We’ve had ten to twenty years of an agenda led by big tech that says smart marketers don’t waste money on building brands. Smart marketers spend their money on serving pieces of information at the point of decision making that will nudge them over the line.
This quote, from author, strategist and marketing consultant Peter Field, characterizes a long-term trend in which advertisers have increasingly turned to direct response as a sort of shortcut to driving short-term commercial growth by generating conversions without having to spend a lot on branding efforts that drive awareness, education, and favorability.
This trend has only intensified over the past year as brands have grappled with the pandemic and its related recession, prompting them to try and maximize revenue opportunities as efficiently as possible. For instance, Google's search advertising grew 40% YoY in Q2 2020, and media agency Zenith estimates that approximately 70% of digital advertising spend in 2020 is currently allocated to programmatic. As such, companies like Criteo, Snap, and The Trade Desk have reported significant increases in advertiser activity since the start of the pandemic.
Time will soon tell how successful these DR efforts have been in supporting revenue and growth goals during the recession - and how sustainable the current reliance on DR advertising could be in the medium-to-long-term as the economy continues to recover.
However, even if DR advertising does, indeed, turn out to be the mighty vessel that carries brands through the current storm, one thing is for certain: at some point, brands will eventually need to reinvest in branding. Why, you might ask? Because, as human beings, we have a basic, social need to feel connected to brands.
Take, for instance, this fascinating social experiment by TV advertising industry group Thinkbox (https://www.thinkbox.tv/research/thinkbox-research/from-brand-to-bland/), in which consumers were deprived of their favorite brands for several weeks, and as a result, experienced psychological distress, depression, and feelings of social isolation - all from simply being forced to live without the brands they had come to know, love, and trust.
Also consider how, according to Edelman (2019), 81% of consumer purchase decisions are influenced by brand sentiment, with 79% of consumers saying brands have to demonstrate that they understand and care about them before buying. According to the Zeno Group in 2020, consumers are 4 - 6 times more likely to purchase from brands they believe have a purpose (Zeno Group, 2020).
So it's clear that, as consumers, we rely heavily on our feelings associated with brands when making purchase decisions; however, this is particularly true for brands in commoditized product categories like Consumer Packaged Goods. This is because consumers make decisions along a rational-emotional spectrum.
On one end of the spectrum, where products are novel, unique, unfamiliar, complex, or expensive, consumers must conduct research into the product, brand, competitors, and the overall market in order to understand their options and make an informed decision. In this case, consumers make purchase decisions largely based on a rational analysis of their options.
On the other side of the spectrum, products that are common, easily understandable, and inexpensive don't require consumers to do as much research. At the same time, there tend to be a lot more of these brands offering relatively undifferentiated products in the market. So consumers instead tend to rely on easy, efficient "shortcut" decisions based on their feelings about the brands. They know they'll get a similar, comparable product whatever their decision, so there's little need to exert energy on hard-working rational decision-making, and instead resort to whichever brand/product makes them feel better.
We can see proof of this in a study of data from the UK's Institute of Practitioners in Advertising in which campaigns for CPG brands that appealed to consumers’ emotions were found to be 2x more effective than campaigns that simply promoted a product’s merits.
Another reason branding remains important, especially now during the pandemic, is that consumers are increasingly willing to break from pre-existing brand loyalties. According to Ketchum, 45% of consumers have changed their brand preferences during the pandemic, with 88% of respondents saying it's important that brands communicate their ethical approach to doing business. This potential break in long-standing loyalties has created an opportunity for "challenger" brands to disrupt the status quo and grow their market share. Here, story-telling is critical to communicate why consumers should pay attention to - and spend their money with - new brands. According to AdWeek's 2019 challenger brand study, The Truth About Disruptors, 79% of marketers believe story-telling is a critical advantage challenger brands have over their legacy competitors.
Finally, it's also worth pointing out the oft-ignored practical reality that, while traditional DR tactics can drive results in the short-term, they do little to generate interest and consideration in the long-term. Without building awareness or favorability, brands favoring DR advertising are less likely to fill the funnel with "organic" prospective customers, for whom they do not have to pay to convert. Like a vicious cycle, this in turn, could make them more reliant on DR advertising in the long-term to keep money coming in.
The ideal situation for brands is to generate sales organically, instead of having to pay for each conversion. This is the fortuitous position Apple is in today: everyone knows who they are, love them as a brand, and will seek them out on their own, without Apple having to drive them to purchase.
With all that said, advertisers don't necessarily have to choose one over the other. As leaders in the exciting new Social Display space, we believe brands can communicate a story that endears them to consumers while taking advantage of the efficiency of programmatic advertising.
Here are 5 ways we suggest brands can enhance their DR advertising
This means occasionally pausing "evergreen" DR creative and substituting it with creative that is produced in response to current events and cultural happenings. You'll obviously want to be careful and considerate with this one as taking a mis-step and potentially offending a segment of your audience could be more damaging than continuing to run tired old evergreen ads, but if you are thoughtful and clever, and hit the right chord with your message, you could reap huge benefits.
These could work especially well if they're produced in an agile fashion per recommendation #1, above (think: Old Spice). Another tactic would be to showcase actual users with your product (authenticity goes a long way); to this end, you could also feature influencers your brand has worked with. Finally, you could consider repurposing video content produced by your social team. In both of these cases, production costs (and time) would be minimal as the footage already exists.
Now, more than ever, we could all use a bit of levity. Humor is a universal form of expression that is incredibly powerful at forming connections across all cultures, nationalities, and walks of life. It's been shown to be highly effective in advertising, as well. According to Nielsen's Global Survey of Trust in Advertising (2013), humorous advertising resonates the most with audiences (47%) vs. other common themes often seen in DR advertising: value-oriented (38%), and competitive (16%).
In many cases, these are people who, over the years, have built up trust among consumers for their critical opinions and informed reviews. Take advantage of their thought-leadership and ask them about extending your agreement to license use of their content in your DR advertising.
Show real people using your products in real-life situations vs. studio photos of products in the hands of professional models. This could have a profound impact on your ability to influence consumers to buy. According to the Nielsen study referenced above, advertising that depicts real-life situations ranked second (46%), just behind humor, for resonating with audiences. In another study examining the beauty space, 59% of consumers "need" photos of real-life users vs. 32% for professional models before they'll consider buying a product (2019 eCommerce Cosmetics trends). As such, developing creatives that show real people using - and enjoying - your product may be more effective than standard DR creatives that simply show staged product shots.