business. Because the most efficient way to run a business, the way you maximize ROI is to go out of business. When you have zero expenditure ROI is infinite.
They did 4 very clever things:
- They read a book by a guy called Les Binet and another guy called Peter Field.
- They worked out how to re-invest in share of voice.
- And how to balance their budget between brand and activation.
- And they hired a rather good little London agency Adam & Eve DDB to make this ad.
That turned their market share decline around in a single year. This is what efficiency does for you: you have tight targeting, high ROI, market share going down and down. This is what wasteful brand advertising does for you: increase market share even though they were doing less discounting, so actually they made a load more money.
The point is that effectiveness that matters first and then efficiency. Efficiency does matter but the point is that if you maximize efficiency by cutting your budget, you will go out of business.
Marketing Mistake #4: be a data lead company
That’s a nice example of a company that was data lead. They would lead by one number and it was ROI. The problem was, it was the wrong number. We hear lots of talk about being data lead, everybody says these days, we are a data first company. What a load of bullshit. Data is not something that lead you, data is something that you should control and that you should use to help give you feedback on the things that matter.
The lesson is: focus on the metrics that matter, not what’s easy to measure. Don’t be lead by the data, choose and create data that helps you to answer the important questions.
Marketing Mistake #5: target tightly
One of the reasons that people collect this sort of data and one of the ways in which people try to maximize efficiency has to do with targeting and about targeting tightly. Everybody wants tight targeting because tight targeting is efficient and manly and all these other macho words. Targeting is massively overrated in advertising. Remember I said earlier on that the most effective campaigns tend to be the ones that talk to everyone who buys the category. Byron Sharp and the people at Ehrenberg-Bass will tell you the same thing. Markets are not nearly as segmented as marketers like to believe. Successful brands tend to actually being bought by pretty much everyone who buys the category.
In the UK we have, I don’t know if you have it here TGI data, big database which allows you to understand in great detail for a given brand who buys it, age, sex, income, where do they live, what they read, what they believe, their attitudes, etc, etc. There are about 400 different questions in the survey, 400 different things that you can test. I ran this for all the whiskey brands in the UK, and the answer was they’re all the same. Actually it’s not quite true. What we found was when you look at blended whiskeys drinkers of blended whiskeys are all exactly the same. 400 different questions no not one single statistically significant difference. Basically there are people who drink blended whiskeys and they’re all the same people. They just choose between all the blended whiskey brands. Single malts are very slightly different. People who drink single malts are slightly older and slightly richer. That’s it. The difference is pretty small between the two. If you’re selling blended whiskey the target audience is “drinkers of blended whiskey”. It’s easy, I don’t know why we get paid to do this stuff.
Lesson: reach is more important than targeting most of the time. Marketing is a numbers game. It’s about scale, it’s about size.
Marketing Mistake #6: be highly differentiated
Talk to everyone who drinks whiskey. In fact, it’s a little bit bigger than that. Talk to everyone who might drink whiskey in the next 2 or 3 years.
If you think that you’re gonna own some little segment of the whiskey market or in the end in any other market, what you usually trying to do is differentiate yourself from the competition. You know, will find a whiskey that appeals to young adventure seekers or whatever the bullshit segment is that you’re working with this week. Companies constantly trying to find things about their brands and their products and their company that makes them very very different from their competitors. Usually functionally different. Mostly they fail. Occasionally you do actually get a product that is slightly different. It’s more important to be distinctive than functionally differentiated, even if you have actually got a real advantage.
Marketing Mistake #7: you must always come up with something new
If you make that first mistake and think you got to be differentiated, then that tends to make you focus on finding new ways to differentiate yourself. Particularly this idea of “new news”. It’s a common mistake in marketing to think that you must constantly be coming up with something new. You need to support the core product, the one that everybody wants. Emotion is far more powerful then information.
Lesson: aim for the heart of the market in two senses. Aim for the core of the market. Your core products should always be the core of your advertising messages in most circumstances. Aim for the heart of the market in the sense of emotions.
Marketing Mistake #8: We assume that marketing is about communication messages. Mostly it isn’t.
Mostly marketing is not about communication at all. It’s about training buyers to want your brand. Not communication with them but training them. Training their emotions, training their intuitions, training their habits. It’s like Pavlovian conditioning. That works at the level of emotion, not at the level of information. [35:20]
Lesson: emotions beat messages, and fame beats everything else.
What we find is is that when John Lewis runs emotional ads on TV, for every pound that they spend on those ads they generate 10 pounds of extra profit. Not sales, but profit. A 10 to 1 payback. That’s partly because of the immense emotional pull of those ads, but also for the fact that these are now the most famous ads in Britain. They the ads that everybody wants to see before their friends. Emotions and fame are far more important than “new news” and “relevant messages” and “tight targeting”.
