This report by the IPA examines the business effects of 1,000 advertising campaigns from over 30 years of IPA Effectiveness data. It provides evidence-based recommendations for businesses on how best to approach investment in advertising.
In Brief
The report was researched and written for the IPA by Les Binet, Head of Effectiveness at adam&eve DDB, and Marketing Consultant Peter Field, and is an update on their influential earlier work, ‘Marketing in the era of accountability’, which was published in 2007.
The findings are based on analysis of the IPA Effectiveness Awards Databank – the product of 30 years of the IPA Effectiveness Awards covering more than 700 brands in over 80 categories. The report focuses on how campaign results develop over time, and the tension that exists between short-term response activity and long-term brand-building. It demonstrates the danger of using very short-term metrics as primary performance measures for long-term success.
Key findings
- Long-term investment in advertising delivers double the profit of a short-term approach
- Brands which target the whole market achieve 3 times as many large business effects than those that focus on existing customers
- TV advertising remains the most effective way to build a brand and creates larger business effects than other forms of advertising
- Advertisers need to ensure their campaigns strike the right balance between long-term investment in brand-building using mass media, and short-term, direct methods that stimulate sales.
- Long-term (3+ years) investment in advertising delivers double the profit of a short-term approach (less than 1 year), but investing in both delivers even higher returns
- Emotional advertising is twice as efficient as rational, and delivers twice the profit
- Short and long term effects work differently which means that short term metrics, especially direct response rates, may not be a good guide to long term success
In Depth
Findings
Balance activation and long-term brand building for greater profit
- The largest part of an advertising budget should be invested in media with a mass reach and long-term effects. At least 60% should be invested in these brand-building media.
- Tight audience targeting, whilst desirable for activation, does not help long-term success.
- Brands which target the whole market achieve 3 times as many large business effects than those that focus on existing customers.
Reaching a mass audience is most effective strategy
- Attempting to build deep, loyal relationships with existing customers is less effective than investing in advertising that reaches as wide an audience as possible. Ad campaigns which target new customers report 60% more large sales effects in the first six months alone.
- TV advertising remains the most effective way to build a brand and creates larger business effects than other forms of advertising.
- TV advertising is becoming more effective due to growing synergies with online and increased competition reducing the cost of reaching mass audiences with TV.
- Including TV advertising in a campaign increases the campaign’s efficiency six-fold.
TV advertising is crucial to long-term profit
Creativity, emotion and scale are crucial
- Emotional advertising is twice as efficient as rational, and delivers twice the profit.
- Highly creative advertising is the most effective of all, but even the best creative work will fail if it does not have sufficient scale and is not evaluated over the longer term.
- Short and long term effects work differently which means that short term metrics, especially direct response rates, may not be a good guide to long term success.
- Unless balanced with proper long term evaluation, they can compromise creativity and steer you in the direction of lower profits.
Don’t steer by short term metrics alone
The report was researched and written for the IPA – in association with Thinkbox – by Les Binet, Head of Effectiveness at adam&eve DDB, and Marketing Consultant Peter Field, and is an update on their influential earlier work, ‘Marketing in the era of accountability’, which was published in 2007.