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The Marketing Architects
Nerd Alert: The Cost of Going Dark
00:09:38
Welcome to Nerd Alert, a series of special episodes bridging the gap between marketing academia and practitioners. We’re breaking down highly involved, complex research into plain language and takeaways any marketer can use. In this episode, Elena...
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- [00:00]
Rob Demars
Nerd Alert. Learning is important, right?
- [00:02]
Linda Jasper
Yes, exactly. What a bunch of nerds.
- [00:05]
Rob Demars
Nerd alert.
- [00:06]
Linda Jasper
Marketing Architects. Hello and welcome to the Marketing Architects, a research first podcast dedicated to answering your toughest marketing questions. I'm Linda Jasper on the marketing team here at Marketing Architects, and I'm joined by my co host, Rob demars, the chief product architect of misfits and machines. Hello. Hello. We're back with your weekly Nerd Alert. Every week, I'll take a deep dive into academic marketing research and translate its complex ideas into simple, understandable language for Rob, and of course, for all of you. Are you ready to nerd out, Rob?
- [00:36]
Rob Demars
I just went shopping at Nerds R Us and the fridge is stocked.
- [00:40]
Linda Jasper
Okay, I'm sorry, I'm, like, starting to laugh before you even start now. Nerds R Us is never going out of business.
- [00:49]
Rob Demars
Hey, it's never going out of business. Nope. All right, let's get into retail space. Right there.
- [00:57]
Linda Jasper
As always, I'm going to link the research we cover in the Episode Notes. This week I read a study titled When Brands Go, A Replication and Extension. This is by Pei Ling, Pa, Nicole Hartnett, Virginia Beale, Zhang Trinh, and Rachel Kennedy, all from the Ehrenberg Bass Institute. But before I get into things, Rob, let me ask you this. What happens when a brand goes dark and turns off their advertising spend?
- [01:19]
Rob Demars
I think you defer cost and incur brand damage.
- [01:24]
Linda Jasper
Yeah, that's the same. Yeah, you got it. Episode done. That's the takeaway. Everybody can turn it off. So it's a big question, what happens next? Because let's be honest. Yep. Marketers, we like to say going dark is dangerous. Don't do it. But a lot of us can't actually point to hard numbers. It's usually a mix of gut instinct. You know, maybe a scary case study from the 2000s. But this study gives us some real evidence and what we're talking about.
- [01:50]
Rob Demars
And potato.
- [01:51]
Linda Jasper
Yeah, sure. Study. It's called Brands go dark. And it's a big deal. It builds on a previous study that made ways when it looked at what happened to alcohol brands in Australia when they stopped advertising for long periods. And this earlier paper found that when brands went dark, sales dropped and they kept dropping the longer they were silent. Which was what you said, Rob. That was just one category in one country. So this new study said last, let's go bigger. And these researchers, they looked at 365 US brands from 22 consumer packaged goods categories. We're talking about everything from cereal to carbonated beverages to skincare, pasta Cough drops. And instead of just looking at sales volume, they zoomed in on market share, which is an even more useful metric for long term brand health. And here's the headline. If you stop advertising, your market share drops and it drops steadily the longer you stay silent. On average, market share declined by 10% after one year, 20% after two years, 28% after three years, and 30% after four years. And what's interesting is that this decline, it's not immediate and catastrophic. It's more like a slow leak. Year one might feel okay. You might even convince yourself that your past brand equity is still doing the heavy lifting. But by year three, you're really bleeding share. And by year four, it's not just a decline, it's a warning sign. But it gets more nuanced than this. The researchers, they also looked at which brands specifically suffered the most. So, Rob, what factors do you think cause going dark to have the worst effects on a brand?
- [03:19]
Rob Demars
What factors? I mean, things like, if you're in a highly competitive category, obviously those are things like CPG products, that's going to really play into it. Newer brands are obviously going to struggle. They have a job to do in terms of even being known. Things like brand loyalty or is there other ways of companies to be able to know about you beyond media like shelf space and things like that. But if you're direct to consumer, you're truly dark. If you're not advertising, yeah, I think.
