IPA’s EFFWorks 2023: Key Takeaways From The Conference At Your Fingertips

Mark Read, CEO of WPP, kicked off by emphasising the need to combine creativity and intelligence in marketing to maximise brand success. Creativity, when paired with intelligence and data, forms a powerful formula for growth. Investment in creative talent and data-driven evidence is vital. 

Another significant theme revolved around the correlation between brand strength and revenue protection when facing the challenges posed by inflation. Building a robust brand and demonstrating its business impact through econometrics models have become crucial for agencies and brands. 

Here are the key takeaways: 

2024 will be the Year of Shopping Around  

Dr. Grace Kite, founder of Magic Numbers and a leading econometrician, predicted that 2024 would be characterised by consumers shopping around due to inflationary times. Consumer behaviour is shifting significantly. Shoppers are becoming more discerning, conducting more research before making previously automatic purchases and the number of consumers switching between different brands from their usual choices has more than doubled between 2021 and 2023. 

This changing landscape offers both opportunities and challenges for brands. Notably, advertising's impact on revenue has increased across various sectors. Brands that invest in advertising are more likely to drive sales, especially in times of inflation. However, simply increasing advertising spend isn't a guarantee of success. 

The type of brand and product category play significant roles in this shifting consumer behaviour. Necessities, products consumers must buy, are more resilient to changes, with advertising improving sales likelihood. In contrast, non-essential items are experiencing reduced demand, with 62% of people spending less on them. Brands in non-essential categories must adopt a cautious approach and potentially act as if they are navigating a recession. 

In this competitive environment, standing out is essential. Non-essential brand categories need to make strategic decisions based on data, especially in a market where media costs are rising, and gaining share of voice may be challenging. For brands selling necessities, strong advertising combined with competitive pricing is the key to success. In the evolving landscape, it's imperative for brands to differentiate themselves and capture the attention of consumers. 

Strong brands supported by advertising are less sensitive to price increases  

Dr. Kite presented compelling industry data drawn from the Advertising Research Community database. This data showcased the positive correlation between increased advertising and brand resilience when raising prices. Establishing a robust brand presence is crucial, as evidenced by the data indicating that brands actively engaged in advertising experienced smaller declines in sales when implementing price hikes compared to brands that had suspended their marketing efforts. 

Yorkshire Tea's case exemplified this as a brand that has successfully built a strong reputation by investing in effective media channels and compelling creative content. When they decided to increase their prices in June 2022, the impact on their sales was considerably milder than what is typically seen in the fast-moving consumer goods sector. 

The key takeaway here is that building a brand takes time, but it is a worthwhile investment, especially in uncertain economic conditions. However, Dr. Kite emphasised that for brands in the necessity category, success is not solely about pricing or advertising. It's equally crucial to offer competitive prices compared to competitors, as inflationary times lead to reduced brand loyalty with consumers. 

Unique Creative Drives Brand Strength - But Our Biggest Issue In Creativity Is Attention 

Tom Roach, VP Brand Strategy at Jellyfish, emphasised the critical role of digital excellence and creative effectiveness in building brand strength. Creativity stands as the most significant factor under the control of marketers when it comes to advertising profitably. As customers engage with content across various platforms, creativity must seamlessly integrate with these media channels to create a meaningful brand and commercial impact. 

An emerging challenge is the battle for consumer attention. Each platform offers a specific range of advertising formats, and there is a limit to how much engagement consumers are willing to give. Research indicates a direct link between attention in digital environments and brand outcomes, driving all key metrics such as awareness, consideration, and purchase intent. On average, it takes just 8 or 9 seconds of attention to instigate a significant shift in purchase intent. To capture and maintain attention in a world where consumers incessantly scroll, creativity is paramount. Tom stressed the significance of a 'first second strategy,' now there are only a couple of moments to compel viewers to stay engaged. 

In a world transitioning away from traditional methods like TV for brand-building, Tom referenced Thinkbox's statement, "TV’s not dead, it’s having babies", and online video has come to the fore as a powerful channel for brand building. Prominent econometricians affirm that online video has the potential to deliver substantial commercial impact, with its influence proved to last twice as long as non-video channels.  

Brands must tailor their creative content to individual digital platforms, considering the surrounding context and user behaviours. In essence, creative must align with the unique 'grammar' of each platform. Kantar's data revealed that campaigns tailored to specific channels yielded a 13% greater impact on brand equity compared to uniform formats across all platforms. 

To enhance watch time beyond just following platform best practice, research highlights that creative differentiation and originality remain as crucial as ever alongside evoking strong emotional responses. Ads that invoke emotions can drive six times more brand awareness than those with minimal emotional content.  

