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The Marketing Architects
The Real Cost of Cutting Brand for Performance
00:24:29
Rebalancing toward brand from a performance-only mix lifts revenue ROI by a median of 90%. Yet 67% of senior marketers are still shifting budget the wrong direction. The gap between what marketers know and what they do turns out to be one of the...
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- [00:00]
A
AI is literally engineered to reward mental availability. Like that's how it works. AI is out there eating the world. If you're known in the world, you will be rewarded through AI Marketing Architects.
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B
Hello and welcome to the Marketing Architects, a research first podcast dedicated to answering your toughest marketing questions. I'm Elena Jasper on the marketing team here at Marketing Architects, and I'm joined by my co hosts. Angela Voss is CEO of Marketing Architects and Rob DeMars, the chief product architect of misfits and machines.
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A
Hello. Howdy.
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B
We're back with our thoughts on some recent marketing news. Always trying to root our opinions in data research and what drives business results. And today we're talking about integrating brand and performance and specifically what it costs you when you don't. So I'm going to kick us off, as I always do, with some research and today's episode is built around a brand new work report. It's called the Multiplier Playbook. It was released in May with analytic partners Bera, Prophet and System One. Listeners might remember that we covered the original Multiplier effect report on an episode last year that was a study that argued it's not brand plus performance, it's brand times performance with brand equity acting as a multiplier on everything else you do as a marketer. And the headline from that one was that shifting from a performance only strategy to a balanced mix lifted ROI by a median of 90%. So that original report sort of told us this is what you should do. This new playbook added on to that by looking into why is nobody doing it then. So work surveyed over 200 senior marketers in partnership with the ANA and they found what they call this say, do gap. So marketers know the theory of effectiveness broadly, but they can't seem to put it into practice. So they identified several structural, procedural and cultural blockers standing in the way. And the first one was a disconnect at the top. About 2/3 of CEOs say brand is important, but only 19% of companies routinely connect brand equity to actual business results. That is a 48 point gap. And 60% of CMOs say the C suite doesn't fully understand what advertising is even for, which is like really sad. Second, the money is moving the wrong way. 67% of marketers say pressure to prove impact has pushed them to shift budget towards performance, even though that only serves one of their top five business priorities. And third, on the creative side, 41% of marketers now say that creativity is is seen as a risk inside their organization, making it the Number one barrier to effective work, despite all this data we've talked about that shows creativity is only second to budget size in driving results. And finally, 90% of ads are never given enough time to wear in. That's not wear out, wear in. We're killing good work long before it starts to pay back. So today we're going to dig into all of this, but I want to start big picture. This whole follow up report hinges on this idea that marketers, we know what works, we just aren't able to do it. We're not doing it. Do we think that the SEIDOU gap between understanding marketing effectiveness theory versus actually applying it is a knowledge problem or a courage problem?
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C
Yeah, I think there's something important to remember related to the report just in terms of the surveyed audience. So my answer is gonna be both. This audience that was surveyed was a group of senior marketers at large brands through the ana. That's a population that has been in rooms where this research gets presented quite a bit. So I would say for that group, yes, that se do gap is real. They know the theory and they're still moving money towards performance because fill in the blank, right. The CFO is measuring roas, the board wants quarterly proof. The incentive structure rewards those short term results. And so the knowledge is there, but the maybe organizational permission to act on it is the harder part for that group. But you and I know this both, Elena. We talk to marketers every single week who have genuinely zero exposure to this type of research. They have no idea who the IPA is, they don't know who work is, they haven't heard of Ehrenberg, Bass, mid market brands, smaller teams, people who are deep practitioners of their craft, but are working entirely outside IPA effectiveness literature or a work report like this. So for that group, the gap I think is still about knowledge. They're optimizing towards performance because the measurement infrastructure that they're working with, either they inherited it or they built it when the compounding cost of that has been sort of invisible to them. So when the report claims that the challenges facing marketers are purely structural, I think that's accurate for the audience that they surveyed. It's, I think a more generous assumption about the broader industry. The real picture is probably that there still are two distinct problems sitting kind of side by side. People who know and struggle to act and then people who are still working from an incomplete picture of how it all works.
