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Marketing Multiplied: 10 Key Facts to Remember

Posted By Core Media & The Association of Advertisers in Ireland, 14 February 2017

The key truths listed below come from Marketing Multiplied, authored by economists Chris Johns and Jim Power and Alan Cox, CEO of Core Media. The report is the first ever large scale study which reviews the impact of marketing communications from both a macro-economic and micro-economic basis and demonstrates the significant contribution that marketing makes to national economies and individual businesses.

 

Marketing generates substantial growth for national economies and businesses

Advertising is extremely important for economic activity; it provides jobs, promotes competition, helps innovation, leads to lower prices and boosts growth in an unambiguously positive way. It is a matter of empirical fact that advertising and national economies are positively correlated to a large degree.

McKinsey found that advertising fuelled about 15% of growth for the major G20 economies between 2001 and 2010. Analysis conducted by Core Media in Ireland, found that €1 invested in advertising typically delivers a revenue return of €8.26 and a net return on investment of €5.44 for brands.

 

Creativity has a profound and quantifiable influence on marketing effectiveness

The value of creativity is proven and quantifiable. Of all the factors that are within the marketer’s sphere of influence, this is the most important by far. The choices made in relation to investment in creativity have a massive impact on the growth in profitability of brands.

Creatively-awarded campaigns are six times more efficient than non-awarded campaigns in growing market share. A multiple of six is impressive, but it has declined from a staggering 12.4 in the decade leading up to the financial crisis that gripped the world in 2008. During the recession years that followed, there has been a significant move towards short-termism in marketing, coupled with a decline in marketing communications investment levels. These factors have been directly responsible for halving the effectiveness of creativity in advertising.

 

Penetration is more effective than brand loyalty in building growth and profitability

Recruiting new customers is more profitable than trying to increase frequency of purchase. Compelling evidence supports the contention that loyalty programmes have little effect and when they work, they do so by mainly recruiting new customers, not by reducing churn or by extracting more value from existing ones.

Marketers should advertise to everyone in the market for their product, rather than focusing on a small segmented audience. Potential gains from customer acquisition dwarf the potential gains from retention. Loyalty strategies can produce cost-effective short-term activation effects, but the true cost of this is long-term ineffectiveness.

 

Brand size has a significant influence on marketing effectiveness

The size of a brand has a major impact on the efficiency and effectiveness of marketing communications. Large brands have inherent advantages over smaller brands; they have higher penetration, better distribution, stronger range and pricing strategies that help to maintain and increase share.

Brands with market shares of over 10% achieve circa two and a half times the level of share growth, for each point of extra share of voice (ESOV), as compared with brands that have market shares of under 10%.Therefore, smaller brands need to over invest, relative to their market share, to compete effectively. They must also devise campaigns with above average effectiveness (from a creative standpoint) to drive growth.

 

Short-term marketing initiatives are less effective than long-term campaigns in building growth and profitability

Short-term marketing is on the rise and it is damaging the profitability of marketing. This shift has been caused by recession-driven urgency, in businesses, to build immediate sales and a belief among senior management that this will be achieved through short-term tactics (rather than long-term brand-building strategies). However, long-term campaigns (those that are evaluated over periods of longer than six months) are around three times more efficient than short-term campaigns. Short-term initiatives are, in fact, more effective at driving transient sales effects, but they deliver weak long-term growth. Businesses need to employ both techniques, but in the correct proportion.

 

Emotional campaigns produce considerably more powerful longterm business effects than rational campaigns

Emotionally-based campaigns outperform rationally-based campaigns on every business measure; they are significantly more profitable, they are better at generating awareness, they are stronger at creating differentiation and they form more durable memories of brands in consumers’ minds.212

Rational campaigns do enjoy an advantage in relation to short-term direct effects, but this advantage is temporary. Marketers should adopt a carefully balanced approach that drives both long-term brand preference (through emotion) and short-term sales (through rational messaging).

 

Marketers need to strike the optimum balance between brand building and activation spends

Emotional techniques tend to be employed in long-term brand marketing programmes and rational techniques are prevalent in short-term sales activation campaigns. They both have their place, but over/underinvesting in one or the other will damage the growth of a brand. On average, marketers should spend 60% of their budget on brand-building activity (long-term, broad reach, emotional) and 40% on sales activation (short-term, tightly targeted and information rich), to achieve maximum efficiency and maximum effectiveness.

