If you want to see an insurgent digital company that ticks all the boxes of contemporary Internet nomenclature, it would be hard to go past Zuper. An innovative fintech, its members sit at the core of the business, crowdsourcing the expertise needed to pick trends, build products and even help run the operation.
“For the first time, members are at the core of a financial business, not at the outside,” says co-founder and Chief Product Officer Jon Holloway.
With such a digital pedigree it’s easy to imagine a marketing culture that puts performance marketing — those bottom-of-the-funnel, transactional campaign tools so beloved by digital marketers and finance departments due to their apparent transparency and measurability — front and centre.
But that’s not the case.
Holloway told Which-50, “Brand is more important than ever. For years people have been pushing the idea of acquisition and retention away from brand advertising, as if they are two separate and distinct things. Having worked in the digital space for more than 20 years on my own brands and many others, the one thing I am sure of is that they aren’t separate. [They are] two sides of the same coin. Everything a business does is brand, every touch point and interaction, whether that is active or passive.”
According to the co-founder and serial entrepreneur, “Marketers have lost their way completely. Overwhelming information and a new ‘silver bullet’ daily has pushed people away from getting the basics right. Basics like a meaningful brand, a positioning that is distinct and a story that works to bring people into your product and drives desire, no matter the channel.”
He says industry commentators are likewise confused, “You are either anti-digital or anti-traditional, where in the real world, the channel is irrelevant at a macro level.”
Liz Miller is the senior VP Marketing at the Chief Marketing Officer Council in the US — the leading peer-powered network for senior marketing decision-makers. Despite often working with the kind of incumbents Holloway seeks to displace, her views are not very far removed from his.
When it comes to spending on performance and brand advertising, Miller sees a merging of strategy across both areas of spend.
“Brand and performance advertising are increasingly seen as two sides of the engagement and experience coin, especially in a connected consumer-driven economy. This evolution and merger is really by-product of customer experience and an understanding that there can’t be a disconnect between performance and brand campaigns.”
She said, “We are starting to see new metrics and ways to measure impact of brand investments, especially across video. And we are also seeing storytelling and brand messaging ramp up in performance focused ads.”
The views of Holloway and Miller reflect those of many of the senior B2B and B2C marketers in Australia and overseas we spoke to in preparation for this story.
In simplistic terms, brand marketing is focused on longer-term goals, such as the lifetime value of the customer or the price a business can capture for a product or service.
Performance marketing is all about short-term objectives, such as a sale or a lead — it is entirely transactional, and involves what marketers like to describe as the bottom of the funnel.
Traditionally, certain advertising channels such as television or magazines have been associated with brand, while performance marketing is more commonly associated with digital channels — for example digital display advertising and search advertising. Social media advertising tends to muddy the waters as it includes elements of both.
As technology evolves, and as the current limitations of performance campaigns become clearer, the division at least at a channel level is starting to blur. Brand dollars are moving into digital as consumers spend more time online, while performance dollars are beginning to trickle into the pockets of TV broadcasters, who are busy building out new real-time targeting capabilities.
While digital media is still highly focused on performance, Venessa Hunt, Head of Digital Trading and Partnerships at GroupM, expects both brand and performance budgets will expand into new areas.
“TV will get more performance dollars, thanks to addressable TV, and digital will take a fair share of branding dollars because of the amount of time that consumers spend in the digital space,” Hunt told Which-50.
The Evolution of TV
Television, still the largest advertising category, is a good example. Large-scale TV buys are designed by brands to connect with a broad audience.
The information that brands have about their audience is derivative — based upon household surveys by companies like Roy Morgan Research, or on panels run by companies like Nielsen. Big national brand advertisers will tell you they love TV for one simple reason: it works, even if they can’t say why. But if you sell more hamburgers or soap powder then the campaign is a winner, and if not then just go back to the creative drawing board.
