Already in the middle of the last century David Ogilvy, for many the first great figure of the advertising industry, stated that the function of advertising is to sell and that effective advertising had to be based on the knowledge of its consumer. 70 years later, it would be curious to imagine his reaction to our current reality, with the amount of information accumulated about consumers and the focus on measuring sales that digital platforms provide today.
We should therefore not be surprised that the market is so enthusiastic about these capabilities and that it tends, in an exercise of simplification, to summarize the opportunity of digital communication to what we are used to designating as performance. Following a logical reasoning, if we communicate to sell, and there is a discipline that promises us that we communicate investing only what the increase in sales allows us in budgetary terms, it is in this discipline that we should focus. But is it really that simple? Maybe not.
The first question is whether we are correctly evaluating the increase in sales recorded. Sales are, by nature, volatile and this prevents it from being unambiguous to identify the increase in sales obtained. That’s where attribution models come in, but when we dig deeper, we realize that they always have criteria that can never be 100 percent objective. The last click is objective but is insufficient to identify the merit and real impact of the communication. If we consider that the performance campaign should also claim credit from those who bought it, as long as they were impacted by the campaign in the last seven or 28 days, the most usual periods, we will be increasing the quality of the analysis but we will also be skewing conclusions. During this period, there were almost always other brand actions that could also claim the same contribution and all the organic flow that would already exist even without the campaign. When we apply these criteria to the calculation of the CAC (customer acquisition cost), we may be frankly optimistic, but who doesn’t like to show dashboards that recognize the success of what we do and, even more, if they belong to entities that have become the reference .
The second doubt is that communication is much more than conversion, because we know that brand awareness and attributes help sales, as well as price variations, ours and competitors’. Aware that building and reinforcing the value of a brand is also an advertising objective, the market’s response led to the coexistence of two types of campaigns with different objectives. One for conversion, almost exclusive to digital, and another for “awareness” or reinforcement of brand value. The error, if any, could be that both promote sales, we just measure their success differently and, more importantly, focus on different potential consumers.
And this last aspect should be the one we should try to know the most. If the attribution model has to be understood to be correctly interpreted, it is even more important to realize that the immense “data” at our disposal, if used in favor of the successive optimization of an ever lower CAC, will leave us talking only with those who already had a high affinity for our offer and, in the worst cases, would already buy from us even without telling them this time. That’s why, when performance campaigns are interrupted, the drop in sales is always less than the number of sales usually claimed by performance reports.
If we are aware of this, we will understand that performance accelerates purchase cycles, which is great for any business, but we must be cautious in the conclusions to be drawn from our analyses. And the main thing is to try to identify the correct balance between the budgets destined to performance and those destined to communication that focus on those who, being our potential consumers, but who are at a moment more distant from immediate acquisition, are those who feed our growth and that bring the indispensable new customers.
I would imagine that David Ogilvy would be delighted with what the market now makes possible, but I doubt he would share the same enthusiasm about allocating resources for performance versus those allocated for brand equity. Without value brands, products and services become undifferentiated, only allowing them to compete on price. And when we look at most of these campaigns that impact us through retargeting, we can’t help but remember another phrase from him:
“You cannot bore people into buying your product – you can only interest them in buying it.”
Opinion article signed by João Paulo Luz, director of digital business and publishing at Impresa
Source: Meios & Publicidade by www.meiosepublicidade.pt.
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