 

Successful owned and earned media strategies are dependent on paid media

Brands using paid media typically grow three times faster than those that just rely on owned and earned media. However, paid media will only be at their most effective when combined with strong earned and owned strands. Owned media typically increase the effectiveness of a paid campaign by 13%, while adding earned media causes an increase of 26%. However, very few campaigns generate strong effects without having paid media in place.

 

To understand how much to invest, scientific budget-setting techniques must be used

Many methods are used to set budgets for marketing communications, but very few are scientific. In addition, they are usually not geared to identify the optimum level of investment for the specific business challenge being faced. 

Econometrics is the gold standard in most cases, because it is bespoke to the brand in question and it uses systematic modelling to understand how all key variables impact sales. It generates response curves, which enable practitioners to forecast revenue and profit for different levels of investment in marketing communications. This, in turn, drives an optimisation tool, which calculates the impact of different budget levels and media combinations to arrive at the ideal level of investment for the campaign in question.

 

A commitment to marketing analytics significantly improves return on investment

Marketing analytics is the measurement and optimisation of marketing activities. It is important to continually analyse all marketing activity in order to grow the effectiveness of campaigns on a compound basis. Marketers must create a measurement culture within their organisations and every brand should budget for it.   Investment in marketing analytics gives practitioners on-going evidence-based guidance on how to ‘course correct’ their plans to build market share growth. Failing to invest in scientific analysis and modelling reduces brand profitability. The benefits can be enormous; an integrated analytics approach can free up between 15% and 20% of marketing spending.

 

At the launch of Marketing Multiplied, as well as presentations from co-authors Jim Power, Alan Cox and marketing effectiveness expert Peter Field, a number of the above issues were discussed with a panel, which included economist and co-author Chris Johns, Professor Mary Lambkin from University College Dublin, Catherine Bent from CB Consultancy and the AAI, Chairman of Core Media, Patrick Coveney.

 

You can listen to the Panel Discussion here.

Copies of ‘Marketing Multiplied’ are available for download from the Core Media website www.coremedia.ie

 #MarketingMultiplied

@CoremediaIRL

@TheAAI

 


ABOUT THE AUTHORS

Core Media is Ireland’s largest marketing communications group. The business consists of nine individual agencies – Mediavest, Mediaworks, Starcom, ZenithOptimedia, Core Knowledge, Engage Communications, Livewire, Ignite and Radical.

Core Media has been voted Agency Network of the Year for the last four years at the Media Awards and the company was also voted one of the top three workplaces in Ireland by the Great Place to Work Institute for the last four years.

www.coremedia.ie

 

The Association of Advertisers in Ireland (AAI) is the voice of Irish advertisers. It is the only association focused single-mindedly on the interests of Irish advertisers and promotes the reasonable freedom to advertise.

The organisation provides advice, assistance and support services to members in respect of advertising trends and issues and liaises with a variety of stakeholders – Government, business, media and consumer groups - to highlight the role, benefits and importance of commercial communications in modern societies.

www.aai.ie

 

For further information, please contact:

Breda Brown / Catherine Quinn

Unique Media

Tel: (00 353 1) 522 5200 or 087 2487120 (BB)

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The 2017 Social Media Survey

Posted By The Marketing Institute & Edelman, 07 February 2017

2017 social media survey

The Marketing Institute of Ireland and Edelman Ireland have partnered to produce the 2017 Social Media Survey. 

This survey aims to identify Irish marketing professionals attitudes and behaviours towards incorporating Social Media into their marketing strategies.

The survey is open to all marketing professionals in Ireland and only takes a minute to complete.

START SURVEY

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Marketing Multiplied Report Reviews The Impact of Marketing Communications

Posted By The Marketing Institute, 31 January 2017

Core Media and the Association of Advertisers in Ireland have released a new report entitled Marketing Multiplied, which reviews the macroeconomic and microeconomic impact of marketing communications.

advertising roi

Authored by economists Chris John and Jim Power, and Alan Cox, CEO of Core Media, the report highlights the importance of marketing for corporate performance but also economic activity on a wider scale. Advertising in particular is shown to drive considerable growth. Every €1 invested in advertising in Ireland typically delivers a gross sales return of €8.26 and a net return on investment of €5.44.

