Brand vs. Direct Response
Eric Seufert offers a perspective on why brand marketing for digital goods needs to fit into a broader framework that emphasizes one measurement output. His article triggered thoughts about how to apply this to consumer brands doing eCommerce.
The core of his perspective is that brand, delayed response, and direct response all need to fit within a marketing measurement model, rather than having separate models for the three different activation types with brand marketing only superficially measured. The end goal with his model is driving incremental sales, whether that is later (brand marketing impact that is modeled) or immediate (direct response marketing that is measurable via sales).
He forms his argument through the lens of digital vs. physical goods. For instance, he suggests that a physical retail world, such as CPG products regularly bought in a grocery store, requires a greater amount of brand marketing, because the buying occasion happens at some point after seeing an ad (at the store when the brand marketing can influence the purchase).
In contrast, for digital goods, like apps, direct response is more often used because the user is purchasing the good on an irregular schedule that is unpredictable. In addition, the possibility of purchasing immediately upon seeing the ad is different than a physical world, and a digital app store is more competitive than a physical retail setting.
This raises many questions for what happens when the physical retail world (let’s say CPG and grocery to stick with his example) transitions to a digital eCommerce world where delivery can happen in sub-30 minutes. The habitual consumer use case (going out to buy groceries weekly) is challenged (as you can buy immediately, from your phone) and you have a more competitive digital shelf that looks closer to an app store than a physical grocery store (such as what you encounter when shopping on Amazon).
So while a product is physical (while an app is digital), the transaction context is now digital. Are CMOs simply stuck in the status quo of separating brand from performance, or is the challenge modeling the impact brand marketing has on revenue, the reduced need for discounting, and/or the heightened effectiveness of DR? The technology is not there yet despite the industry being aware of these issues for years.
There are many competing goals:
- Visibility is crucial and that increasingly means paying for the top slots via direct response paid search
- Effective marketing can drive greater use of branded search terms, which helps reduce the level of competition on the digital storefront
- Relevance inside of stores clearly still matters, therefore requiring brand marketing
So the applicability of the framework is less clear for consumer brands trying to wrestle with the right balance of brand vs. direct response.
Brand still matters, but the buying experience is increasingly digital, and yet budgets are limited.
Questions to Consider:
- How will the mixture of brand, direct response, in-store activations, and promotions changing next year?
- How does social’s move towards direct response and now commerce impact this model?
- If brand is as important as ever and budgets are fixed, do dollars need to shift out of in-store activations?
- What about discounting? Does that decline in favor of brand or direct response advertising and/or compelling content? What would retailers have to say about that?
- What technology, like Amazon’s clean room, is coming to solve for this?