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B
And when you speak at shows or like on roundtables, you'll often open with who hears red? How Brands grow. What percentage do you think of people in general, like, raise their hands?
- [04:48]
C
I would say, on average, between round tables and bigger shows, probably 10% would be like, the guess I would have.
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B
So that's a pretty big knowledge gap. And that's, I think, maybe more of a general sample of marketers, probably y. Yep.
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A
We just had Mark Ritson on the podcast who would argue that people just don't know. Right? Like, that was almost his whole point is that people have an infl. Sense of self when it comes to knowing all of this marketing stuff. So it would definitely support that avenue that you're talking about. I think the other thing that was funny for me, and just hearing this study out loud when you explain it this way, Elena, is it sort of feels like one of those health studies that comes out where they're like, so it turns out drinking alcohol isn't good for you, you know, and it's like, yeah, well, we kind of know this stuff. We know it's important to be doing this stuff. We know brain's important, but we don't really do it. And then a study comes out and supports it, and we're like, yeah, yeah, but. But then, you know, people still just like, it's happy hour, let's go.
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B
I think, too, the cultural blockers is a big deal as well. Like, you could have the knowledge and the courage, but if there's not the people within the business who can help support these types of marketing initiatives, I think a lot of marketers end up just completely stuck. Like, they're just not able to actually bring forward the principles. So one of the big stats from the original multiplier effect was this 90% median ROI lift from rebalancing towards brand, which is a pretty enormous number. And yet we talk about in this report how 67% of marketers are still moving money the other direction towards performance. So if the data is this clear, that moving, you know, rebalancing towards brand is going to drive a better business result, why do we think the majority of the industry is still betting against it?
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C
I think it's tied back to data and measurement. Right? The data is clear and the organizational incentives are still misaligned. When you look at that 90% median ROI lift, that sounds enormous in a research report, but inside a company, I think the conversation happens in a quarterly budget review with a CFO looking at roas. And roas is clean and it's legible. It's known. It's a simple story that they've understood for years. Brand roi Especially something that's delayed. And compounding requires a more sophisticated model to see and understand. And most companies either haven't started building it or in are in process of building it, or they have it and they don't believe it or some mix of those three. I think there's a concept in the report that really landed for me, which was the doom loop. When brand investment drops, that multiplier weakens performance efficiency falls because brand equity was making performance work harder. So more money ends up going into performance to compensate, which further starves brand, which further erodes the multiplier. And the cycle maybe looks okay or fine in quarterly numbers for a while and then it becomes a serious problem that's hard to get a hold of. So that 67% moving towards performance are kind of just rational actors responding to the measurement environment that they're in the measurements showing them that this distorted picture and the systems inside most companies are built to see that short term Roas and miss that 90% entirely, even while it's compounding in the background.
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A
Roas is just such a nice warm bath though, isn't it? I mean, you just get in there and you're in. Oh, this feels so good. And life's good. And I agree with everything you're saying, Angie. It's just hard. It's hard. I mean, you're sitting around the table going, we got to move the needle. And you go to those short term metrics and they feel good, they give you that hit, they give you that dopamine rush. And when people are talking about, well, just wait another six months, that seems like an eternity. So it takes real maturity to be able to withstand the long game.
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C
That warm bath turns real icy though. Like when you're, when you run out of that short term win and you're still being pressured to grow and your Roas falls apart and you don't have that brand equity to help fuel new customer growth, then it's real uncomfortable.
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A
Maybe it's an one. It's cheesecake. Like I can eat a whole cheesecake right now, no problem. It's not good for me, but man, it's going to taste good. But you put a plate of broccoli. I know, long term that's better, right? I mean, I know long term that's what I should be doing, but. But dear God, that cheesecake is right there and it's so full of empty calories. Roas is like the empty calories, right. Of marketing.