However, corporate boardrooms tend to underestimate marketing’s contribution to an organisation’s success. Marketers are often absent from the boardroom, causing marketing to remain misunderstood and seen as an expense rather than an investment. The report recommends that marketers up their game by providing more accountability and demonstrating the strategic value of marketing, to help changing this mindset and gain recognition for their efforts.

short term marketing

Marketing Multiplied also warns against the rise of short-term marketing, which delivers weak long-term growth. Barry Dooley, CEO of the Association of Advertisers in Ireland, says this shift is damaging the effectiveness of creativity and the return on investment it generates. “Marketing really matters […].  It enriches the brands that people enjoy and trust. It contributes to society, not least by funding an independent, varied media and, fundamentally, it facilitates choice.”

Get the report on coremedia.ie

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Mediaworks Launches Jargon Buster

Posted By Mediaworks, 30 January 2017

Adland is rife with terminology and with the fast rate of change in our exciting media industry, new words and terms are added all the time. It was time that someone solved this dilemma!

 

Mediaworks have just launched a Jargon Buster to their website, in an effort to help marketers and ad executives understand the various marketing and media terms that are used throughout the industry both offline and online.

 

This is an A to Z terminology report which defines all of the both new and old terms that are used.

 

Go to Jargon Buster

 

jargon buster

Tags:  jargon buster  marketing jargon  marketing terminology 

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Chinese New Year: What we can all learn from China in the Year of the Fire Rooster

Posted By Colin Lewis, 27 January 2017

chinese new year

This weekend marks Chinese New Year, called the 'Spring Festival' in China. Many millions of Chinese people travel back to their families in the provinces to celebrate the festival, the most important holiday in the Chinese calendar. Starting from 28 January, celebrations will continue for around two weeks to welcome in the Year of the Rooster. Chinese New Year is based on the ancient lunar calendar, which means it changes each year.

In Chinese astrology, each zodiac year is not just associated with an animal sign, but also one of five elements: Gold (Metal), Wood, Water, Fire or Earth. Both the zodiac sign and the element shape the astrology of the year. For example, 2017 is a Fire Rooster year. The celebrations end on the day of the full moon (Feb 11), with a Lantern Festival, where red lanterns are hung in homes and temples. 

Chinese people believe that what happens at New Year influences your fortunes in the year ahead. Indeed, I would argue that understanding China offers us all an insight to what is going to happen globally within technology and travel in 2017 and beyond. Let’s examine six important trends as we seek to learn from China…

The Future of Mobile

China, like many other developing markets, did not follow the pattern in the West of going from travel agent to PC to laptop to smartphone as their channel to book travel. Many consumers just went straight to the smartphone and have never engaged directly with a website. The Chinese technology industry — particularly mobile — has pulled ahead of what we see in the West. Handsets such as Xiaomi and Huawei have fantastic build quality, amazing performance, great storage, long battery life and look great. And this is before we start talking about the Apps that are available. Any visitor to China will immediately be struck with the ubiquity of the smartphone to the Chinese consumer. You think you thought Westerners are addicted to their phones? Wait till you visit Shanghai or Beijing: you will see that Chinese people live their life through their mobile phone. 

Chinese consumers are on smartphones at least two hours a day, Internet users in China reached 668 million in June 2015 and 549 million of those users, almost 90 percent, accessed the Internet on a mobile device. In other words, the number of Internet users in China is more than twice the population of the US and almost the population of Europe, and most of those individuals are walking around with a smartphone. But, this has barely started: the total number of Internet users represents less than half of China’s population of over 1.3 billion.

The question asked in the West is - what is our strategy for mobile? In China - mobile is the strategy.

The Future of Social

If you have not heard of WeChat, download it immediately. WeChat had 768 million daily users in 2016. That is 35% year-on-year growth. 50% of WeChat users are on the App for 90 minutes a day, and typically send around 80 messages. What is WeChat? Think of WhatsApp, mixed with Facebook and Twitter. And throw in Skype and Facetime. WeChat’s roots extend back to its original hit, the QQ instant-messaging program launched by Tencent.

