Brand advertising crawls its way back
Ray Hennessy via Unsplash
The marketing investment pendulum is starting to swing back to the upper funnel and brand, according to industry experts.
While marketing is constantly fluctuating, the last few years have seen a short market dominate with the pressure of a weak economy and tightening marketing budgets.
But as SMI numbers show the decreasing advertising spend slows, marketing is looking healthier with more strategic long-term work being briefed.
The Olympics also helped masked soft advertising spend, as many brands raced to create big brand campaigns and purchased ad spots to ensure they get a share of voice for the once-in-four-year cultural moment.
Clients are starting to move away from an over reliance on digital/performance marketing approach at the expense of brand/top of funnel activity, says Tumbleturn managing partner Jen Davidson.
“New customers are still a core metric for most brands, and hence brand building activity is still crucial to business success,” Davidson said.
Given the tough economic climate it is understandable that some brands have focused more on performance marketing over the past couple of years, Industry body Australian Association of National Advertisers (AANA) CEO Josh Faulks told AdNews.
“I think there is growing recognition that a single focus on short-term gains won’t deliver sustainable growth, and there is some discussion that the pendulum is starting to swing back towards investing in brand building,” Faulks said.
However, marketing mix modelling platform Mutinex’s data tells another story.
Marketers are still dumping upper funnel investment in favour of lower funnel activations in an environment of constricted budgets and flat marketing ROI, according to data analysing $2 billion of marketing investment.
Mutinex see’s investment in search and affiliates surge at the expense of online video and OOH.
“With the economic outlook increasingly bleak, investment in marketing has stalled with upper funnel marketing taking a bigger hit than lower funnel,” Faulks said.
“Either way, this is not about performance versus brand marketing. It is performance and brand marketing, and brands that prioritise long-term brand health alongside short-term performance are more likely to achieve sustained long-term success.”
It’s still a two speed market according to agencies
Despite some relief, the industry is still experiencing a mixed state, with some clients thriving and investing in upper-funnel branding, while others are struggling to meet targets and focusing on short-term metrics.
For example, some business categories like automotive and airline travel are still seeing high pent-up consumer demand from Covid-related supply chain issues.
When demand is strong, businesses can focus primarily on brand-building activity rather than lower funnel conversion because there’s less need to drive immediate leads. But that’s not everyone, Saatchi & Saatchi CEO Patrick Rowe said.
“Some brands are focusing on lower funnel at the moment because inflation is having a significant impact, and there is a need for immediate sales,” Rowe told AdNews.
“Having said that, we are certainly seeing a renewed emphasis on upper funnel at the moment. I think there’s a realisation that a robust brand platform can integrate much of the fragmented lower funnel stuff, too. Brand is the glue that connects everything and makes it work harder.
“The ideal is to have both humming together.”
At independent media agency Kaimera around 50% of its clients are doing amazingly well allowing them to shift investment further up the funnel.
But then there’s the challenger brands that are really having to scrap and fight for every new acquisition and don’t have the luxury to invest in the brand, Kaimera founder and chief digital officer Trent McMillan told AdNews.
“We’re coming to a great intersection where the C suite and marketers are starting to get more aligned on outcomes based measurement and looking at how they can truly measure the investment they’re making in media,” McMillan said.
“Historically media has been seen as an expense for most clients, whereas now it’s being seen more and more as an investment.”
At GroupM media agency Mindshare, national head of investment Nik Doble also sees a client portfolio featuring both ends of the spectrum.
“But the market still feels pretty short to me,” Doble told AdNews.
“Broad statements don’t really meet with my reality at the moment.”
On the other hand, many of Enth Degree’s major clients have consistently invested in major brand campaigns since the country emerged from its Covid induced hibernation.
But the challenge for agencies is to generate mass awareness of brand (and retail activity) in an ever-increasing fragmented marketplace, Enth Degree partner Peter Coffey said.
“It’s not that long ago that FTA television alone could propel a client’s message to deliver a mass reach virtually overnight. This is no longer the case,” Coffey said.
“It is more important than ever that creative and media agencies work harmoniously to generate the synergies in campaign work to deliver outcomes.”
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