You’ve probably heard the expression ‘The devil is in the detail‘. It tells us that focusing on detail is the way to solve problems. In many ways, this expression is true, but in this post I’d like to argue that placing too much focus on the digital detail can mean marketers and their agencies miss the bigger picture and it is, in fact, the big picture that drives your commercial sales and success.
How marketing and media metrics have changed
Prior to around 2005, the main metrics marketers used were of three types:
- The media metrics that monitored the delivery of their campaigns – GRPs, reach, frequency etc.
- The attitudinal metrics that measured how these campaigns had changed attitudes towards their brands – e.g. brand consideration, preference and purchase intent.
- And of course, commercial metrics that captured the impact of marketing investments: unit sales, value, volume, purchase frequency and market share.
Since 2005, the digital media industry and particularly its giants, Google, Facebook Microsoft have produced huge amounts of microscopic detail covering almost every digital movement made by millions of online consumers. Through the cookie, we are able to see exactly where consumers have been, what they’ve looked at, what they’re interested in, where they have engaged, what they have registered for and what they have bought. And modern marketers inhabit this world of tracking, measuring, analysing and reporting the microscopic detail produced by digital media owners and their platforms.
Real time micro-measurement has become the main source of campaign performance insight for a generation of marketers. It is relied up by marketers and their agency partners across the industry and across the globe. Micro-performance data is used to set budget and optimise campaign on the presumption that it is accurate and correct. But what if it isn’t accurate and it’s not correct?
Some senior marketers in leading brands have questioned real-time digital measurement data. Here are two examples:
‘This real-time ROI can mean brands get tempted into ploughing investment heavily into digital – but, actually, he noted, that can result in short-termism that doesn’t ultimately grow the brand or sales, and can give “misleading” results – Simon Peel, Global Media Director, Adidas.
‘Digital attribution doesn’t take into account the [full consumer journey], [like] the fact [that consumers have] been influenced by a TV ad, or that their mum recommended this product to them. While it’s brilliant that we’re getting more accurate with digital measurement, there are so many more factors that influence why and what the customer does’- Rosie Hanley, Head of Marketing, eBay
This problem may be even worse that it looks when we consider the opportunity cost of doing the wrong thing
There is good evidence that managing and optimising this digital performance detail compromises your overall media ROI and even worse, too much focus on this detail can harm a brand’s commercial health and have a major opportunity cost. Here are four very strong large-scale case study examples that have provided support for this point:
Case study 1 – Airbnb
- In 2020 AirBnB cut $50 million of performance media investment. The result: it made no difference to their overall business performance.
- During an earnings call in February 2023, Airbnb CEO Brian Chesky said that AirBnB now sees the role of marketing as evolving from buying customers to educating markets and has shifted its marketing priorities accordingly.
- Airbnb CFO, Dave Stevenson added that this strategic change in marketing had proven to be incredibly effective during the period 2020 to 2022. He added “Our brand marketing is delivering excellent results overall with a strong rate of return, and it’s been so successful that we’re actually expanding it to more countries”.
- Great news. But consider for a moment the resource costs required to deliver the digital planning, activation, tracking, measurement and reporting that $50 million of performance marketing spend would require.
Case study 2 – Adidas
- AirBnB are not alone. Around the same time, Adidas undertook a similar shift. The result: they concluded that they had too much focus on short term ROI and this had led them to over invest in performance marketing at the expense of brand building.
- What’s interesting about the Adidas case is that they had previously assumed only performance activity drove e-commerce sales (ie total reliance on the digital ecosystem), but further analysis showed the brand development activity was actually driving 65% of sales across wholesale retail and e-commerce.
- At that time Adidas’ marketing investment was split 77% into performance and only 23% into brand.  The reason for this misalignment was an overfocus on short term digital performance metrics. Simon Peel, the global head of media at Adidas, called out some specific metrics as being responsible: Google last click, Google custom, Adobe and Facebook, and within these platforms, too much of an emphasis on short term, real time measurement.