- [03:48]
Linda Jasper
You'Re right on it. They narrowed it down to two big things, brand size and trajectory before going dark. So to start with brand size, larger brands are more resilient. Probably not super surprising because if you're well established, you, you can kind of coast for a little bit. You might even hold onto some of your share for a year or two before things started to slip. But smaller brands, they weren't so lucky. Some of them dropped quickly and sharply, especially if they weren't growing before they went dark. But it gets even more tactical. The trajectory of your brand before stopping advertising was a single best predictor of future success or failure. So if your brand is already in a decline, stopping advertising just accelerated the fall. If your brand was stable or growing, you had a little bit of a buffer. But even then, the losses started stacking up over time. And this wasn't some sort of quirky finding. They tested across a massive range of product categories. And while the exact size of the decline varied, like coffee brands really took a hit. They lost 80% of their share over three years. The general pattern held up across Almost every category. There were a few exceptions though. Brands and categories like cat food or baby food didn't decline as much. Some even grew slightly. But those are outliers in general. The longer you're out of market, the more likely you are to lose relevance. But I thought that's interesting. Just like the momentum matters, which makes some sense. The hard part is the brands likely to cut spend are probably brands that are already on a downward trend, self fulfilling prophecy. But one of the really useful things about this study is they do break down performance further by category type. And they use this framework from the Food Marketing Institute that classifies products into staples, fill ins, niches or variety enhancers. So Rob, what categories of brands do you think suffered more or less than others when they turned off their advertising?
- [05:33]
Rob Demars
I would think again going back to categories that probably suffer more are going to be like your CPG brands or retailers or even like subscription services where you're really relying on that churn and then suffering less. I would imagine your bigger monopolies, like you said before, like if you really own a category or essential services, things.
- [05:54]
Linda Jasper
Like that, I think you're close there. What they found was low frequency categories suffered a lot more when they stopped advertising for multiple years. So if people aren't buying your product very often and you're not reminding them you exist, you fall out of the mental rotation. So if you're marketing tea, skincare, deodorant, you might want to fight even harder to stay visible than say crackers or cereal that you buy every week. There's a theoretical tie in here. The study points out that losing market share is isn't about losing your core loyalists, it's about losing those light buyers, those who buy your brand once or twice a year. And we know from Aaron Berg Bass theory that light buyers are a majority of your customer base, but they're also the easiest to lose if your brand disappears from memory. And that's what this whole study really reinforces. Mental availability matters. Advertising isn't just about short term sales. It's about staying in people's heads. So that when the moment of purchase comes, especially for those once a year buyers, your brand shows up. And there's a great line in this paper. They quote a media researcher named Irwin Efron who said not being there with a message is like being out of stock. And I love that. Cause that's what happens when you go dark. Maybe your product is still on the shelves, but mentally you're out of stock. Your brand's shelf in the brain is Empty. And what I like about the studies, it gives us some actual numbers. You can walk into a meeting and say, here's what could happen if we go dark. Are we prepared to lose 10% share in a year? We could lose 28% by year three. That kind of data turns market into a strategic conversation, not just a cost center. I will say this study expanded it from their first study of just alcohol brands. We are still looking at consumer packaged goods, but it seems like they based on the study that I would think we can extrapolate this to other categories too. It would also line up with what we've seen with our own clients when they've paused tv, even in different categories beyond cpg. But that's just our perspective. Really quick. The robgpt Turning off your ads is like turning off the fridge. Everything still looks fine for a bit, but spoilage is coming. I had asked it for another one that I liked. Advertising is like watering a plant. If you stop for a day, you're fine. If you stop for a year, that thing's dead. All right, what'd you think?
- [07:58]
Rob Demars
It added more data against something that you know is true, but you're not always sure it's true. You know, it's just like exercise or eating gonna help you in the long term or not. We think so. The data supports it. You're like, ok, it's, it helps confirm long standing assumptions. So yeah, that was really interesting.
- [08:17]
Linda Jasper
I like the study too because I think a lot of times we hear too, you hear marketers all the time who turned off advertising and they could feel the effect like, oh, last year we were investing more, this year we're not. Like it shows up in the data. It'd be great if we could use more studies like this to make the case before. And I know sometimes there's simply nothing you can do, but it's nice to just have more evidence that you could point to before you have to find out the hard way what happens.
- [08:41]
Rob Demars
I think adding nuance too to the type of category is helpful when you're having those conversations with marketers because it doesn't seem like some blanket statement of fact. It's, hey, there's a lot of nuance to this. We recognize that. But your particular category, it's either more important or less important or what, what do the nuance, the nuances help tease out?
- [09:03]
Linda Jasper
Yes, exactly. If you're in a low frequency category and your growth is slowing, you really don't want to cut advertising. That's it for this episode of the Marketing Architects. We'd like to thank Taylor Delos Reyes for producing the show. You can connect with us on LinkedIn. And if you like the podcast, please leave us a review. Now go forth and build great marketing.
- [09:26]
Rob Demars
I like that analogy, though.
- [09:27]
Linda Jasper
But yeah, out of stock.
- [09:29]
Rob Demars
I just feel like my brain is out of stock a lot, you know? So, yeah, me too.
- [09:34]
Linda Jasper
Marketing Architects.