Brands that use paid media typically grow three times faster than those that rely on owned and earned media alone, new research from the IPA has found.
The report makes for interesting reading, particularly at a time when post-Brexit budgets are under scrutiny, leading many marketers to question whether they need to spend more money on paid media and mass reach.
The IPA has stressed that with penetration still three times more likely to be the main driver of growth and profit for brand, appreciating the effectiveness of paid media spend has never been more vital.
But it has also highlighted that there is no singular approach to brand growth.
“Paid media will only be at its most effective when coupled with both strong earned and owned foundations,” said John Barham, head of paid media at performance agency Roast.
Indeed, the IPA revealed that owned media typically increases the effectiveness of a paid campaign by 13% and earned media by 26%. This is also true online: paid online media is much more effective than unpaid.
It's something P&G tapped into earlier this year. Marc Pritchard, global marketing officer for the business, revealed that company was reevaluating its spend on Facebook saying that “we targeted too much and went too narrow.” Now, P&G is working to find a balance between getting the most reach with the right precision.
“As the research illustrates, there really is little replacement for paid media when it comes to both activation and sustained growth of a brand,” continued Barham.
“This is especially apparent in the digital landscape. The ability to reach potential users beyond your conventional or natural audience will always remain core to growth of awareness and long-term engagement. Be it through programmatic, search, digital OOH, VOD or social platforms, the ever-increasing ability to promote your brand or services to highly targeted users is unrivalled in its capability to deliver content or ads most likely to result in a positive user action.”
No rival to TV
Conducted by Les Binet, head of effectiveness at Adam & Eve DDB and IPA marketing consultant Peter Field, the research also put a spotlight on one “vital ingredient” that marketers might overlook – emotion. And despite talk among marketers to the contrary, the IPA has found that there is no rival to TV when it comes to effectively engaging with consumers.
It found that adding television increases effectiveness by 40% and it’s also the best for generating top-line growth that drives profit, with a 2.6% average market share point gained per year when using television advertising. However, the impact of spend going to video-on-demand and online video cannot be overlooked when talking about the effectiveness of TV advertising.
The IPA's research shows a 54% increase in the average number of "very large" business effects from adding television and online video together, versus 32% for television only and 25% for online video only.
The findings show why the likes of Facebook have been doubling down on efforts to work with TV broadcasters. The social network has already met with several this year in the hope of getting them to commit to host more content on the platform.
“Here lies the proof that the digital transformation has helped make mass media work even harder,” added Janet Hull OBE, IPA director of marketing strategy.
“It also proves that while it is good to have earned and owned media, for top-line growth brands must invest in paid-for, mass reach.”
Maintaining the 60:40 ratio
Looking to 2017, then, understanding the right blend of paid, owned and earned is crucial. The hard-and-fast rule from the IPA remains that the most profitable campaigns have a 60:40 ratio of long-term brand-building media (broad reach, highly emotive) and short-terms sales activation (tightly targeted and information rich).
“It makes all kinds of sense to see paid media as the quickest and simplest way to get your brand seen and noticed by the widest group of people in the shortest amount of time. Like most things in life, paid media and owned/earned media work best when they work intelligently together to do the job that each is best employed to do. It’s the classic brand + response model,” said Kevin Chesters, chief strategy officer, Ogilvy & Mather London.
While brands like Nestle, Jack Daniel's and Heineken have all been toying with getting the model right, they are arguably in the minority. The IPA has suggested there is a “sub-optimal focus on short-term activation strategies” at the expense of long-term brand building.
The average proportion of budget spent on activation objectives now exceeds the optimum, increasingly from 31% (average percentage of comms budget) in 2014 to 47% in 2016.
The findings constitute the first part of a full report, to be published in 2018, designed to identify marketing best practice at a time of mature, experienced usage of digital channels.