There seem to be many large brands that are spending too little on advertising, eventually leading to a weakening of the brand and its ability sell and command a premium. Take for instance Tanishq, a leader in the fine jewellery space with over 20 k cr in turnover, it is all but invisible on mass media. Sure, it is a fast growing brand, but is it actually taking full advantage of its strengths and the headroom in the industry? Probably not. There are also large FMCG companies, who have cut advertising spends as a percentage over time, especially in years when the going gets a little tough. Are they doing the right thing? Or are they leaving money on the table?
Let us look at the reasons why they are doing this? The main reason is that advertising has a short term impact and a longer term impact. When companies are looking at quarterly profits, they are essentially focussing on the short term, as they see the immediate benefit. As the money is coming from the same budget for advertising and promotions, they spend even lesser on branding as promotions typically have a higher immediate lift, and brand campaigns may not deliver as much. So CEOs find it convenient to spend less on brand related activities.
Studies show that the longer term impact of advertising is 3 or more times that of short term campaigns as brand advertising gets the consumer to buy into the brand promise and stay with it, sometimes over a lifetime.
The issue with long term is that it is more difficult to measure, as even regression based methods, tend to identify only the shorter term effects. So even a relatively advanced technique like marketing mix modelling (MMM) will still tend to show that brand advertising does not perform as well as promotions. So what then is the solution? Do marketers go with the broad studies and take a leap of faith and invest more than what they have been till now?
Luckily for us it is now possible to measure the longer term effect through both a specialised modelling technique as well as by using brand health measures into the equation. By doing this, brands can truly optimize how much to spend, and maximise profits, not at a quarter level alone but at a longer 3 to 5 year period. Why leave so much money on the table, simply because the impact is not immediately obvious and one does not have the skill set to identify the opportunity?
.jpeg)
The COVID-19 pandemic has dramatically changed how markets operate and how consumers behave, shaking up the world in ways we’ve never seen before. As we move forward, the way we do marketing needs to change too. One key tool for this is the Marketing Mix Model (MMM), which traditionally helps businesses figure out the best ways to spend their marketing dollars and understand what works.
.jpeg)
How does one evaluate the return on investment from a sponsorship – let’s say the big bucks spent by Dream 11 on sponsoring the shirt of the Indian cricket team. Spend by Dream 11 was reported to be Rs 358 Cr for150 matches across all India teams – Men's, Women and Under 19. The interesting thing is that this rate is not even half spent by Byju’s and before them Oppo, who spent a whopping Rs 5.09 Cr per match. The increase and decrease in rate seems to be based on how buoyant some companies felt, a few years ago as opposed to how they are feeling today.
.png)
RainMan has worked for over 15 years in the area of Marketing Analytics, and one consistent and recurring theme has been that otherwise great marketing companies, leave a lot of opportunity go a begging when it comes to use of their assiduously collected data.