Digital channels can be just as effective for long-term brand building as for short-term activation, according to new independent research commissioned by Meta.
Conventional wisdom has it that digital media, such as Facebook and Instagram, are best for delivering short-term activations and ROI while TV campaigns, for example, are the way for longer term brand building. The reality is more nuanced. Different media can offer different outcomes depending on how they are used.
The research was conducted by three different companies – Nielsen, Nepa and GfK – and analysed 3,500 campaigns across multiple media channels in five European countries between 2016 and 2021.
Using econometric modelling, the research sought to analyse the effectiveness of ad spend on short-term and long-term sales and brand equity. “This helps us understand the true value of advertising,” explained Konstanze Fichtner, marketing science partner at Meta.
Traditionally, it has been hard to measure the more subtle cumulative long-term effects of campaigns but this research reveals that a significant proportion of ROI is generated longer term. The study found that, on average, 60% of ROI is achieved over the long term.
This figure chimes with the published research of Les Binet (main), group head of effectiveness at agency adam&eveDDB, alongside Peter Field. Binet, regarded as ‘the godfather of effectiveness’, said: “In multiple campaigns, it’s the longer-term effects that drive the growth in sales over time because those are the ones that accumulate.
“We believe that you need both short term activities to drive revenue now and long term activities to build up demand for the future and you need those things in combination and in balance.”
Binet explained that the short-term effects of a campaign (around 40% of ROI) occur in the first month after the ads are aired/published while the long-term effects can last for up to two years. “These are harder to see and harder to measure but have really important consequences,” he said.
“Different media have different effects,” he added. “Classic performance marketing and direct marketing promotions tend to have big short term effects, but not much of a long term effect. Brand advertising has a more modest short term effect, but it has much bigger long term effects.”
Binet described the Meta-commissioned study as “an impressive piece of research”, specifically because of its independence and its breadth of coverage, as it analysed campaigns across CPG, Retail and Telco and Tech and Durables.
One of the key findings was that online video and Meta deliver an almost 50-50 split in ROI between short and long term. “It shows us that digital media is not just for the short term,” said Fichtner. “It’s about how you use the media and how you set up the campaigns.”
Binet added: “I think there’s a short term bias in the way that people tend to use digital media, which maybe partly historic. When digital channels first emerged, the most obvious use for them was short term because you have a very straightforward, direct-response mechanism. As digital channels have matured, marketers are becoming more confident about using those channels for brand building.”
Binet reiterated Fichtner’s point about the importance of how mediums are used, saying that most channels can be used for short or long term response. He cited the example of press advertising. “Fashion magazines, say, are at the extreme brand end while local newspapers with classifieds are at the extreme activation end,” he said.
“It's not the medium as such, it’s the way you use it. I strongly suspect that social media, including Facebook and Instagram, is the same. You could use it for brand building with video or you can use it in a very direct response way, depending on the format and the targeting.”
Les Binet’s five tips for brands to navigate turbulent economic times
Don’t panic
The economic situation is complicated. While there are storm clouds gathering, we’re not in recession yet and it’s not a foregone conclusion we will be. And even in an economic downturn, some brands and sectors will do well. When Covid hit, a lot of packaged goods brands cut their ad spend and then missed out on a huge packaged goods boom. There are categories currently doing really well, like the travel market which is booming. So, don't panic and understand how the economy affects your sector.
Inflation has an upside
Historically inflationary periods are quite good for advertising: the 1970s was a period of rampant inflation and yet was the heyday of brand advertising.
Make sure the price is right
Many brands are going to need to push through price increases and to do that you need brand advertising because that is what supports your pricing. You may want to question your promotional budgets because this is probably not a time for excessive discounting.
Keep advertising
Don’t just turn advertising off, dial it up or down in order to maximise ROI and shareholder value. There may even be media buying opportunities because rates may fall if there is a recession. If budgets need to be cut, do so very carefully.
Model behaviour
Econometric modelling is a great way for advertisers to steer their way through rocky times like this. Use modelling to measure and optimise the ROI from your different channels and keep things going.
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