Where ad investment should really go

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New research due for release in early 2013 by the IPA (Institute for Practitioners in Advertising) will endeavour to shed light on the effectiveness of short and long term advertising.

In recent years the trend in advertising has been to focus on building loyal relationships with customers. However, the research, which has examined thousands of advertising campaigns over the past thirty years, has concluded that stirring consumer emotions as well as providing highly creative advertising will always bring in the highest profits.

Other key findings and recommendations include:

• Advertisers must ensure that their campaigns strike the balance between long-term investment in brand-building using mass media and short-term, direct methods that stimulate sales.

• Long-term (3+ years) investment in advertising delivers double the profit of a short-term approach (less than 1 year), but investing in both delivers the highest returns.

The report also advises that price promotions can maximise customer response rates and sales in the short-term but can also lead to increased price sensitivity and erode long-term profits.

Tight audience targeting, whilst desirable for reducing wastage may not contribute to the long term success of a campaign. The IPA suggests that a campaign which reaches a mass audience of existing and new customers is much more efficient.

Attempting to build deep and loyal relationships with existing customers is less effective than investing in advertising that reaches as wide an audience as possible. Ad campaigns which target new customers report 60% larger sales effects (effects include increased profits and sales or market share) in the first six months alone.

According to the IPA, none of the 1,000 ad campaigns included in the study achieved substantial long-term profit growth without investing on TV advertising. TV advertising remains the most effective way to build a brand and creates larger business effects than other forms of advertising.

The research suggests that using emotional advertising is almost twice as effective as rational messaging, and delivers twice the profit.

Highly creative advertising is the most effective of all, but even the best creative will fail if it does not have sufficient scale and is not evaluated over the longer term.

The IPA findings of 1,000 advertising case studies (over 700 brands in 83 categories) contradicts some fashionable thinking in modern advertising, where the emphasis on nurturing one-to-one connections with customers seems to be the norm.

Four concurs with this view in that while social media has become the ‘holy grail’ we still believe long term brand value building via strong quality media activity is vital to maintaining a Brand’s position in the marketplace.

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