It’s the end of Brand vs. Activation as we know it, says Dr. Grace Kite
The rise of online shopping has changed the world of media budgets. Now, there’s something new on the table.
Eleven years ago, the IPA publication “The Long and the Short of It” revolutionized how we look at marketing budgets. In unison, media planners let out a relieved sigh, as they were introduced to a fantastic rule of thumb: 60 % of marketing budgets should be directed toward brand building and 40 % on short-term activation.
It was good as long as it lasted. But now, according to Dr. Grace Kite, there’s a third thing.
“As people buy more and more stuff online, it’s no longer a two-task situation with your media budget. You also need to consider visibility online,” she explains.
As a business economist who’s worked on hundreds of marketing analysis projects, Dr. Kite truly knows what she is talking about.
“It’s an availability job – you don’t just need to generate new sales; you also need to nudge people who already know you towards buying something.”
To put it simply, there’s no point in doing big-reach TV ads if people are not able to find your stuff afterwards.
“If the goal is to make people buy your products online, it’s important to lead them to the checkout as effectively as possible.”
Specifically, Dr. Kite talks about the importance of allocating some of your budget to signposts: paid ads that help you navigate to buy something you’re already looking for. A signpost could be a paid search ad in Google or on a retailer’s search page, or affiliate links that lead you to a checkout.
“In my opinion, you must get the availability and visibility thing right before you start advertising for those who don’t know you. If your bottom-of-funnel is not watertight, why lead customers there? There's no point in doing brand campaigns and activations if people can’t find you,” she says.
How to allocate your budget for the “third thing”
And now for the grand reveal: How much should we spend on online visibility?
“There’s no rule of thumb how much the third allocation should be – not yet. But we can already see that in the UK, companies are spending more of their budget on signposts than ever before”.
Evidence also shows that ROI is maximized if advertisers spend 5-10 % of the company’s revenue on advertising. Almost everyone is still spending less, and in the wrong places, as many of us are still measuring mostly last-click attribution.
“Last-click attribution is not a useful metric when deciding where to allocate your budget, as it only gives credit to the last ad someone’s clicked on before buying. It does not consider the brand ads you’ve seen on TV or the magazine ad saying there’s a sales campaign. Focusing too much on last click attribution can make you waste 35 % of sales,” Dr. Kite states.
No need to worry though, as Dr. Kite has a solution: econometrics, which is the most effective way to measure your campaigns throughout the buyer’s journey.
Brand building tomorrow
What else should we consider than signposting and measuring our campaigns better? Looking ahead, Dr. Kite envisions a future where short-form digital videos and influencer marketing take center stage. As younger generations eschew traditional media, brands must adapt their strategies accordingly.
"Video, wherever it’s aired, is the best choice for brand building. We’re in an era of fleeting attention spans. The younger generation is not going to grow up as TV watchers, they’re growing up with short videos and social media. Even though TV is still the most effective advertising channel, the shift is happening rapidly. Online video is already next in line after TV.”
Dr. Kite also reminds us that in 2023, 18 % of Finnish people bought something because an influencer recommended it. The impact of smaller influencers will continue to grow, as studies show that they are much more effective than bigger ones, as people tend to trust them more.
So, what should brands do when they only have half a second to grab someone’s attention and need to allocate their media budget between an ever-growing number of channels?
Dr. Kite’s final advice is to diversify your channel selection:
“The more channels you use, the better the ROI. Rely on lots of little exposures through a lot of media channels and you’ll get the biggest impact.”
Get to know Dr.Kite and register for her online courses at magicworks.training/real-people/dr-grace-kite
Summary:
- It is the end of the traditional Brand vs. Activation model in advertising, as the rise of online shopping has prompted a paradigm shift in media budgets.
- According to Dr. Grace Kite, there's now a third thing: online visibility.
- Allocating budget to signposts, such as paid search ads and affiliate links, has become crucial.
- Last-click attribution should be replaced with econometrics to measure campaign effectiveness.
- The future of advertising lies in short-form digital videos and influencer marketing, catering to evolving consumer preferences.
- Diversification of channels is recommended to maximize ROI and capture fleeting attention spans.
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