What if you stop?

Lately, some companies have flirted with getting out of mass advertising altogether - but those who try it find it costs a lot more than you save

With marketers under more pressure than ever to prove ROI, many are succumbing to dramatic cost-cutting, with some even putting a stop to advertising altogether. But the experts warn that because brand awareness decreases more quickly than it builds, reducing spend while keeping a foot in mass media is the way to go when times are tough.

Peggy Jarvie, assistant VP of customer knowledge and branding at Sun Life Financial, has been asked to do what some might consider the impossible: prove that advertising for the Clarica brand – which was swallowed by Waterloo, Ont.-based Sun Life two years ago – actually produces sales.

‘Now that Clarica isn’t a corporate brand any more, and it’s specific to one part of our retail business – granted the largest part – it’s even more imperative to demonstrate value and demonstrate an impact on top-line growth. Which is really difficult to do,’ she says.

Of course, Jarvie isn’t alone; many other marketers have seen their chief financial officers strut into their offices demanding proof of ROI. Such scrutiny on results may force some firms to pull the plug on their mass campaigns – often in favour of a more tactical approach – a decision that pundits warn could cause long-term damage to the brand.

Gray Hammond, who leads the insight and tracking practice at brand consultancy BrandCreator in Toronto, says that Jarvie’s experience is all too common these days, as two-thirds of ad budgets are now held in the fists of CFOs.

‘In the eighties, there used to be double-digit growth, and therefore double-digit growth in ad budgets was a lot easier to get,’ he notes. ‘Now people are saying, ‘I’m facing a stagnant market and maturing category, suddenly my advertising-to-sale dollar ratio has to become far more conservative than it used to be, and [I have] to get more tactical, more targeted’ … It’s ‘show me the money,’ and if you can’t, you lose the budget.’

For her part, Jarvie reports that Clarica will resume its ad campaign in the fall, although it will now reflect the brand’s evolution into a retail business. The value of advertising has so far been demonstrated through qualitative research, she says, where brand recognition, consideration and attributes are tested. ‘But we do not do a strictly financial measure because we haven’t found a methodology that we have confidence in at a cost that’s reasonable,’ she says.

But certainly, qualitative research has indicated that the ‘Clarity’ campaign, the work of Toronto-based ad shop Doug, has made an impact. According to Jarvie, people get the message, and while many financial firms are described as ‘stodgy,’ Clarica is instead deemed approachable and human. ‘We’re very happy with the level of awareness considering Clarica only launched five years ago, and considering the low level of involvement in this category. We’re well in the pack of companies whose brands have been around for 50 to 120 years.’

But should Clarica, or any other marketer, decide to take a break from advertising down the road, they better make sure they first undergo 52 weeks of awareness tracking, according to Rob Young, a founder of Toronto media agency PHD Canada.

Young has been studying sales and awareness data and their relationship to media campaigns for the past 10 years, and has penned a chapter in the book, Managing Data Mining: Advice from the Experts, published in April. He says marketers can learn a lot when they track in between and not only during media buys.

‘You get to see what happens when there’s a void of weight,’ he says, adding that ‘what happens is things start moving south, so awareness starts declining and sales start declining and it’s really important to know how quickly those declines take place, because not every advertiser can afford to be advertising all the time. They need to make decisions such as ‘should I advertise a bit all the time, or advertise in waves and flights and take a hiatus.’ Understanding what happens when you back out of the marketplace is really important. You have to know that before you make that call.’

Generally, the danger to taking a hiatus is that brand recall, which Young sees as a function of share of voice, diminishes, and for the vast majority of brands, the decline occurs in a straight line. Meanwhile, ‘the build is often not a straight-line build, the build is often an S-curve going up, so if you straight-line down and s-curve going up, you can see that it’s probably smarter to support the brand consistently over time than it is to freefall and let it build later.’

Several brands have learned the hard way that a long pause from advertising can hurt. The New York Times recently reported that Jim Beam has introduced its first campaign in a year – prompted by a sales decline for the 200-year-old brand in 2003, when other liquor labels grew.

And witness the experience of Nestlé’s Aero, as outlined in a case study submitted to the Cassies advertising awards show. The candy bar dropped from a high of 4.6% share to 3.3% after almost 10 years with very limited ad support. (Confectionary brands fight for fractions of share points so the fall was significant.) After reinstating advertising in the spring and fall of 2002, via a campaign by Toronto-based J. Walter Thompson, Nestlé saw Aero jump to a 5.0% share in 2003.

But to Young’s point, for many brands it isn’t plausible to advertise all the time, and during a recession cutbacks are all but inevitable. Hammond points out that there are ways to trim ad spend without a complete withdrawal: a company can produce 15-second instead of 30-second commercials, reduce the pool of ads in a campaign from four spots to one, change its media strategy to a drift pattern, or use 50 GRPs as a minimum.

