I bet Lord Simon Wolfson a pint that Next will return ad spend to television by the end of next year.
Last week, the UK fashion retailer announced that it will double its digital advertising spend in 2019 while cutting print, TV and direct mail budgets in half. A Next spokesperson told me that only Wolfson, the chief executive, can comment to the media and that he was unavailable. As a result, I have no knowledge of the brand’s exact reasoning and plans. But I will make an educated guess on what will happen.
Next will become the latest company to fall victim to the online vanity metrics and delusions of digital grandeur that harm brands and decrease sales.
“If you emphasise vanity metrics such as likes and followers, you can easily lose sight of metrics that show how marketing campaigns and programmes deliver against the overall marketing strategy and business goals such as revenue growth,” Gartner senior research analyst Anna Maria Virzi said.
“There’s a finite amount of time in a day. Time spent on vanity metrics takes time away from more productive endeavours, such as tracking metrics that link marketing activity to business outcomes.”
Next is repeating a common mistake
In March 2017, Adidas chief executive Kasper Rorsted announced that the brand was moving ad spend from TV to digital. What happened? Quarterly revenue fell from €5.68bn in September 2017 to €5.26bn in June 2018. That is a loss of €420m. (Adidas did not respond to requests for comment.)
Take a look at another fashion company. Here in Israel, I tend to buy clothes at Castro. Yes, I usually make the purchases on the store’s website and ship the items to my flat. But the online purchases at the end happened only because of the offline marketing at the beginning.
Castro has always known the value of TV, print, and outdoor. (I had seen the ads for years before starting to shop there. ) Here is an example of the elements of a past campaign with future Wonder Woman Gal Gadot. (I will reserve comment on “Jeanius.”)
Yes, Castro has a YouTube channel and Facebook page. But people, in general, do not actively follow brands on social media. People follow friends, family members, politicians, entertainers, celebrities and sports teams instead. A 2017 CivicScience survey found that 45% of Americans have never bought anything as a result of social media advertising.
What the research actually says
If Next wants to improve the customer experience by making online fashion purchases quick and, well, seamless, the company is correct. Gartner published a new L2 Digital IQ Index report last week naming the top fashion brands in digital – and almost every single example highlighted customer experience and website functionality.
But in terms of marcom specifically, the evidence is clear that traditional media – especially TV – is what builds and maintains consumer brands.
“Research has shown that there’s little to no correlation between digital actions and brand or business effects like sales or leads,” Camilla Yates, planning director at the London creative agency ELVIS, said. “Direct response campaigns, by their nature, have very specific objectives, so attempting to maximise followers, likes or retweets may actually divert consumer attention away from the ultimate objective of the campaign by making the ‘ask’ less single-minded.”
An Ebiquity study found that brands can generate $45bn in additional profit through actions such as decreasing spend on digital display while increasing investments in TV and radio. The research firm also determined that TV and print are much more effective than social media. Only direct response spends – not advertising spends – are moving online in general.
In general, digital channels do not build brands. Organic reach for company pages on Facebook is practically non-existent. So-called influencer marketing on Instagram is more fake than Milli Vanilli. And that does not even take into account the pervasive online ad fraud and bullshit digital numbers as well as the fact that 40% of all online traffic may be fictional.
But let’s still keep measuring the success of campaigns by their numbers of impressions, followers, retweets, views and other dodgy online vanity metrics that are never audited by independent third parties.
A personal example
I fear that brands such as Next are falling victim to the same mentality that harms the startup industry. In the VC-mandated world of “growth at all costs,” if some digital marcom campaign gets a huge response in superficial direct response metrics, startups quadruple down on it.
I see it all the time. “Content with numbers in headlines get more clicks? Put one in every headline!” “Sensationalist adjectives get more retweets? Add that too!” It leads to boring marcom and a complete lack of creativity – and, most importantly, it does nothing to build brands.
Here is an example from a past agency job of mine. The startup client wanted us to “do social media”. That phrase is meaningless, so I asked which marcom tactics he had in mind for the channels. Creating and running ads? Doing direct response? Building an online community? He tilted his head quizzically and looked at me like a dog trying to figure out what the owner was saying.
“Engagement!” he replied. He wanted us to throw anything and everything online that would maximise “likes”, shares and retweets.
I stifled an eye roll because, you know, he was a client. But I wanted to joke that if he wants purposeless “engagement”, we could just make funny memes and cute kitten videos and slap the company’s logo somewhere.
“Clickbait and vanity metrics are like the steroids of the marketing world: focusing on short-term gains instead of your long-term health will do more damage than good,” Ollie Roddy, business development manager at Catalyst Marketing Agency in London, said. “You’re much better going the natural route to growth.”
TV is less expensive and more effective
Still, the most common argument against television is that it is an expensive channel. But that statement is wrong.
Simulmedia founder and chief executive Dave Morgan recently crunched Nielsen AMRLD and Kantar ad occurrence data with Magna Global’s numbers and found that the average CPM across all national US TV advertising is $2.26. In contrast, he found the CPMs of branded premium online video ads against broad targets range from $10 to $75.
Not only is television cheaper and more effective, Forrester Research principal analyst Jim Nail also reported at the US Association of National Advertisers’ media conference earlier this year that “TV is still unchallenged for its effectiveness in long-term brand-building objectives”.
And why is that? In any given minute during summers, the ad-supported multi-screen TV 18-34 audience is six times larger than Facebook and two times larger than YouTube, according to the trade group Video Advertising Bureau.
Another fact that should concern brands: 79% of the consumption on YouTube is of videos created by so-called influencers, according to a presentation at an RTL AdConnect event last week in London. It is a mere 2% for brands. (So much for content marketing being the only marketing left.)
What’s next for Next?
Following last week’s announcement from Next, JP Hanson, chief executive of the Swedish strategic consultancy Rouser, rightly tweeted that the brand’s new digital focus will lead to short-term gains but less long-term success.
“[The news is] largely unsurprising, given that they equate effectiveness with internal rate of return,” he wrote. “Short-term projects usually have high IRR but low net present value while long-term projects that may add substantial value over time often have low IRR but high NPV. It's a self-fulfilling prophecy.”
And why is that? As Jakob Nielsen wrote about online ads in 1997, TV is warm and the internet is cold. People go on the internet to get something done. People watch television to have an emotional experience.
It is obvious which channel is better at building memorable brands. Many digital campaigns will get countless views, “likes,” and shares. But an increase in vanity metrics will rarely sell anything itself – especially without any offline help at the beginning.
“While there is certainly a place for these types of metrics in indicating how your campaign went and signposting how it was received by your audience, they do not provide the in-depth measurement or figures needed to speak the language of boardroom,” Abe Smith, EMIA president of the PR software company Cision, said. “By using only vanity metrics, it is impossible to derive the full picture, and possible success, of a campaign.”
I look forward to settling the bet with Lord Wolfson the next time I’m in London or if he is ever in Tel Aviv. Just make sure the ale is cold. After all, I’m American and Israeli – and the temperature of British beer is a metric that I will never understand.
The Promotion Fix is an exclusive biweekly column for The Drum contributed by global marketing keynote speaker and workshop facilitator Samuel Scott, a former journalist, consultant and director of marketing in the high-tech industry. Follow him on Twitter. Scott is based out of Tel Aviv, Israel.