WARC has long held the view that effective marketing strategies combine immediate results with long-term goals. However, a fragmented media landscape and a focus on short-term measurement make it difficult to prove the value of marketing over the long term, and mean that marketers don't have a clear view of the impact of their marketing activities across the sales funnel. This ultimately leads to the risk of budget misallocation.
For example, a recent MMM (Marketing Mix Modeling) meta-analysis by Ipsos focused on e-commerce brands shows that advertisers can be more effective if the brand building budget makes up 50-60 percent of the overall investment.
Source: WARC, 2024Advertisers who focus on short-term ROI may be missing out on half of the revenue associated with brand building. That's one of the main conclusions of a new study, "Beyond the horizon - the holistic path to measuring media investments," conducted by WARC in partnership with Google.
A comparison of Ekimetrics and a long-term study Google commissioned from Nielsen reveals that the long-term impact of media on sales over 5-24 months equals or exceeds the immediate short-term impact on sales over 0-4 months.
These findings are consistent with a Thinkbox study showing that measuring long-term effects leads to an increase in advertising profits to £4.11 (£125), compared to a short-term ROI gain of £1.87 (£57).
This suggests that prioritising only short-term ROI may cause marketers to overlook a significant portion of the media revenue generated by separate brand building dynamics.
According to WARC, marketers should abandon their binary view: brand versus performance. And invest in marketing at the top, middle and bottom of the funnel. A recent study conducted for Google by Nielsen showed that increasing brand awareness at the top and middle of the funnel by just one percent leads to not only a 0.6 percent increase in long-term sales, but also a 0.4 percent increase in short-term sales.
The same study showed that a one percent increase in purchase intent activities leads to a 0.7 percent increase in short-term sales and a 0.2 percent increase in long-term sales.
By focusing on short-term results, marketers risk neglecting brand-building activities, which could impact long-term brand health. In fact, when this long-term health is sacrificed frequently and at a higher rate, it can be devastating to the brand. This is also true for dependence on conversion tactics.
Why Use Marketing Mix Modeling
No single tool can provide a comprehensive measurement of media impact. Marketing Mix Modeling (MMM) is experiencing a renaissance. Companies should consider how much data they have and how detailed the data should y ultimately be. According to Grace Kite, economist and founder of Magic Numbers, 10 percent of media budgets should be invested in MMM. This is because it can serve as a guide for strategic budget planning, provide benchmarks and optimise investment across channels.
Marketers looking to implement MMM should decide whether to use an in-house solution or outsource it, as it depends on many factors, including the level of expertise across the business or whether the company will be happy with an off-the-shelf solution or needs a specific, tailor-made one. The availability of resources is also key.
Although MMM provides a comprehensive view of media impact, the WARC report stresses that it should be combined with other tools such as attribution to measure digital media campaigns and incremental experiments to validate observations and test findings.
AI-powered solutions will also be effective in transforming campaign measurement, particularly by enabling faster, "finer-grained" insights and helping marketers to proactively and data-driven allocate budgets that could match their immediate and future goals.
Source: mediaguru.cz