The rise of WeChat is inextricably linked with the rise of the QR code – a technology that has long been under-utilised in the West. QR code  (Quick Response Code) is a type of two dimensional barcode that consists of square dots arranged in a grid on a white background and which can be read by an imaging device such as a mobile phone camera or a scanner. In China, the QR code has become the magic sauce of mobile commerce largely as a result of the success of WeChat. 

Given the success enjoyed by WeChat through the use of QR codes, all the major internet giants in China such as Alibaba, Baidu and Sina Weibo have added a built-in QR code reader to their own Apps to easily connect their users to additional services and content via any mobile device, anytime, anywhere.

But WeChat is much more powerful than just gaming or chatting. It is also disrupting CRM and Email. WeChat enables businesses to register as an Official Account of which there are now more than 8 million such accounts. Followers who scan the QR code of the business, either from the website of the business or at a physical location, can then 'follow' the business through the Official Account without the need to sign-up through yet another registration form. Therefore, think about how much less friction is involved in using Official Account Apps for services such as hospital pre-registrations, visa applications or credit card services. A WeChat Official Account also allows a business to perform outbound marketing to its followers with up to four promotional messages per month (via text, audio or video).

What is so significant about the above activities? The answer is that WeChat has become a 'CRM' platform that controls the intermediation between businesses and consumers through owning and managing user profiles. It is so simple but so powerful.

The Future of eCommerce

Mobile is ubiquitous in China, a way of life, not only a medium of communication. Brands are not just purveyors of products and services, but as partners helping consumers with daily living. Most Chinese companies have recognised this, and build their advertising and marketing, social communication, shopping, purchasing, and payment programmes around mobile. 

Mobile has become an integral part of everyday life for Chinese consumers. On mobile, they talk, text, shop, order food, hail taxis, book travel, trade stocks, pay for products and services, deposit money into their bank or transfer money. About half of all e-commerce in China happens on mobile compared to just over a fifth in the US and around a third in the UK.

As a result, China is now entering the next phase of e-commerce – digital shopping is the norm for Chinese consumers. The e-commerce paradigm has shifted to brands and platforms that offer a complete brand experience rather than a narrow focus on sales and as a result, many Chinese brands are doing things that are yet to be seen in the West, integrating experiences across all touch-points and channels to create a seamless and immersive experience, often leveraging VR and 3D imaging to build continuous engagement along the entire consumer journey. 

The Future of Payment


Every time the WeChat App is downloaded onto a mobile phone, so too is an embedded QR code reader which can facilitate a whole range of O2O (Offline to Online) services from scanning posters in subway stations, to joining social networks and for making payments. WeChat supports payment and money transfer, which allows their users to perform peer-to-peer transfer and electronic bill payment. With WeChat Pay plus an Official Account, a business can accept payment from a customer through the use of a QR code. The customer uses their WeChat Pay App to create a QR code detailing the required payment and the business simply scans the mobile phone QR image to complete the transaction. Think about how powerful this model is when you apply it to small retailers or street vendors who use their WeChat QR code reader on their mobile phones, instead of a dedicated Point of Sale terminal. And think about how the use of digital technology in this instance has substantially broadened the market for WeChat by providing convenience and a method of cashless transactions. 

The Future of Travel

China is becoming the largest source market for international travel. China overtook the US as the largest source market in 2014. The income growth and expansion of China’s middle class makes long-haul travel more achievable. The rapid expansion of airlines such as Hainan Airlines on the international stage makes the Chinese traveller more accessible. Already, Chinese travellers are ranked among the top spenders on a per-trip basis. Their preferences are rapidly shifting towards long-haul travel, higher cost accommodation and upscale shopping. Cities are the primary attraction for Chinese outbound travellers. Nearly 92% of total Chinese outbound travel spending is received by major global cities.

This has ramifications for hotels and retailers welcoming Chinese tourists: nearly all Chinese travel brands, and indeed, Western travel brands with services to China already enable their customers to transact through WeChat; the user simply scans the brand's QR code and then follows the brand. To book a flight, simply go to the airline App within WeChat. To receive customer service, again use WeChat to send a voice or text message to an agent in a call centre detailing your request. What about when you arrive into your hotel room? Simply scan the unique QR code in the room and use the in-room App on your mobile phone to control the temperature, the lighting or room service payable through WeChat Pay.