In summary, advertising content customised to individual platforms that captivates attention directly contributes to brand equity, which, in turn, impacts demand and revenue. The alignment and uniqueness of creative and media for individual platforms is key to success in this landscape. 

Marketeers must communicate in terms the C-suite understand 

Throughout the day, a consistent theme emphasised the renewed significance of econometrics in the pursuit of more accountable, effective, and profitable marketing. The IPA event unveiled a newly released report on econometrics and its role in evidence-based decision-making for businesses, underscoring the importance that is being placed on this form of measurement by the industry.  

Sessions during the day, many of which were informed by econometric data, provided substantial evidence of marketing's tangible contributions to brands in terms of revenue. This revelation naturally raises the need for marketers to improve their ability to communicate these contributions effectively to the boardroom executives, portraying marketing as an investment rather than a cost. 

Ross Farquhar, Marketing Director at Little Moons, highlighted how econometrics extends beyond merely quantifying marketing performance. It excels in its capacity to comprehend the various drivers of demand in a business, not limited to marketing alone. It adds rigor to marketing teams by revealing the interdependency of all demand drivers in a business, granting visibility into these relationships. For instance, during Ross's tenure at Wagamama’s, their model highlighted that restaurant refurbishments and weather conditions significantly influenced demand. This information empowered teams beyond the marketing department, such as the property director, to integrate these insights into their strategies. Essentially, econometrics is a tool that marketers can harness to create utility for colleagues in the C-suite, ultimately amplifying the authority of marketing voices in the boardroom. 

Ross also emphasised that econometrics is now more accessible and essential for smaller brands to make informed decisions as they grow and not just for big brands with large budgets. 

However, one challenge is evident: while the benefits of such models are clear, CMOs can lack the technical knowledge behind a model. Simultaneously, they must be the ones to advocate for and explain the model within the business, potentially fielding questions from C-suite executives who are highly attuned to the data. The advice underscores the importance of involving econometrics partners in collaboration with senior stakeholders from the outset, addressing any challenges and questions before they reach the boardroom. It advocates involving the finance team in contributing to the model's inputs and jointly owning the outputs, enhancing the CFO’s role as an effective messenger to the CEO on these projects. 

Crucially, because business profitability and demand come from multiple areas within a business, involving numerous teams in the initial model scoping process proves invaluable. Models are constructed based on hypotheses, and since marketers do not hold a monopoly on knowledge regarding the drivers of demand in a business, perspectives and inputs can be sourced from various teams. This inclusive approach fosters buy-in and generates stimulating input, which can subsequently be used to simulate numerous investment scenarios looking ahead. 

Regarding the most effective use of econometrics with the board, David Grainger encapsulated it brilliantly: "Econometrics is not a presentation but a mixing desk that the board can huddle around and play with the faders." 

There is a correlation between Advertising, Brand Strength, and Business Share Metrics  

One of the standout sessions featured Ian Whittaker from LibertySky Advisors, who presented a compelling perspective. He pointed out that in uncertain times, CFOs tend to favour the strategy of raising prices to safeguard profit margins. This insight aligned with Dr. Grace Kite's earlier research, which underscored the significance of strengthening a brand to protect demand and revenue which also increases tolerance to price changes. 

Ian then delved into the IPA's new survey on the perceptions of investment analysts regarding the importance of marketing. The survey reinforced the value and influence of brands in driving demand for businesses. Notably, when asked about the most crucial factors for publicly listed companies, brand strength stood out as the top priority for respondents. This underscores that financial analysts regard the strength of a brand and marketing as pivotal determinants when assessing businesses and their worth. They view marketing activities as fundamental to achieving business success and consider them an investment rather than an expenditure. 

Furthermore, city analysts advocated for a shift in the accounting treatment of marketing expenditure within a business. Specifically, 89% of analysts suggested that all or a portion of marketing expenses should be capitalised. This shift in perspective encourages a shift in the perception of marketing—moving it away from the discretionary spending category, where it could be cut at will, to an investment category that adds positively to a company's future revenue. 

Ian reemphasised the point that, just as econometrics provides credible evidenced based arguments, language is crucial when speaking to the c-suite and this latest report serves to add further credibility to that mission.  

In summary 

The IPA Effworks Global conference emphasised the need for creativity, data-driven decision-making, and effective communication with the C-suite to navigate the evolving marketing landscape successfully. Building a strong brand and investing in advertising, whilst using econometric models to evidence revenue growth from this, are key strategies for brands facing inflation and changing consumer behaviours moving into 2024. 

The IPA have teamed up with WARC to create a series of podcasts with the speakers from the event which can be found here: https://www.warc.com/warctalks