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Reading: Performance Wins Advertiser Confidence As Awareness Gains Mixed Reviews, Says WFA research
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B&T > Advertising > Performance Wins Advertiser Confidence As Awareness Gains Mixed Reviews, Says WFA research
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Performance Wins Advertiser Confidence As Awareness Gains Mixed Reviews, Says WFA research

Staff Writers
Published on: 18th June 2019 at 2:34 AM
Edited by Staff Writers
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Major multinational advertisers are increasingly satisfied with the performance of their response activity, designed to drive consumers to take action or purchase but give much more mixed reviews on the effectiveness of their awareness messages.

The State of Advertising, launched today at the Cannes Advertising Festival with the help of The Economist Group, reveals that while 30 per cent believe effectiveness of performance has “increased dramatically” over the last five years, just eight per cent said the same for the top funnel.

Overall, a huge 72 per cent of respondents said lower purchase funnel messages had improved on effectiveness over the last five years but only 43 per cent said the same about ‘top funnel’ performance and 37 per cent of those questioned said effectiveness had declined.

Despite this, most advertisers are continuing to focus their investment on awareness. Spend is focused on ‘top of the funnel’ activities for most respondents, with 55 per cent saying most of their investment was going on activity designed to promote brand awareness. Thirty-one per cent were investing evenly between awareness and lower funnel performance with 7 per cent investing mostly in performance messages and channels. 

The results are based on an online survey of WFA members conducted in June 2019. More than 100 individuals responded from 70 companies across 15 categories, including consumer packaged goods, automotive, food, alcohol, tech and finance. Collectively, respondent companies spend roughly US $115 billion on media and marketing annually. 

Our respondents reported that despite stagnant economic conditions in many markets ad investment is up for 43 per cent of our respondents over the last 12 months. Fifteen per cent reported a significant rise and 28 per cent said it was “somewhat more”. 

Over a five-year period, 49 per cent reported an increase with 27 per cent saying there was significantly more investment and 22 per cent somewhat more. No change was reported by 9 per cent over the last five years. 

Increased investment in advertising, however, wasn’t automatically improving performance, with those who felt ad effectiveness was in decline blaming clutter (63 per cent), the increasing ease of ad avoidance (53 per cent), declining reach (42 per cent) and declining trust in advertising (39 per cent). 

To overcome these challenges, respondents were focusing investment in eCommerce, programmatic, POS and offline advertising. eCommerce was cited as top priority by 28 per cent of respondents with a further 30 per cent saying it was a high priority while programmatic – covering search, social and display – was named as a top priority by 26 per cent and as a high priority by a significant 47 per cent of respondents. 

Future priorities included areas currently attracting a lot of attention – IOT, voice, VR, AR. The three-year timeline highlighted the ongoing importance of data and programmatic as well as the rising importance of influencer marketing. Fifty per cent of respondents said data was an area that would increase significantly, with programmatic in second scoring 27 per cent on the same measure and influencer marketing attracting support from 11 per cent.

Conversely, big advertisers seem to reject the current hysteria around the scale of the move to in-housing. They cited only one area where they would in-house more than outsource, low-cost, fast creative executions. Other areas likely to be affected by in-housing included short-form content marketing and influencer marketing.

Agencies are likely to benefit from increased spending in areas such as traditional media buying where 45 per cent expect to spend significantly more and 30 per cent to spend somewhat more in the next 12 months. Other areas that are also likely to be less impacted by in-housing include big ticket creativity, traditional media planning, creative strategy and programmatic search, all of which had over 50 per cent of respondents predicting they would spend more externally. 

Finally, respondents also highlighted their vision for the next five years:

  • Ads need for reciprocity: Seventy-seven per cent supported the statement “in the future advertising will need to involve a value exchange/reciprocity”. 
  • DTC (Direct to Consumer) brands to inspire: The second most popular statement was “direct to consumer brands will inspire the big traditional advertisers to find new and better ways of connecting with their audiences”. 34 per cent strongly agreed and 39 per cent somewhat agreed. 
  • Traditional ads are here to stay: Respondents largely disagreed with the premise that in five years’ time there will be no traditional advertising. Just 8 per cent strongly agreed with the statement that: “looking ahead five years, I can imagine a world without traditional advertising formats”. 28 per cent strongly disagreed and 34 per cent somewhat disagreed. 
  • Marketers obsessed with their own problems: 67 per cent agreed that the industry had become too obsessed with its own problems to the detriment of putting the consumer first, 
  • Brand purpose frequently lacks authenticity: 65 per cent agreed with the statement that most examples of brand purpose fail to resonate with the consumer as they lack authenticity, with 19 per cent strongly agreeing.

“As in industry, we are often prone to overstating sweeping new trends so this is a useful bellwether of what a lot of the world’s top brands really think.

“There is great optimism in terms of the perceived effectiveness of some direct response inventory but brands increasingly face the problems of clutter, ad blocking, declining reach and trust in advertising.

“There is also a stark reminder that, for all the talk of in-housing, our agency partners will remain critical partners in achieving brands’ goals” said Stephen Loerke, ceo of the WFA.

The Economist Group CMO Mark Cripps added,

“What we take away from this survey is that we need to balance short-term needs with long-term brand building. Of course, we need to continue to put the fires out. And we also need to reforest with an eye to the future.

“Advertising is transforming with increasingly sophisticated audiences, media and tech. We need to plant the right trees for a changing climate. We need to create firebreaks, irrigation systems and nurture our saplings for a lush and thriving industry.”

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TAGGED: Cannes Lions, Cannes Lions 2019, The Economist, The Economist Group
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Rosie Oakshott
By Rosie Oakshott
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Started out at Retail Week in London before tackling large-scale expo’s around Australia. Rosie’s background gives her the nous to bring together B&T’s editorial, events and commercial vision.

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