One thing Hammond warns against is reallocating huge portions of the ad budget from mass media to tactical methods. ‘Anything that’s measurable, be it online, direct or whatever, has more short-term appeal but I think there’s long-term image harm of suddenly diverting resources out of one and into the other,’ he says.

Hammond gives the example of one of his own clients – an IT firm that operates in the B2B world. The company used only direct marketing. Hammond found that the brand’s unaided awareness was at 1%, and while aided awareness was much higher at 50%, half of those respondents simply recognized the company name, but didn’t know what the organization stood for, or anything about its products and services.

It’s important to build the brand with mass, because as consumers, ‘if we see something we haven’t seen before, we just put it straight into the blue box,’ says Hammond. ‘We don’t even read it.’

Markham, Ont.-based Timex Canada has invested in mass media for 18 of the last 20 years, according to VP marketing Paul Sine. But the watch manufacturer did take a couple of years off before coming back to TV during the holiday period in 2003.

‘We just changed our priorities, but we’ve come back to television as a key focus again for communicating with the consumer. Through that time, we did some more targeted, more focused communications, such as a few programs with MuchMusic and CityLine.’

Sine says that, at the time, Timex went tactical because it didn’t have a strong message to deliver to consumers, and he maintains that there wasn’t a significant dropoff in sales as a result. The return to mass advertising, he adds, was in part a desire to communicate new innovative product such as a watch that is equipped with a perpetual calendar.

However, going forward, Timex plans to stick with a broader plan. ‘I think we would stay with a stronger, core brand message, as opposed to more targeted sub-brand messages. There is a much bigger return from supporting the entire brand and the halo it gives to the sub brands than trying to build it up from the bottom.’

Timex, which has 90% aided and unaided awareness and makes up one-third of all watches sold in this country, would never pull its advertising altogether, he adds. ‘If we just focused on our core consumers, clearly as demographics shift and consumers get older, you run out of consumers.’

Other companies though, don’t necessarily share that belief, at least when it comes to their heritage brands. Peter Jansen, brand manager for Thunderbird and Mustang at Oakville-based Ford of Canada, says these models get about 10% of the media spend of a typical Ford vehicle.

‘The stronger your brand is, the less you have to do to tell people about it,’ says Jansen, who points to the relaunch of T’bird in 2002 as an example. Ford didn’t spend millions of dollars on TV; instead it invested in PR and events, such as a simultaneous unveiling of the car – which was hidden under a custom-designed cover – at 500 dealers across the country. Recalls Jansen: ‘The launch blew away our wildest expectations – we sold everything we had and more. We probably sold double what we expected.’

Similarly for the 2005 Mustang, Ford isn’t expecting to have to dig deep into its pockets to support the brand. ‘What we’re seeing so far is that the car is so strong, we may even scale back more in terms of what we need to spend,’ says Jansen. ‘That’s [because of] the attributes of the brand; if you have a power brand like that, it draws people in.’

Jansen points to the fact that several car clubs have sprung up around Mustang and T’bird during their respective 40- and 49-year-old lives (many still exist today), as well as the fact that the brands are currently prevalent in novelty stores, on T-shirts and the like.

While the clubs generally consist of core customers – for Mustang, this typically means consumers who want the power performance enabled by the car’s V8 engine – there’s a broader audience consisting of those who are lured by ‘Stang’s attributes of ‘freedom’ and ‘affordability.’ Mustang has led convertible sales in Canada for the last three years, and it is also the number-one sports car in its segment.

But that’s not to say mass advertising isn’t used every so often – or at least when there’s something to say. This summer Ford is running a TV spot that delivers an affordability message for Mustang. ‘We think the strength of that brand has so much potential for us, we want to grow it, and we think we can do that through the grassroots methods, but also short targeted bursts that help reinforce the message.’

And that’s just as well, because even though some brands have what Young calls ‘brand ad stock’ – meaning high levels of equity which allows the media weight to regurgitate for some time after advertising is cut – even the most resilient brands can suffer negative effects, as eventually awareness declines to a level where only a core group of customers remains.

Says Young: ‘[They] tend to be very faithful and loyal, but a brand needs more than them to survive. If you get down to core numbers, then you’re going to be losing sales.’

How to cut costs without damaging sales

* undergo 52 weeks of awareness tracking to determine just how long your brand can afford a hiatus from advertising, if at all

* produce 15-second instead of 30-second commercials

* reduce your pool of ads in a campaign from four spots to one

* change your media strategy to a drift pattern

* use 50 GRPs as a minimum

* skew your weight to favour master-brand rather than sub-brand ads

* continue to invest in mass advertising, versus reallocating huge portions of your budget to tactical methods