Now targeting capabilities enabled by Internet-connected TV are opening up the possibility of capturing performance dollars. That’s because consumers will start generating all kinds of new data points through their behaviour in the world of connected TV. (An obvious caveat is that television creative executions are very expensive compared to digital inventory, meaning optimisation is a very different proposition in this medium.)
Still, it’s a big step forward, as GroupM’s Hunt explains. “We didn’t understand the human on the other side of the TV set, but the launch of addressable on connected TVs is going to change that in the next 12 months.”
Addressable TV advertising allows different commercials to be shown during the same program depending on the user’s profile. Those features allow advertisers to move further down the conversion funnel, from the big budget car commercial to adding a final frame advertising a local dealership based on a specific post code.
“Targeting and knowing more about somebody and what their mindset is, will always help you get further down that conversion funnel,” Hunt said.
Hunt said Australian TV broadcasters have acknowledged there is a “huge opportunity” to tap into performance budgets which have previously gone to digital media thanks to its targeting capabilities.
But there is also a risk. For instance, Which-50 is aware that at least one of the major marketing technology platforms has investigated technology that would link a consumer’s phone device ID to the television ID. That means they can prove that despite the Nielsen metre claiming otherwise, most members of the household were kilometres away, or even just too many metres away from a screen to have actually seen an advertisement.
When these sort of unforeseen consequences emerge — as they surely will — Free to Air TV in particular will face its “newspaper moment” when all those lazy campaign dollars suddenly run up hard against the immutability of all that auditable, unfortunate data.
But that’s for another day.
Unlike the print media, however, the television networks have options — including capturing more of the branding dollars being spent on digital media via the connected TV or streaming video.
Gai Le Roy, Acting CEO and Director of Research at IAB Australia, said the growth of video consumption on digital platforms is driving an uptick in brand advertising in digital.
“Marketers are very comfortable with the role that video plays for their branding objectives,” Le Roy told Which-50.
“The IAB is now reporting around 40 per cent of display dollars being spent on video inventory. While some of this is performance focused, there are definitely more brand dollars in the mix than in previous years. Other forms of digital advertising can also work incredibly well for branding but video is definitely the format that is changing the mix significantly at the moment.”
Miller, from the CMO Council, concurs. Asked where she expects to see growth across brand or performance her answer is clear: “Video. Video. Video. For both brand and performance. Video. Can I say it again? Video.”
“This is really the advertising opportunity that has so many thinking ‘wait … is this a performance campaign or a brand campaign?’ And video is really that point at which many marketers realise that one campaign can and should be both. We will certainly see lots of movement and innovation here across both brand and performance initiatives as video takes on new forms and engagement opportunities.”
Facebook is one digital giant that is pushing its branding power to marketers.
Naomi Shepherd, Director of Brand, Facebook Australia and New Zealand, argues the rise of mobile and social is a genuine cultural shift and has a critical role to play in long-term brand building.
“We’ve designed our platforms to attract over two billion people on the most engaged screen on the planet — and that’s a powerful place for brands to be,” Shepherd told Which-50.
“The evolution of our platforms has been epic. They’re not just about short-term conversions — although they can do that too — but they contribute to those longer-term brand metrics no differently than any other brand impression from traditional media, to packaging, price and promotion.”
Facebook recently commissioned research from Deloitte which found brand is still on marketers’ agendas, but it is falling behind shorter-term metrics like sales and conversions.
“The results also indicate pretty strongly that most marketers understand that there should be a mixture of short-term and long-term metrics,” Shepherd said.
“A lot of our focus now is on balancing the short and long term. We think our platform is great at conversion, but equally has a role to play in consideration and bringing big ideas to life.”
In particular, the development of ads in Stories both on Instagram and Facebook is an example of a format which meets the needs of brands and consumers, Shepherd said.
“It’s fun, interactive, ephemeral and delightful for people, and for brands it’s a full-screen, mostly sound-on, highly immersive mobile format where their brand message can come to life,” Shepherd said.
“The rise of Stories in Australia is seismic — one million Aussies are making a story every day. No other channel can do that at the scale our platforms can.”