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B
I would agree with both of you that it's definitely a measurement Challenge. And I think the doom loop is such a perfect word for it because I think it's the natural instinct of the business. If things aren't going well, we need to cut back on brand. You need to invest more in performance. And if you keep doing that, you're right. You're like stuck in this vicious cycle and you never are able to get out of it. So ange, you're a CEO, you talk to a lot of CMOs and CEOs and we were laughing about this stat, that 60% of CMOs feel the C suite doesn't understand advertising, which is funny but also concerning. And only 21% feel their ad objectives are aligned with commercial objectives. Do you think that this is on the C suite, that they need to understand advertising and marketing effectiveness more? Or is marketing failing to speak the language? Like, is it a combination of both? What do you think?
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C
I think it's a little bit of both. But I think marketing has to own more of it than the other side. When you talk to CEOs outside of the marketing world, like, brand is far from abstract to them. They understand pricing power, they understand customer acquisition costs. They care deeply about what percent of their revenue is truly resilient versus what requires constant maybe promotional pressure. And those are all brand questions. Marketing just tends to maybe arrive with a different language for them. So the 48 point gap, gap in the report site, 67% of those CEOs believe brand is important. But only 19% of companies routinely connect brand equity to business results. And I think that gap lives inside the marketing department. The system where brand tracking and MMM run separately was built by marketers. We created our own silos and then treated the C suites confusion as their problem. So the concept of this missing 15% gets at this directly. If on average 15% of a company's baseline sales trace back to that cumulative weight of prior brand investment in a standard mmm model, that 15% just surfaces as baseline revenue. It looks like it was always there, it was attributed to the business and is invisible to kind of marketing's contribution. But when brand investment erodes, that contribution shrinks slowly and quietly and makes it easy to miss until the problem becomes really significant. So yeah, I mean, I think it's that measurement architecture, architecture failure, which is kind of owned by marketing. Build models that show the C suite what they're sitting on and the conversion shifts. McDonald's CFO Eden Boren, I think quoted in this report, he said the key was a framework that evaluated both immediate returns and that sustained impact. And that Orientation really should be kind of driven by marketing.
- [11:55]
B
Yeah, and McDonald's has had such great creative advertising too in recent years. It's funny how you hear a CFO say something like that and you look at their advertising and it really tracks. So you're talking about the missing 15%. Is that just lost forever? Is there like a model or something that marketers could use to prove that through, or is that always going to be just unable to prove?
- [12:14]
C
I think the hardest part is the politics of it. Honestly, on the measurement side, most MMM models treat that brand equity as a static variable held constant in each time period. So the accumulated value of years of brand investment shows up as just that, baseline revenue. When you inject dynamic brand equity into the model tracking how equity moves in response to investment decisions, you can see that 15% as more of a living, moving contribution. You can run scenarios showing baseline degradation when brand investment stops. And you can quantify that compounding cost, maybe of underfunding it. Barra's research across those 30 MMM studies I think puts brand equity's contribution to baseline sales at like 5 to 31% with 15% as the average. So for some companies this is a massive number hiding in the baseline of a spreadsheet somewhere. The part I'd push hardest on is the conversation with the CFO works best as a collaboration. The report recommends building a growth model with the cfo. The relationship with the CFO is super important and it's not super intuitive either for especially an agency to be like, let us connect with your CFO and help build, you know, marketing analytics. But their instincts are great. Analytic partners found that companies with low CFO involvement in marketing decisions leave 20 to 80% of opportunity on the table. So bring that CFO into that marketing process and let them stress test the assumptions. And when they've had a hand in building the framework, shocker, they arrive at kind of shared conclusions that they're more willing to lean into as well.
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B
Well, that sort of helps highlight the problem. The fact that if as an agency you're asking to speak to the cfo, most brands are probably going to look at you like what? Even sometimes speaking to the CEO of certain brands is not seen as like something that they do speaking to agencies. So that's part of the issue of marketing is going to be seen as driving business impact. Someone like the CFO should be involved. And I know with some of our best performing clients the CFOs are involved in marketing. So moving on to the creative section of the report, another stat we shared was that 41% of marketers say creativity is seen as a risk, even though data says creativity is second only to budget for driving outcomes. So Rob, why do you think our industry is so afraid of investing in creativity and taking those risks when the evidence continues to say year over year again and again how well creative works and how important it is?