Marketing Mistake #9: you always need to innovate and to disrupt
This one is actually less of a mistake. We constantly tell that you need to innovate, you need to disrupt, and so on. This is the mantra of the tech sector. We all want to be like the tech sector, although if you actually look at what they’re trying to do is being more like the old fashioned advertisers. They all piling into TV advertising these days. Yes, if you’re Uber, coming into the market for the first time, innovation can do fantastic things. If you’re Uber, if you’re Amazon, if you’re Apple with a radically new device, fantastic. But most of us can never be that. But that’s OK. You can grow without innovation. Couple of examples:
Marmite which is a black salty spread thing that you put on toast which most people who aren’t British find horrible. That product has been around for about a 100 years, over a 100 years and in that time there has been almost no innovation at all in the product. They did briefly try to launch a cheesy version of marmite, that didn’t went well. The only other thing they done is they changed the packaging at one point and put it into a squeezy bottle. Apart from that, unchanged. But marmite grew and grew and grew even though actually using pretty much the same advertising campaign.
Felix cat food. Another similar one. Same advertising campaign for about 30 years. Long period in the early 1990s when there were no significant improvements in the product, when there was very little price promotion all they had was a little black and white cartoon cat doing fun things on TV and it grew and grew and grew, even though they were putting their prices up.
The point is if you’ve got good advertising and you use it consistently the effects can accumulate and get bigger over time. You don’t need constant change. If you got a winning formula and you stick with it the effects can get bigger over time. So you can have growth without innovation. Innovation is great. If you’ve got really radical innovation, go for it. If you haven’t, don’t feel that you need a cheesy marmite spread in order to move further forward. Consistency can sometimes be a more important thing than innovation.
Marketing Mistake #10: let’s break the marketing rules
Many people these days feel that marketing is kinda like, you know, we can do what ever we like. Let’s not be bound by the rules, let’s break the rules. Well yes, OK, if you’re very lucky you’ll might be able to break the rules, but actually there are some rules. I give you an example.
I met a man from a credit card company and he was telling me some very boring stuff about how people use their credit cards in petrol stations on a Thursday, literally. And I said, excuse me, can I just ask you a slightly bigger question. What’s happening to your market share? He said market share is not a meaningful metric in our business. I said, surely it is. He said, no, we not bake beans, you know. We don’t follow the normal rules of marketing. We are credit cards, a very very specific sector. I said, do you mind if I look at your data? We found that there were at least 6 measures of market share that made sense and all of them correlated with advertising spend. Their market share had been going down for some years. They never even noticed because they didn’t bother to measure market share. They were too obsessed with what was happening in petrol stations on a Thursday. When they did spend money on advertising, it briefly arrested their market share decline and when they cut their ad spend, market share started to decline again. They hadn’t noticed any of that because they were so obsessed with how special they were and different they were. In fact when I earlier talked about share of voice, yes, share of voice isn’t the only metric, but in fact share of voice does matter in many markets and this turned out to be one of them. This particular category follows the same share of voice rules as for example baked beans. Selling credit cards is a lot more like selling baked beans then this guy had realized.
Lesson: read the rule book. How not to Plan – 66 ways to screw it up – by Les Binet and Sarah Carter.
- QUESTION #1: What is the main role of TV advertising? Is it building brands, the long term effect, or sell short term effect? Or both?
- ANSWER #1: All activity does a little bit of both. So TV will have a short term effect and a long term effect. You can see this for example if you run a TV ad for your brand and you’re tracking things like search behavior or visits to your website you can literally see, second by second, people respond. But probably the main way to use TV is to build the long term. John Lewis is a good example. It does have a short term effect, it gets people into the shops in the weeks after Christmas, but the point is because people remember this stuff it keeps working the next year and the year after that. It’s more long term than short term but it depends how you use it, I mean you can do direct response TV, you know, middle of the day, short ads with a phone number on for short term.
- QUESTION #2: Based on your lovely spreadsheets in Excel, what are the common signs TV ads that work?
- ANSWER #2: Ultimately sales and profit. That’s what really matters. In order to do that properly you got to do something like econometric modeling or maybe regional testing to measure the effects properly. For example John Lewis use econometric modeling. The Cravendale Milk ads used econometric modeling and regional testings, so they ran the ads in different parts of the country to see how sales responded. Sales is the ultimate test. But obviously you might want to look at other things to get a little bit of a reading. I’m quite interested in using search behavior as another way of looking at things.
- QUESTION #3: Would you ditch targeting even if you are a small brand with a marketing budget of £10,000?
- ANSWER #3: Go back to that whiskey brand, suppose I can’t afford to talk to all whiskey users. I mean, it’s probably better to talk to all whiskey users once than to talk to some tiny portion of the market and focus on that. But if you really haven’t got enough money to even talk to everybody once, then you might want to pick a slightly more valuable bit of the market. You might say, we can only do it in London or we can only talk to the people who read this particular newspaper or something like that. Your aspiration should be to reach as many people in the category as possible. Only as big as the category and no bigger.