The 1% Leaves Room for Brands to Harness the “Multiplier Effect”
1% – that’s the percentage of ads in System1’s Test Your Ad Premium database of more than 150,000 ads that score 5-Stars (the maximum level) on our creative effective scale. Given the right level of media investment, 5-Star creative is an exceptional driver of long-term profit gain and market share growth.
The reality is that the majority of ads land in the 1- and 2-Star range, predicting low or modest growth potential. In fact, the most common response to advertising is neutrality. Adam Morgan, Peter Field and Jon Evans have explored in their research that most consumers find ads dull rather than entertaining. And many ‘dull’ ads air for more than 4 months, according to research by System1, when advertisers could instead invest in creative that will yield better commercial results.
Of course, TV isn’t the only channel where brands show up, and for many it’s not their main avenue for reaching consumers. This new ‘age of performance’ has resulted in a greater amount and percentage of marketing spend going into digital channels, coupled with increased pressure for advertising to quickly prove its value.
In addition to impacting where dollars are invested, the digital transformation has also shifted what creative looks like. In Orlando Wood’s books Lemon and Look out, he notes the trends in the types of creative features being favored by brands. There’s been a decline in more right-brained features that appeal to those not yet in buying mode and an increase in left-brained features that appeal to those already interested in the product. Wood argues that digital transformation has made brand-building advertising more important, not less.
The short is often prioritized over the long:
- A relatively short lifespan for ads, leaving little time for good creative to wear in and build the brand, especially among those not yet in the market to buy
- ROI is increasingly assessed against a short timeframe, which makes it difficult for marketers to prove the value of brand-building initiatives
- Creative features that drive short-term results are on the rise while those that support long-term brand-building are being used less frequently
All of this creates a perfect storm, and prevents brands from achieving the “Multiplier Effect” – brand advertising and performance advertising work harder together when they are part of integrated platforms, rather than siloed disciplines. New research from WARC, System1, Prophet, Bera.ai and Analytic Partners further explores the issues marketers face today and how to overcome them to unlock the Multiplier Effect.
The “Doom Loop”
Because performance advertising targets a niche group – those who are already interested in the category or product – it can deliver relatively quick wins via creative that touts features, differentiators and pricing and promotions. But what happens when the pool of prospective buyers dries up?
If you’re an organization that’s invested in brand building, you’re regularly replenishing this pool. Brand work builds mental availability among a wider group of consumers who will move from awareness to consideration and then on to purchase, thanks to nudging from your performance work. Brand campaigns rely more on character, incident and place, as Orlando Wood writes, and tend to leverage more right-brained features than left-brained. They entertain for commercial gain.
But as previously mentioned, there’s been a rise in performance advertising in an effort to accelerate immediate returns. WARC research finds fewer brands are increasing their investment in brand compared to those increasing investment in performance.
You’d think it wouldn’t be sustainable to continue investing more in performance and less in brand, and you’d be right. But what if that truth isn’t immediately clear? Marketers get stuck in a “doom loop”, where advertising is optimized against the wrong metrics and becomes iteratively less effective. Performance advertising suffers from:
1. Misleading metrics
Performance advertising is seen as the sole means of tapping current demand via channels like paid search, social media advertising and retail media. Given the near-instant results (clicks, views, etc.) linked with this strategy, it is also regarded as enabling real-time optimization to maximize returns.
Yet research from Analytic Partners showed last-click attribution could overestimate the impact of paid search by 190% while underplaying the impact of brand-led TV advertising by 90%.
Advertising that builds brand equity can easily get passed up for investment if faulty data gives all the kudos for purchases to performance campaigns. TV has a massive reach and brand-led campaigns on this channel give advertisers the chance to build mental availability that replenishes the buyer pool over the long term.
2. Diminishing returns
There is an assumption that online sales must require online ads. Yet there is a point where growth stalls, performance advertising costs rise and its results trail off as they hit a sales ceiling.
In the worst cases, wasted spend and falling returns can result in the C-suite losing confidence in advertising altogether.
3. An inability to build mental availability
We know that there are two jobs of advertising – making people more predisposed to a brand over time and nudging those who are ready to buy. Can one ad accomplish both goals?
System1 analyzed more than 41,000 US ads and found that the majority of above-average performance-led work doesn’t effectively engage consumers to build mental availability. Relying on promotional, product-focused work, whether on TV or digital channels, is unlikely to be interesting or remembered by those who aren’t currently in the market.
Performance advertising is not effective on its own. It must be coupled with brand-building counterparts that aid in further building out the buyer pool over the long term.
Closing the Gap
It’s true that many advertisers add a “layer” of brand building on top of their existing performance activity. This “bothism” approach – running brand and performance ads simultaneously – is an improvement compared with an overemphasis on performance. But there is danger in brand building becoming siloed. In many instances, there isn’t a common thread between performance and brand, meaning creative isn’t working as hard as it could be.
With only 1% of creative reaching the heights of commercial potential, the good news is that there’s nowhere to go but up. Brands must first recognize the limitations tied to overreliance on performance advertising, especially when it is siloed from brand work. By reinstating brand-led thinking into advertising, organizations can bridge the effectiveness gap and unlock the full range of benefits of the Multiplier Effect.
WARC, System1, Prophet, Bera.ai and Analytic Partners have just released “The Multiplier Effect” – a joint report that tackles a critical problem facing marketers today: The separation of brand and performance advertising. Dive into the issue more deeply and discover solutions to multiply the short-and long-term impact of creative.