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A
I think if you look at a lot of the other levers that a marketer gets to deal with, creative can seem risky. What I mean by that is look at media, for instance, right? If you go and you buy media, you pay a certain amount of money, you know what you're going to get, and guess what happens if it doesn't go right? You get a make good. Can you imagine if there was a make good for creative? I mean, like, oh, that campaign didn't quite work, right? I want my make good. That just doesn't happen, right? So it feels risky. You have to go out there, you have to put your brand out on the line, you have to put your name as the marketer on the line. Oftentimes people get associated with the campaign that gets launched. So it just feels risky. I think the irony is, and the irony that even the research here is showing is going safe with creative is actually riskier. Spending that money and not having it actually resonate and being forgettable is the greatest risk of all. So being able to de risk some of the things, do some pre testing. Obviously we love pre testing, understanding what audiences think of particular message strategies, but make them bold, make them big and make them meaningful. Otherwise again, your greatest risk is being forgotten.
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B
Yeah, and I think like risk can come in different ways too. Like even things like investing long enough in like a sonic logo and things like that can feel risky for brands or like investing a campaignable idea. The report also digs into our favorite topic, which is AI, which actually might be our favorite topic, but it's not usually a marketer's favorite one right now. So AI was supposed to be very connected to performance marketing, but this report cites research that 63% of a brand's visibility inside large language models comes from long term brand equity. So they're arguing that AI strengthens the case for brand, which is not something I personally would have expected at first. So what do you think about this, Rob? Do you think AI is actually going to reward a more balanced approach to brand and performance?
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A
I mean, it's not even an opinion. It does. And that's what's so fun about this one. I think we're as marketers we're so trained into keyword optimization and like that's how to show up in the digital world. And there's all these tricks and things that you need to deploy and backlinks and strategies in order to show up. But at the end of the day, AI is literally engineered to reward mental availability. Like it's actually fundamentally like that's how it works. AI is out there eating the world. If you're known in the world, you will be rewarded through AI. So it really does flip the script in terms of how we do digital marketing and it really rewards the fame angle using the levers that we talk about with how brands grow. You will feel a difference in AI for sure in how you're found and how you're searched and how you're rewarded by the agents that are out there making the buying decisions for you now, which, how weird is that we're now targeting AI in many ways in terms of making the buying decisions for consumers.
- [17:37]
B
Building on that something that when Peter Reinberg was on the show a few weeks ago, it's not just that brand's going to help your brand get sourced. It also helps when there is a human making a decision. It's going to help them pick you up. Because if that LLM comes back with three options and you only know one of them, you're be much more likely to pick that. So brand is sort of baked into the whole process. All right, we got to discuss this finding. I kind of mentioned it earlier that 90% of ads don't wear out. They get pulled before they ever wear in. And the report talks about booking.com Super bowl spot. They said that tested better a year after it launched. I feel like we've heard a version of this over and over and over again and it's still a huge problem. Why do we think it's so hard for us to just leave a good ad alone?
- [18:14]
C
Well, I think the people that are pulling the ad are the ones who've been staring at it for 18 months. So they're bored or it feels lazy in terms of what they're doing next and they're concerned about the image internally. Their agency makes money by producing new creative, so the agency is driving potentially the need for new creative. Someone in a conference room just raises the idea of something new. And there's really no measurement model to offer friction to that move because most systems are built to detect wear out and are blind to that wear in. If you think about marketing and how it works and short term sales activation versus long term branding, and in market consumers versus out of market consumers and the 95 5, like all of this blends together. You can see degradation in that short term outcome, just that immediate response window. It doesn't necessarily mean the ad isn't working any longer, but just in terms of your depending on how much you're spending and how long it's been in market, you may be kind of working through some of that immediate demand that's in market. So it can be a little confusing. And I think to your point, the booking.com case is a perfect illustration. I remember reading that the ad tested at like 3.3, which is a pretty solid score in system one at launch and then a year later with more exposure tested at like 4.3. So it just got better over time. And I think that's because those memory structures build and those brand associations compound. And so sometimes the right decision, a lot of times the right decision is to just keep running it. Most brands pull it after one cycle and start back at zero with something new.
