Great stuff to share with a local-direct client. Philip Jay LeNoble, Ph.D.

COMMENTARY

It's Time to Rebalance Your Client's Advertising Strategy

• by Alan Miles , October 26, 2023

There was a time when advertising strategy in the consumer packaged goods ecosystem was fairly straightforward: Reach as many consumers as you can with your message.

But changes in technology and consumer purchase behavior are challenging this conventional wisdom.

Brand factors, including consumer loyalty, market share and brand penetration, now impact 21% of incremental sales — an increase of 6% since 2017, when we released our study, “The Five Keys to Advertising Effectiveness.”

By the way, this uptick in brand factors comes at the expense of reach. Back in 2017, this element impacted 22% of sales. Today? It contributes just 14%.

That finding turns conventional wisdom on its head. It means CPG marketers need to rebalance their advertising strategies for today’s environment if they want to improve return on advertising spend.

How to Rebalance the Five Keys

So what’s behind this shift? Advertisers are still adapting to the ripple effects of the pandemic, the influence of social media and ecommerce, and the impact of technology -- such as delivery apps -- on buying behavior. And now we have a new buying block: Gen Z-ers, digital natives who foster new expectations for brands.

The five keys of advertising effectiveness -- creative, brand, targeting, reach and recency -- are the same. But advertisers need to weigh the relative value differently. Here’s how to think about each.

Creative: Creative quality still matters most, impacting 49% of incremental sales. So lean into it, especially with younger consumers like Gen Z who are open to ads. Tailor creative to their preferences. In a recent consumer sentiment survey, we found more than half (52%) want creative to be entertaining, and 43% enjoy humor in ads. And don’t forget: One of the best ways to maximize the impact of your creative is to optimize in-flight.

Brand: The impact of loyalty is unmistakable. Brands with the highest levels of consumer loyalty had twice the incremental sales as brands with average or low loyalty levels. Double down on relationships and build experiences beyond single transactions. In that same consumer sentiment survey, we found Gen Z-ers are three times more likely to engage with ads with a social message.

Targeting: This driver has greater influence today, impacting 11% of incremental sales—up from 9% in 2017. Your best audience is more likely to be those who’ve bought your product before. Ads targeting existing buyers drive significantly more incremental sales than ads that either target new buyers or have no distinct target.

Reach: Be careful not to discount this element, especially when it comes to TV advertising. You can maximize its effectiveness by coupling it with the right audience, targeting and data strategies.

Recency: Timing is still an important driver, impacting 5% of incremental sales. Keep in mind: advertising effectiveness isn’t only about how many times a consumer sees an ad, but also about when they see that ad in relation to making a purchase.

Today’s advertisers must continually hone their campaigns to connect with modern shoppers. Rebalancing your advertising strategies based on this new dynamic is the key.