Big brands have ‘wasted’ cash on unproven digital advertising, warns Ehrenberg-Bass Institute
Brands are wasting money on targeted digital campaigns and making other flawed marketing decisions amid a false belief they are losing out to smaller rivals, a new report has claimed.
The conclusion was contained in a study by the respected Ehrenberg-Bass Institute, a research body highly regarded in marketing circles.
Under the title Are Big Brands Dying?, the South Australia-based Institute investigated – and pulled apart – several myths which it said have wrongly been peddled as fact.
Those beliefs result in ill-judged and wasteful marketing strategies, the report found.
“When someone shouts that big brands are dying they get a lot of attention because big brands pay the salaries of many, and make up a large chunk of our pension funds,” Ehrenberg-Bass director Professor Byron Sharp said. “But the scary story that large brands are dying turns out to be wrong.
“These claims are dangerous because they are being used to justify hasty, ill-thought out marketing strategy.”
Contrary to “popular opinion”, the report found no evidence that loyalty towards big, corporate brands was declining or that trust was an issue. It also exposed as a “myth” that smaller brands command more loyalty and warned that larger brands have been “hurt” by “wasted advertising spend on unproven new media”.
It is the last of these findings that will interest, and concern marketers the most.
In drawing the conclusion, Ehrenberg-Bass Institute has become one of the most prominent bodies yet to question the amount of cash thrown at digital channels.
The Institute’s findings emerged after exploring the “assertion” that digital media has given smaller brands a cheaper way to reach consumers and that “big brands need to use more new media”.
Such a view was described as the “wrong interpretation”.
Professor Byron Sharp
One of the “mistakes over the past 10-20 years” listed by the authors of the report was “allocating too much advertising expenditure to overly targeted new digital media with unproven abilities to reach consumers and build mental availability”.
Another mistake cited was “creating too much low quality advertising content in an effort to cater for media fragmentation and capitalise on the (over-estimated) value of targeting”.
“The effect has been to increase the percentage of non-working media spent,” it said.
Turning to the advertising strategies in more detail, the report suggested that display advertising, and in particular programmatic buying, has been “plagued with problems of fraud, non-human exposures, ‘middle man’ costs and lack of viewability”.
“Leading brands have probably lost more marketing dollars in this area than start-up companies or brands,” the report said, explaining that start-ups were either more cautious with their ad spend or didn’t have the “size or complexity of spend” to delve into programmatic buying.
It added that a major advantage of leading brands is their ability to fund “outstanding creative and vast media options” which provide reach at low cost.
But it argued too many brands have fallen into the trap of diverting too much money to digital channels.
“It’s true that many large brands over the past five years moved large portions of their advertising budgets into new untested media options and away from big consistent creative campaigns,” the report continued. “There have been many failures.”
It identified the Pepsi Refresh project as one such failure.
“Our analysis reveals that in more than 40% of cases, leading brands actually do better among under 25-year-old consumers than they do selling to older consumers,” co-author Magda Nenycz-Thiel said.
“While there is certainly a trend for brands to signal virtues like being eco-friendly, the idea that young people increasingly distrust and reject big brands is not back by the evidence.
Magda Nenycz-Thiel
“Hipster coffee shops attract both young and old and the same is true for Starbucks.”
topics
Advertising
big brands
digital advertising
Ehrenberg-Bass Institute
Marketing
Media
media and marketing
Professor Bryan Sharp
This is a out of touch I don’t know I where to start. And its the first time I have ever heard anyone tout 40 percent of an audience as being a positive thing.
Ask the big brands how they are going. Look at the power struggle at P & G, and what their CEO has admitted.
And this whole anti programmatic rhe
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This is a out of touch I don’t know I where to start. And its the first time I have ever heard anyone tout 40 percent of an audience as being a positive thing.
Ask the big brands how they are going. Look at the power struggle at P & G, and what their CEO has admitted.
And this whole anti programmatic rhetoric is so absurd. If you don’t want to use it, don’t. Meanwhile those who understand how to use it effectively will keep on enjoying the monthly reports from our agencies.
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Wow the ‘Ehrenberg Bass INSTITUTE’ Not so long ago was Uni SA called a College of Advanced Education. Was a nice way of saying after school ?
I cant wait till the PONDS INSTITUTE way in on this issue. They will turn the debate up a notch at the same time as reduce the visible lines of ageing. Win win.
Does an Academic Institute so heavily ‘Sponsored’ by Big Brands actually have a clear head about this?
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Hello,
I’m not necessarily disagreeing with you, but the article is based on a research study, while your rebuttal is seemingly based on anecdotal evidence/a hunch/derrrr. It would probably be worth including some statistics or research that back up your argument, rather than just saying “believe me, it’s wrong”.
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I agree. I’m sick of wasting money on measurable mediums and would prefer to go back to the estimated reach model. Anybody wanna go halvies in sponsoring a blimp?
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Read the actual report vs. the cherry picking journo version..
https://www.marketingscience.info/are-big-brands-dying/
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“Leading brands have probably lost more marketing dollars in this area than start-up companies/brands.”
Probably lost more!
Unfortunate that in a research piece full of supporting facts and figures, this headline and article focuses on the one area of the piece with no such supporting evidence.
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Because traditional advertising was so measurable? what a joke. If brands are wasting money on digital then they aren’t reading the reports- because why would you repeat a poor outcome? And if they aren’t reading the reports then how do they know they are wasting their money?
Maybe it’s time for “new media” or “digital” to be deconstructed in these articles- talk about platforms and what digital? so we can even understand what you are talking about? Because if brands still think display ads on the footer of some random website work then SURE digital doesn’t work. If they think that AdWords trumps Facebook ads then sure, digital can be tiresome. And if they haven’t heard of an Instagram influencer then maybe it’s time for retirement. So tired of these articles that just continue to imply digital is a waste of money considering digital is measurable and proven to work if done right.
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I think the most pertinent point of this article which seems to have been missed in the commentary above is the underinvestment in creative as a result of all of the media options that are now available ie the shift and emphasis on efficient reach, and the resulting lack of funds to make sure the creative is actually strong enough to ensure those reached take a message away .
This part of the article is bang on …..
Another mistake cited was “creating too much low quality advertising content in an effort to cater for media fragmentation and capitalise on the (over-estimated) value of targeting”.
“The effect has been to increase the percentage of non-working media
What a silly post. As if our University history is germane.
Yes we have dozens of sponsors who own big AND small brands ! We do our analysis using unrivalled breadth of information and we report what we find. And we publish and are completely open about our methods so others can check if they desire.
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Lots of very angry commenters here.. not a lot of factual / statistical rebuttal.
The report isn’t saying not to use digital, just to be wary that proven methods of advertising are still.. proven?
It’s very hard to criticise Ehrenburg Bass after a full read of How Brands Grow, hopefully the bloodletting era of marketing will die out eventually!
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