At the other end of the scale is the need for airlines to cope with the increase in future travel. Boeing are forecasting, over the next 20 years, a general market need for over 39,600 airplanes valued at more than $5.9 trillion, with 38% of this in Asia – the majority in China. Think of the impact of this demand on the need for pilots, training, and inflight crew and aviation fuel. It’s mind boggling!

The Future of Competition

Edward Tse’s book China’s Disruptors: How Alibaba, Xiaomi, Tencent, and Other Companies Are Changing the Rules of Business, gives us a glimpse into how Chinese companies compete. Writing about the IT business of the late 1990s, Brown and Eisenhardt wrote a book that coined the phrase “Competing on the Edge.” They believed that IT businesses oscillate between order and chaos, with change occurring in unprecedented and unpredictable ways, barriers between previously unrelated industries erased, and hyper-competition leading to the fast rise and fall of companies. As a result, they argued that – to succeed - businesses had three principal vectors:

1. Advantage can only be temporary. To succeed, companies must continuously generate new sources of advantage, and view change as the key source of new opportunities for growth.

2. Because advantage is temporary, strategy will have to be emergent, and defy simple generalisations. Companies must always consider a broad array of options, with resulting actions and overall direction being only semi-coherent. Plans should always be shifting in accordance with the opportunities. 

3. Reinvention is the heart of all of a company’s activities. Businesses will have to constantly change how they operate, and efficiency will count for less than the ability to generate and test new ideas.

Brown and Eisenhardt also suggest that businesses should gain maximum benefit from existing products by extending offerings to new market segments – a process called “stretching out the past” – using existing strengths to launch new products and to test the market.

Almost all of China’s leading entrepreneurial companies exemplify these three trends, because China’s markets are at multiple stages of development. This means constantly iterating and launching new products aimed at the immediate future. No five year plan or decision making by committee.

Future of Entrepreneurship


Alibaba, founded by Jack Ma, dominates e-commerce and electronic payments in China, and its $25 billion IPO in 2014 was the largest ever. Its various sites account for around 80 per cent of e-commerce in China, and are worth more than those of eBay and Amazon combined. Pony Ma’s Tencent dominates messaging (WeChat). Robin Li’s Baidu (the equivalent of Google in the West) accounts for over 60% of Chinese search engine activity. Together, these three companies are referred to as the ‘BAT’ companies, just like ‘GAFA’ in the West (Google, Apple,Facebook,Amazon). Huawai,run by Ren Zhengfei, is one of the world’s leading manufacturer of mobile and telco network equipment, competing against Ericsson and Nokia. Lei Jun’s smartphone company Xiaomi is building its brand to take on behmoths Apple and Samsung. These individuals have built up these huge businesses through the power of their personality in a viciously competitive environment. 

In summary, although the Chinese market appears to be so different to the West, it is just further along. China therefore gives us a glimpse into the future with its diverse strategies, reiteration and reinvention, a balance between systems, rules and chaos, and a mind-set against being locked into outdated competitive models. Sounds like something we can all learn from for 2017 and beyond.

So, 'Happiness and Prosperity' to you for the Year of the Fire Rooster. Or if you want to practice your Chinese Mandarin, 恭喜发财 (pronounced gong-sshee faa-tseye), or Cantonese, 恭喜發財 (pronounced gong-hey faa-choi).


ABOUT THE AUTHOR

Colin Lewis is an award-winning marketer with over 20 years international marketing experience in Europe, Asia and Australia. Currently CMO with BMI Regional, he previously held senior marketing roles with 118118 Directory Enquiries, City Jet and Thomas Cook. Colin was awarded the ‘Marketing Leader of the Year’ award in 2008 by the Marketing Institute of Ireland, and in 2012, was awarded a Fellowship by the Institute for his contribution to marketing. Colin is Content Programmer for DMX Dublin, the Marketing Institute of Ireland’s massive annual Digital Marketing conference. He has an MBA from UCD.

www.colinlewis.ie

 

Tags:  Chinese New Year 

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