Brand versus Performance
Spending between brand and performance is sometimes portrayed as binary, particularly in parts of the adtech world.
Take for instance Ashu Garg, a General Partner at Foundation Capital, an investor with a long pedigree in advertising and marketing technology. He argues all marketing is performance marketing.
“What you are seeing is a shift away from advertising where brand safety is a concern or where there is a perception of high risk of fraud,” Garg told Which-50.
Foundation Capital’s bets include such well-known businesses as AdRoll, Responsys (acquired by Oracle) and TubeMogul (acquired by Adobe) and TV analytics business Conviva.
But Garg’s binary view of the world of digital advertising is uncommon.
Most marketers, even those for whom performance is typically the first tool in the kit they reach for, have a more nuanced view.
Haley Doel is a B2B marketer for SiteImprove, a Copenhagen-based software company that helps its clients better manage issues like GDPR compliance or accessability. She told Which-50, “Advertising spend will always be unique to the individual business depending on many internal and external factors.”
She says the direction often comes from management and board level to align with the broader business goals. “As a B2B technology company, resources are often invested heavily in developing new products to stay competitive with fast-paced global demands. This in turn has an impact on the marketing department. We often have an increase in activity to push the product to market, with a focus on achieving revenue targets in the shortest timeframe.”
Marketing departments are required to manage advertising budgets in response to how they anticipate the market to take up new technology and actual adoption rates, she says. “Performance advertising is a first priority after a new product release with pressure to show a return from development investment — it is easier to implement and to show results.”
But she adds that, once initial sales have started to generate a return, “… we see a shift to brand- and leadership-style advertising.”
“We need to not lose sight of the bigger picture and recognise the value of brand positioning to provide context and relevance to consumers as an important part of the buying process. In the technology space, we can’t just expect a prospect to buy straight from the first ad they click on.”
Cat Prestipino is the CMO of human resources disruptor Employment Hero, a platform for small to medium businesses offering what the company calls an easy-to-use HR and payroll software which also provides employee benefits through a digital marketplace.
She brings an especially well-rounded view to the topic, having previously held the role of JAPAC Marketing Director for AdRoll, an advertising retargeting business and one of the local leaders in the performance advertising sector.
According to Prestipino, “There has definitely been a resurgence in brand advertising over the last twelve months across businesses of all sizes. Marketers want to show their business impact so there has been a natural gravitation towards towards performance advertising.”
She says there is now more acceptance, especially at the leadership level, that performance advertising can’t work in isolation and there needs to be balance between brand and performance.
“We’ve also seen understanding around attribution mature and, with less reliance on single touch attribution, brand advertising is being credited with more value in the marketing funnel.”
Striking a Balance
Speaking on a panel at Advertising Week in Sydney earlier this month, Nicola Lewis, Chief Investment Officer of GroupM, warned brands need to strike a balance between brand and performance.
“We speak a lot with our clients about the balance of brand and performance and arguably over 24 months many clients went very heavily down that performance route at the expense of brand health metrics, brand sentiment and brand saliency,” Lewis said.
Lewis’s GroupM colleague Venessa Hunt told Which-50 the language around brand and performance has started to shift.
“If you look back over the last few years there’s always been a sentiment of brand versus performance, which I think is quite fascinating because they don’t really work without each other. So it’s not about brand versus performance, it’s really around how they work together to achieve short-term and long-term goals.”
“If you are not thinking about the long-term branding goals and you are only focusing on the short term, you are not filling the top of the funnel up. All you are doing is focusing on how you can push people through it. If you are able to turn around and put more people in the top, or not changing the brand consideration at the top, you are obviously prone to risk.”
Speaking to media at an event in Sydney last month, Tourism Australia CMO, Lisa Ronson, argued neglecting brand to focus on short-term outcomes like sales will hurt revenue over time.
“You can’t have a robust sales outcome without a strong brand. It just doesn’t happen,” Ronson said. “Consumers need to make an emotional connection when they are paying for things.”
