The Effect of Creative on Sales Is Dwindling, Why?

However a year earlier TRA and Mars presented results at ARF showing that the creative percentage of sales effect was 65 Apollo and NCS also found it to be 65 in that same time period These studies all used singlesource amp8211 based on panels for Apollo and Mars based on big data for TRA and based on both for NCS Singlesource is householdlevel MMM Both methods traditionally use amp8220tonnageamp8221 ie ad spend or its proxy GRPs and in rare instances nowadays reachfrequency Quantitative data having no human measures of motivation or creativeHowever the right number might actually have been 80 to the extent that human factors might play any role in sales effectRSCamp8217s data were data about creative persuasion scores and the likeMMM runs on media GRPdollars The singlesource studies used multiple regression analysis similar to MMM however at the household level rather than at aggregate levels Still the singlesource estimates of the creative contribution to sales utilized dollar spend rather than creative parametersUse of data about creative and use of data about media dollars are two variations of the same method One might be more accurate than the other The two combined together might be more powerful than the mediaonly MMMsinglesource without creativeIs there any evidence of that Yes the ARF Cognition Council study found that the creative as quantified through RMTamp8217s AI lens accounts for 48 of sales effect MMM based on media dollars generally finds that all of advertising amp8211 both the creative and the media amp8211 account for only about 7 of sales effect The ARF study using just the creative data based on RMT methods showed that advertisingamp8217s creative effect on sales was about 7X advertisingamp8217s media effect Itamp8217s possible that MMM or singlesource using both media dollars or TRP or reachfrequency plus RMT creative parameters essentially the dimensions of motivation would show that advertising drives 55 of sales effect 48 creative and 7 mediaHowever creative is only one part of advertising so if creative is 48 of sales and media promotion and all other factors the other 52 then marketing accounts for 100 of sales which is impossible because habitual behavior is so strong and looked at on a very long range basis way back in the beginning marketing along with product experience did create those habits So we might say that ultimately marketing including word of mouth does drive 100 of trial sales although when habits form their having been originally formed by marketing and product experience drops away as perceived by advertiser C suitesSo what is the fair answer to the question of creative percentage of salesSoon someone will answer that question by being the first MMM andor singlesource to utilize both the usual plus the RMT factors Or some other data representing the creative or several sets This method will then become the standardIn the meantime we notice that the creative percent of sales effects is trending downHere are the three data points from which I draw that potential conclusion They all use similar econometric modeling based on the dollars or GRPs allocated by media typesIn 2009 or thereabouts four companies using singlesource agreed on 65 Mars TRA Apollo NCSIn 2017 using panel plus big data singlesource NCS reported 47In 2023 NCS using panel plus big data singlesource found 39 for TV and 26 for digitalWhy would the power of the creative be going downIt would not seem to be about the quality of the creative but more about the changes in the media environment and in the audienceThe audience working longer hours than their parents and soured out Levels of skepticism and cynicism greatly increased brand trust in many cases shrinking away more pessimism than optimismA main driving factor I feel is that digital is the next generation of promotion Advertising increases value perception but promotion is focused on triggering immediate sales generally utilizing reminder and price effectsAs documented here the digital standard 12 seconds of attention can accelerate sales among existing customers but not win new hearts and minds Jim Donius foretold it five years ago digital is actually part of the promotion budget or should be If only 26 of its sales effect comes from creative it must be more like promotion and less like advertisingAs more dollars shifted plus new dollars the emphasis of the new lowercost mass medium digital was on shortterm sales performanceThe biggest winners being walled gardens giving themselves report cards on everything from audience sizes to sales effects and everything in between Most often their selfstudies did not include TV or other nondigital media so any sales produced by TV was attributed to some form of digital Because of the shininess of the new object its fast device level data reporting and especially those lovely low CPMs not to mention what oneamp8217s kids advise their marketer parents many C suites have hypnotized themselves into believing that they can cut TV amp8211 amp8220no one watches it any more except poor old peopleamp8221 amp8211 with impunity as long as they continue to pay for digital shelf space in amounts dictated by the big walled gardensNow groupthink herd mentality has convinced marketers that they can cut marketing year after year and simply make up for it with greater efficiency amp8211 ie those attractively low CPMs in digitalIn parallel to that TRAamp8217s introduction of big data crossplatform ROI systems 20052014 had the same effect on increasing C suite focus on shortterm performance once the new systems brought a greater sense of control You actually could see a glimmer of cause and effect Everything suddenly felt like direct response A new level That has translated today into programmaticQuarterly earnings reports and management compensation are of course linkedEverything points to the wisdom and appropriateness of focusing on the shortterm presentThe only flaw in the ointment is the pressure to grow brandsBrand thinking is longer term in its vision The apparent debate between branding and sales for a short time appeared to be intelligently converging on an emphasis on both in an integrated way without silos separating them That illusion has fast faded in the US Perhaps in other countries there is still a respect for branding effects but all that has been flushed away hereTo grow brands you need to sustain attention considerably longer than most digital The arrow is back toward the spurned bride of television But few if any marketers have noticed this so farItamp8217s best to not starve a symbiote If something grows along with your growth that is a signal that it might be a symbiote For many years TV and brands had a grand symbiotic relationship which enabled them both to grow togetherThe FOX BHC ROAS study based on MMM methodology has found that since 2014 fewer than one in five brands studied have gained market shareStarving TV has hurt the buy side even more than the sell side As shown in the FOX BHC ROAS study for example if consumer electronics and technology marketers in the US utilized the optimal allocation by media types amp8211 involving a shift back to TV and a reduction in digital ad spend amp8211 the US incremental sales made in the 12 months ending September 2023 would have increased by a factor of 26X Across Automotive CPG and Consumer ElectronicsTechnology the additional US sales that would have been made in that same 12month period with its optimal allocation shifting some digital dollars to television would have been 55 billion Over the period 20142024 the cumulative lost sales dollars across all verticals is roughly estimated to be in the neighborhood of nearly a trillion dollars caused by overinvesting in shortdurationattention digital at the expense of underinvesting in the worldamp8217s most powerful inhome advertising medium as measured objectively by ROASA Nielsen report of industry changes based on 150000 observations notes that half of all brands studied are underspent and only 25 are overspent amp8211 half of all brands studied not achieving the ROI they could if they spent moreTakeaway Test hypotheses using random control trials singlesource and MMM instead of rolling the dice based on herd mentality Use digital too but consider it mostly as part of promotion branded content and influencers are more like advertising than like promotion and do not cut advertising that is working Measure the effects of cutting advertising without having to test the whole carpet Measure the effects of increasing advertising too Open your minds to evidencebased decision making and resist going along with popular street wisdom blackandwhite proclamationsPosted at MediaVillage through the Thought Leadership selfpublishing platformClick the social buttons to share this story with colleagues and friendsThe opinions expressed here are the author39s views and do not necessarily represent the views of 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The Effect of Creative on Sales Is Dwindling, Why?

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