- [19:50]
A
He nailed it to Angela with lazy. As a marketer, you're a maker, right? You want to make stuff. That's what you're paid for, that's what you went to school for. It's what you get to tell your friends about. And you know, after you've sat in an edit bay for watching a commercial get edited 400 times, you're like, I'm so sick of this thing. And it gets on the air and your customer's seen it twice if you're lucky. And we all know repetition is how you continue to build those memory structures. I would challenge the and in this though is there's the ad getting worn out and there's the campaign getting worn out. And those are two different things as well. And sometimes the hardest work is actually iterating on an existing campaign than just saying, let's start over and do something brand new. So that's where I think you separate the good marketers from the great marketers. And the great marketers can look at that existing campaign and see endless potential to continue to compound on those memory structures versus let's just take a clean sheet of paper and start over.
- [20:52]
B
Yeah, I was thinking the same thing. Like our clients, it's not like they run one creative for years and years, but we try to invest in a campaignable idea and then that can come to life through updated creative. But I don't think this means you have to use the exact same spot for eternity. But they have recurring themes and how can you stick with Something like that. So you don't always look brand new. All right, to wrap us up here, we've been talking about a lot of concepts that require some consistency for you to see them through. I think that's something, Rob. When Peter Sangenberger was on the podcast, he was talking about how when he switched to a brand strategy, like, at first, you don't see anything. Like, you have to really stay consistent to see results. So what is something in your personal life that you've stuck with consistently for years that has quietly paid off?
- [21:38]
C
I can jump in. My oldest daughter would kill me. Luckily, she doesn't listen to the podcast, so she won't hear this, but I like mandated Saturday morning snuggles with my kids as they grew up. And it has paid off because I now have a graduated senior that comes to me every Saturday morning. And she loves it now. But through those teenage years, it was like, oh, my gosh. But we always sit down together and do something, but we're all cuddled up
- [22:07]
A
and, geez, yeah, that's deserving of its own podcast. Like, just. How do you pull that one off? Wow. Okay. One thing that I. That I do that is completely insane, and I know it's insane, and I should seek therapy over it, but I really. I like to journal, and I like to collect all the different conversations in my life, whether it's zoom calls and health data and everything else, and just get it all into a database. And it has been kind of an insane exercise until AI has just gotten so much better. And now I have this context, this table of data that I can now use in ways I never thought I could use before. I went from feeling a little insane to a lot insane to, hey, this is kind of cool. Now check this out. So it's very narcissistic. I have more data on myself than one should, but it is now. These LLMs are making me feel better about myself because I have all of it. It knows me and can impersonate me and can take over my banking account and stock portfolio and leave me penniless.
- [23:12]
C
Well, hopefully that doesn't happen.
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B
Once they start, like, rebuilding humans from scratch, Rob's gonna be, like, the first one picked. They're gonna have everything they need right away.
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A
My kids will be able to save as me in the future.
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B
Yep. Will they? But they'll be able to.
- [23:27]
A
They may not want to.
- [23:28]
B
No, they'll be able. They'll want to. Mine is, I know this isn't possible for everybody, but I've been consistently listening to at least one to five marketing podcasts a day for almost 10 years. And I just think that has paid off so much for my career and learning. I think if you want to learn anything, podcasts are just so great. And it's a way every day, whether you're commuting to work or getting ready in the morning, you think you have time for at least one a day, no matter who you are. And like, just having those queued up and investing in that every day in like, a fun way. That's it for this episode of the Marketing Architects. We'd like to thank Taylor de Los 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.
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A
Roas is like the empty calories, right of marketing.
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B
I'm glad we found the analogy that
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C
I was thinking the same thing. If we don't find the right one
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A
for Rob, actually, it's the cheesecake in
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B
the warm bath that sounds so gross for some reason.