“I’ve worked in many industries over the years and if you stop investing in brand to get a very short-term outcome, you might not see the results in three months or six months — but after a while you will see your brand start to decline and it will cost you. You will have to spend twice as much as what you were spending before to try and get that brand value back to restore your sales outcome.”
Virginia Hyland, founder of Hyland Communications, echoed that sentiment. She told Which-50 there are four main actions companies take which contribute to drive sales growth: build Awareness, Consideration, Trial and Loyalty.
“What we have found is that when you ignore any of these four actions it will affect sales consistency,” Hyland said.
“Our ecommerce clients tend to focus on the Trial end of the funnel. However once their ability to attract customers starts to flatten we have found that we can lift sales by adding brand building elements.”
According to Hunt, GroupM’s most progressive clients are moving to outcome-based marketing, which includes measurement around marketing outcomes rather than media metrics. Essentially, using “language that is important to their business rather than what is important to a media plan.”
That could include specifics such as footfall traffic or a mindset change in certain locations or going into a particular store to go and buy a certain product.
“Rather than looking at media metrics as successes — for example a click-through rate — we are not focusing on those very short-term goals. We are actually focusing on what our clients care about, so whether that is selling cars or selling chocolate bars,” Hunt said.
Hunt said that requires having a bigger conversation about finding a “targeted customer that cares about the value proposition of the brand rather than somebody that is going to click on an ad banner.”
As a supplier, US software house Adobe straddles both the performance and brand agendas. According to Tom Braybrook, the company’s APAC Customer Solutions and Strategy Specialist, “The obvious trend is a continued increase in investment in digital channels overall. This is because of the digitisation of some traditional media channels (Connected TV, DOOH, audio, print) as well as the improved targeting and measurement capabilities that digital offers.”
Irrespective, he stresses the importance of the overall experience for the customer. “Once again, experience is key. Consumers are increasingly fatigued by poor ad experiences — invasive ad formats and irrelevant messages at a high-frequency.”
Email marketers have been through this learning curve already, says Braybook, “And the ad industry will be no exception. Leading organisations are taking more of a pull-approach by investing in content partnerships and in-house editorial/design teams to become more useful and engaging to a customer, rather than simply shouting about their products in ads.”
Zuper’s Holloway says he is in no doubt that advertising is going to be fully automated, sooner than we think, “That isn’t really a good thing, but that’s progress for you. As we reach the tipping point for video online … I can see a future where a large percentage of ads are bought programatically, and not just in digital. Outdoor, radio, cinema and TV are all on the way to becoming traded on exchanges.”
“This should in theory bring the cost down and make targeting more targeted. But in reality, the way it is being built will probably drive it the other way.”
What this does, though, is bring about accountability, he concedes.
“Imagine a world where we could measure the big expensive media by actual eyeballs or more importantly attention. I am convinced that if we could, the cost of big media would come down significantly. It’s easy to sell high-priced media on the back of theoretical audiences. The big media works, no doubt about it, with the right creative. For me it has always been about opportunity cost.”
“What’s your plan B and what’s the plan for when it stops working? I look into the future and can only see a demise in the effectiveness of advertising. The writing is on the wall, so it’s not if, rather when.”
He says that over the past six months he has seen some great technology being used particularly at younger companies to measure everything, from attribution to true brand value studies of real people. “Closed, immediate feedback loops that are run by technology and deciphered by humans.”
“Our marketing stack at Zuper is lean, but powerful — we measure everything and ladder up to two key metrics. We talk to our customers both in real life and digitally every single day to get the feedback we need around the product, brand, messaging and feed that back into the marketing and product team. Our brand is very powerful in a market of vanilla, so we can’t wait two years, we need the information now,” he says.
According to Holloway, “Big brands move slowly. People churn is a problem and passion for actual truth can be hard to find, so I am not sure that there is a desire for change and to know the truth. My theory is that the truth would be something most brands and marketers wouldn’t want to hear — the wastage, the misinterpretation of marketing and messaging and the real performance of advertising might prove to be too much for too many.”