“Frank, are you now an ad expert too?” “Isn’t there enough been written about advertising effectiveness?”
When still the majority of ads show moderate ROIs, we know there is still work to be done. I am not specialized in advertising. Still, I did enough studies around this to give you some food for thought.
Food for thought with the potential to 10x your ad impact.
One of Europe’s largest insurance brands became aware of the Creative AI work I had presented in 2017 at ESOMAR Global Conference. We tested dozens of TV ads – a dozen from the brand and many dozens of competitors. We also categorized each ad with an extensive code book, describing in detail the building blocks of the ads.
We used Causal AI to extract the causal do’s and don’ts of successful ads. While ads may look different, winning ads share a certain profile.
The true banger was this:
We included classic ads of the brand that had been more than 30 years old. The ads just enjoyed some makeover. It turned out that those old ads outperformed the existing ads as well as competitive brands with flying colors.
More than that: even the young audience that does not know nor remember the old ads or the brand songs, responded greatly to those ads.
The way brands did advertising in the 80s is seen to be “old fashioned”. But there is a reason why this brand had become one of Europe’s most reputed insurance brands… And why its growth has stagnated since the ad strategy had been “modernized”.
“Never change a running system.”
Same thing happened in the German beer market. 20 years ago, Warsteiner was the best-selling beer. Then they lost their focus and the regional brand Krombacher hit the jackpot with very distinct and memorable advertising. Krombacher refrained to change the winning system and sells today nearly twice as much beer as Warsteiner.
In the domain of IT, everyone knows this: “Never change a running system”. Same is true with ads. You can alter your creative but not the core ingredients, the building blocks of your ad. For this, you need to understand what defines success first. Then you know what is just décor.
“Not just test ads, understand root causes.”
Creative quality explains 50% or more of success. Still, 30% is how you distribute your marketing dollars. That’s why most brands do marketing mix modeling.
“I can not sell these results internally. Digital affiliate ads is a junk channel.” This was the response of a telco client to our mindblowing insight from our MMM work. We found that this channel showed 10x higher ROI than conventional channels.
How can this be? The channel is not targeted. It is distributed everywhere. Even on ethically questionable sites. This is why it was called “junk channel”.
Because every media planner was disregarding it as junk, the impression was very cheep to book. In addition, a mobile carrier is what everybody needs. The value of targeting is therefore questionable in this domain anyway.
The channel was inexpensive and it acquired the long tail of prospects that the competition obviously missed out. With amazing ROI.
“Think different and you will 10x ROI.”
We found a similar breakthrough when doing MMM for a luxury goods brand with its own stores. Turned out that the display ads at the airport had 10x ROI than other channels (it was actually 9x but as you know I like 10x more).
This astonishing uplift was a mix of three effects. One is the stronger more actionable link of ad and sales occasion with more leisure time and less competition. Second was that the brand purchased those ads at a huge whopping discount. Turned out that also the brand-building, long-term effect of this channel was higher. Such effects are an integral part of a Causal AI-based MMM.
What can we learn
Never change a running system. If you have an ad system that produces high ROIs, be sure to ride it until it breaks.
Not just test ads, understand why they work or don’t work. Only if you understand the core reasons for success, you can systematically create alternative ads that do not bore your audience.
Think different also with marketing mix modeling. Be ready to learn something new instead of just confirming your existing beliefs.
This is how you 10x your advertising ROI.
p.s. each week I will come back with inspirations that have the power to contribute to 10x your impact of insights. Subscribe and take me by the word!