- This cycle was only broken when Google AdWords went down in Latin America and search was halted. During this time, Adidas did not see a dip in traffic or revenue from search marketing activity.
Case study 3 – ASOS
- The third case study is ASOS, who also made a similar set of discoveries. Across the 2020-22 period more than 80% of the ASOS marketing investment had been put into performance marketing. 
- According to ASOS new CEO, Jose Antonio Ramos Calamonte, insufficient levels of brand investment was a contributory factor to a slowdown in customer acquisitions. Calamonte observed that historically ASOS had under invested in marketing relative to its peers (aka Share of Voice), and that marketing spend had not been “effectively prioritised”, or “managed effectively” to ensure a return on investment.
- As in the case of Adidas, it was a halting of spend, in this case brand spend, that led to the change in marketing investment thinking; after pausing a broad reach [brand] campaign in the US, ASOS saw customer acquisition and visits growth slow.
Case study 4 – eBay
- In 2015 eBay was spending 90% of its budget on performance using hyper-targeted product to audience techniques. By 2017 revenues had fallen to pre-2010 levels at $7.4bn.
- By 2022 it had switched back to full funnel marketing and a focus on the experience of using the eBay brand. Revenues grew to $9.8bn.
- In a 2022 earnings call CEO Jamie Iannone said the shift away from “just lower funnel optimisation has worked out really well for us”.
- These four brand case studies are further supported by multiple additional studies. In March 2022, Kantar chimed into the debate saying, “There is inalienable evidence that unbalanced brands won’t win in the long term. Multiple Kantar studies reveal that if marketing mix allocation consistently favours performance marketing, baseline sales will steadily weaken”.
Is there any robust experimental research evidence to further support this view?
Yes. A brilliant and comprehensive large scale, field experiment designed to measure the true effectiveness of brand and generic keyword search terms was undertaken by eBay and the university of Chicago in the US in 2013.
These were not small scale tests but large scale experiments. One stopped bidding on a 30% sample of eBay’s US traffic across a 60 day period.
This study sought to understand whether search marketing really has any genuine incremental uplift effect on consumer purchase behaviour. Here is what the eBay experiments found:
The brand, keyword, advertising experiments found that halting brand terms resulted in no detectable drop in traffic and sales.
Search engine marketing did have a significant effect on new registrations and those consumers with a low purchase frequency <2, but this was not sufficient to offset inefficient results across higher frequency eBay users.
The generic keyword experiments showed that search engine marketing had a very small and insignificant effect on sales.
Conclusion and actionable insight
These case studies make clear that an overemphasis on the detail of performance marketing does not add value to the business and risks a significant opportunity cost through misplaced marketing budget investment.
This is not just about the unhelpful “brand” and “performance” categories and nor is it about digital versus traditional mainstream high reach media. The problem is around why and how much marketing budget we deploy across all channels. It’s about the objectives we set, the strategies we develop, the plans we implement, and the way we measure and optimise.
In terms of actionable insight, simple Occam’s Razor maths tells us that in the case of Adidas, if 23% of budget was driving 65% of sales then 35% of budget could deliver 100% of sales. And, more importantly, shifting more budget into brand would grow sales substantially. In this case, 50% of budget could potentially grow sales by 150%. That’s a 50% increase in sales for 50% of the current budget.
More broadly, we must ask, how much more shareholder value would have been created if the $50 million spent by Airbnb would have been generated if this money had been focussed on growing market penetration, purchase, frequency, and overall market share?
If you are working in a category where the majority of spend is over committed to performance marketing, you have a significant opportunity to build share whilst your competitors over optimise activity that is probably not contributing to business growth.
And meanwhile, over at Google
The company posted annual revenues of $182bn in 2020, $257bn in 2021 and $280bn in 2022.
Just imagine the increases in market penetration, purchase frequency and market share that marketers would have generated if just a fraction of that revenue had been invested in building and strengthening in high reach media.