Advertising Effectiveness. What is it anyway?
Curio #33
It’s been a while.
How’ve you been?
The last time we spoke was months ago.
For me, things got busy last fall.
I started a new job, then we moved to a new apartment (which took way, way longer) followed by the start of my daughter’s school year - which for the grown-ups means catching every new strain of flu that’s going around, back-to-back.
So, I took a deep breath and decided to find a new pace.
I read more and caught up with my backlog of video games.
I also finished reading The Almanac of Naval Ravikant - something I’ve wanted to do for a while.
And the one thing that stuck with me is his take on building foundational knowledge.
He says that:
“Knowledge is a skyscraper. You can take a shortcut with a fragile foundation of memorization, or build slowly upon a steel frame of understanding.” - Naval
So, I started building my steel frame of foundational marketing knowledge.
I started connecting the bits and pieces of information, experience, research, and ideas that inspire me into bigger and bigger blocks.
I’ve been putting these blocks together into big ol’ guides.
And good ones, too.
The kind I can turn back to, update as I learn more, and share with anyone who’s on the same learning journey as I am.
Starting with what we can learn from thousands of marketing case studies that have won multiple awards for effectiveness.
And asking, what is effectiveness, anyway?
Advertising effectiveness measures how successful your campaign is at delivering the desired commercial, brand, and behavioural effect.
It’s different from efficiency.
Effectiveness measures outcome and efficiency measures spending.
Both are important but they’re not the same.
Although, the terms are used interchangeably.
And that hurts more than it helps.
Think of it this way.
A petrol engine can convert only 4 out of every 10 litres of fuel into mechanical energy to move your car.
As much as 60% of the fuel you put in your tank is wasted as heat and exhaust.
On the other hand, in an Electric Vehicle over 77% of the electric energy stored in the battery is converted into mechanical energy at the wheels.
Both cars provide convenience.
And fueling one might be cheaper than the other.
But if you cared about cutting down on using fossil fuels AND saving money (outcome) then only one of them is a more effective option - even if the upfront cost of owning an EV is more than a conventional car.
Effectiveness is getting more of the desired outcome.
And let’s be clear about one thing.
Effectiveness is not a single metric.
And that can be a hard concept to grasp if you’re used to optimising your campaigns for CPC or ROAS.
Effectiveness measures how well your marketing is working over the long and the short term.
Effectiveness is a marketing function. It’s not a report.
And thanks to the work of brilliant marketers and researchers such as Dr. Grace Kite, Byron Sharp, Les Binet, Peter Fileds, Mark Ritson, and James Hurman, we can have the building blocks that make marketing an effective business function.
Planning for Effectiveness
In the last 20 years, the content we consume and the media we use have drastically changed.
That’s a fact.
But how communication and advertising work haven’t changed much.
What sucks though, is that along the way we decided that performance marketing is fundamentally different from traditional advertising.
It’s not.
Thankfully, as much as data has supported the rise of highly targeted advertising, it’s also transformed our understanding of how marketing communication works.
Marketing data combined with econometrics and consumer psychology have made it possible to see how advertising really works and how to measure its effect.
And Planning for Effectiveness is the foundation for delivering successful advertising campaigns.
4 basic principles for planning effective advertising campaigns.
Today’s newsletter was about the principles overall.
In the coming weeks, I will share research, case studies, and data on each one of these principles individually.
Set clear and specific targets for your advertising campaigns: The most important sign that your campaign is going to be successful is not your budget, it’s the work you put into setting specific goals for your campaign.
Spend more than your current market share: Besides media selection and creativity your advertising spend relative to your competitors is a key driver of brand growth.
Reach everyone in your category: Advertising campaigns that drive more light category buyers to your brand or successfully get them to buy more often are more effective at growing your brand than campaigns only targeted towards a narrow group of heavy buyers.
Balance your ad spend across branding and activation: The rule of thumb suggests a 60/40 split in the favour of your brand. Even though the ratio differs by industry, investments in upper funnel campaigns outperform all other types of campaigns in the long run.
Stay curious, my friend :)
Have a wonderful week!
Aliyar