Brand Value: Measuring The Long-Term ROI Of Different Advertising Channels
By Michael Cross, Brightblue Consulting
Consider it’s the late 1980s. Marketing analysts in the U.S. are completing work on a project known as “How Marketing Works,” studying historical data across 40 packaged goods companies. As part of this work, the analysts will propose that the so-called long-term impact of advertising can be considered to be, on average, twice the measured short-term uplift.
Then spring forward 30 years to today. Many marketers have been relying on this rule of thumb over this time, in doing so risking overlooking the key differences that come with variation in creative, sector, campaign KPI and media channel.
What is long-term advertising impact?
One way to think about long term advertising impact is to imagine where some of the world’s largest brands might have been today had they never advertised. They could never have built such a large customer base without trust, awareness and repeated messaging that comes with a history of prolonged marketing activity. Therefore, we define the long-term impact of media to be the increase in a KPI that has taken place as a result of all the advertising a brand has run in the past, after any short-term response in the initial few weeks following activation have been accounted for.
But how can marketing analysts identify this effect, and what considerations do brands need to be aware of?
1. Clarity Of Project Aims
Firstly, it is important to clearly set out how we are defining long-term media effect. Whether we are interested in the impact on sales, purchase consideration, price elasticity or otherwise should reflect the long-term business growth aims. This is crucial in how we design our methodology to get the right result and generate actionable insights.
2. Understanding The Consumer Journey
One traditional way to reliably measure long-term media effectiveness is to consider the impact of media throughout the consumer funnel. Typically, marketers will look to metrics such as brand health and social listening to measure the impact of a brand-focused activity. However, assessing if these metrics also then lead to revenue uplift in the long term is important in order to identify truly cost-effective campaigns.
We can explore this by modelling the long-term movement of KPIs at each level of the consumer funnel, identifying which metrics drive growth in a KPI once short-term factors have been accounted for. This is what we call analysis of “base” drivers, long-term factors that drive sales outside of changes in other short-term influences. These models can then be combined together to produce a holistic view of media impact throughout the customer journey to conversion.
3. Pairing Micro And Macro Data Sources
We can take our analysis of the consumer funnel a step further by pairing this analysis with more granular consumer-level data, offering a multifaceted approach to understanding the full long-term impact of media. Micro-level data allows us to study groups of consumers based on shared attributes, which can help us make wider statements about the population at large.
Consider two examples:
• Is there a statistically significant difference in the likelihood of an individual to purchase based on their price perception of our product?
o Assessing whether there is a significant difference between these two groups may help us understand whether a long-term increase in price perception is likely to translate into business growth.
• Following our brand’s long-term sports sponsorship, what is the difference between the purchasing habits over time of a football fan vs. non-fans?
o This may help us understand how those exposed to long-term campaigns have changed compared to those who are less likely to have interacted with this media touch point.
We also can use customer-level data to analyze retention rate using customer lifetime modelling. One way in which a brand can typically increase its natural base is to attract new consumers who go on to repeat purchase. Observing how those who engaged with the brand during a certain campaign have interacted with the brand over a successive period can help us understand the impact of different marketing channels in building a loyal customer base.
4. Trusted Analytics Partnerships
Working with analysts with a wide breadth of experience and a creative approach to analytics offers the opportunity to move away from the traditional short-term focus of large marketing studies and obtain a more accurate read on media’s true impact.
Michael Cross is the founder and CEO of leading predictive analytics firm Brightblue Consulting. He is a leading predictive analytics expert with a track record of delivering double digit improvements in clients’ marketing driven profit. Over the last 20 years, Cross enjoyed a successful career working in various specialist econometrics, marketing mix modelling and data science roles, helping organisations to quantify and optimise their marketing. Cross recognised that many businesses were relying on their marketing agencies to measure the effectiveness of their own marketing campaigns. A clear conflict of interest. He founded Brightblue Consulting in 2012 to offer businesses independent and unbiased predictive media analytics and started a step change in how analytics is used in the commercial environment.