6%
CaseBrand Strategy
The AA cut brand spend to near zero over 8 years while chasing short-term ROI, ending up with 6% of Britons never having heard of the brand and an internal warning that it would go out of business within five years.
The AA cut brand spend to ~zero over ~8 years for pure price-promotion activation: short-term ROIs looked fantastic while 6% of Britons had never heard of the AA, searches went generic, comparison sites commoditized the category and churn spiralled. Internal projection: 'Our ROIs are fantastic and in five years we will be out of business.'
Source
Effectiveness Week 2018: Les Binet & Peter Field present Effectiveness in Context (2018)
Les Binet (adam&eveDDB), Peter Field; IPA / Effectiveness Week
00:33:00-36:00, Les Binet
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PrincipleBrand effects build and decay slowly while activation effects spike and fade fast, and brand only overtakes activation as the growth driver around 6 months into a campaign.StatAcross roughly 500 IPA digital-era case studies, campaigns that combine brand building and activation together outperform campaigns that use either alone.Quote"The myth that brands are no longer important in the digital era is possibly the most corrosive and idiotic piece of thinking we've heard in recent years." - Peter FieldPrincipleA strong brand is what makes short-term, agile marketing campaigns more powerful in the first place.WarningOverspending on brand costs about 20% of effectiveness and is easily corrected, but overspending on activation costs over half of effectiveness and cannot be quickly corrected.PrincipleThe budget-balance principle says to spend more on brand when activation is easy, and more on activation when brand is easy, sending money to whichever effect is harder to achieve.StatBrands that are heavily researched online, sell online, or run on subscriptions need more brand building, with an optimal split of around 74/26 toward brand.PrincipleNew brands at launch should split budget close to 56/44 toward brand, but as brands mature the optimal split shifts back to around 76/24 for brand leaders.StatAcross more than 1,000 IPA cases, no brand has ever reduced price sensitivity through short-term activation alone, and premium brands need an optimal split of around 64/36 or more toward brand.WarningBrands with major product innovation should tilt budget toward brand at around 72/28, while minor, tweak-level innovation performs worse than no innovation at all.PrincipleNot-for-profit causes nearly invert the standard rule, with an optimal split of around 44/56 toward activation because their emotional brand effect already comes easily.StatThe optimal brand share of marketing budget is trending up, from around 60% toward 62% or more, not down.