This month is all about enough – knowing how much to invest to support your new product, creative strategy or brand and, conversely, knowing when it is time to call it a day and move on.
In our blog this month we are focusing on one particular aspect: creative. Specifically, when should we get a new ad? Or, to use the industry jargon, what is the extent of ‘wear-out’ on our current ad?
The Elephant in the Room
We marketers love a new ad. What’s not to like? The process is exciting, the tasks fun and you get to see your handiwork on your nan’s TV screen, which is about as visible as you can get (ever tried explaining the brand planning process to nan? And – whisper it quietly – it might win an award and you get the opportunity to pull on your evening garb and go to your very own Oscars night to pick up a piece of tasteless cut glass.)
All good, wholesome things per se, but not at all the same thing as needing a new ad.
So, how do we know when we actually need a new ad?
The Giraffe (?) in the Room
We need some numbers, right? Specifically, we need some modelling. Very specifically, we need some modelling of the econometric sort.
The problem is that it is not at all simple to isolate the contribution of ‘creative’ to your media ROI. Think about it this way. There is no numerical variable called ‘creativity’ that I can insert in my econometric model as a potential driver in order to measure its effect.
Instead, ‘creative’ is measured in econometrics as a residual effect, that is once you have controlled for everything else – mix, deployment, media cost and so on. Only once you have done these robustly are you in any position to make any inferences about creative performance. It’s a subtle art that, dare we say, needs some experience and nous to get right.
What does it look like?
But supposing you’ve commissioned your econometric models and had them built to a high standard by pros, what might you expect to see?
Here’s an example taken from our ROI database. We’ve anonymised it for obvious reasons, but what it shows is the relative performance of a TV ad used consistently for a single brand over 3 years. We’ve controlled for flighting and cost and what we are left with is the residual effect of the ad.
The first thing to notice is the decline in ROI from the first to the last burst. The ad is gradually becoming wallpaper, as (some) customers get used to it and relegate it to a lower place in their memory bank.
Secondly, notice how in this case the sharpest decline took place between the first and second bursts, when ROI fell by -21%. The third time it was aired, the ROI was 14% lower. By the fourth time, in April 19, the decline was a relatively benign -5%.
Does that mean we need a new ad?
Not necessarily. You could argue that ROI is stabilising at 64 (remember it’s an index) and that 64 (and whatever that translates to in £) meets your action standards as a business. In that case carry on, we would say.
But think about what economists call the ‘opportunity cost.’ Even if it stops declining, your ROI is 36% below what it could be at peak, with a new ad. If that 36% translates to a bigger ‘loss’ than the investment needed to make a new ad, then you’d be better off going for a refresh.
Is it always like this?
Not at all. Some ads have more longevity and hold their own for longer periods. Much depends on the brand, the category and the clutter in the surrounding airtime. If you’re a brand in a dynamic category where all your competitors are hammering away all the time, you might expect to see your own ad wear out faster than in a relatively slow-moving category which you dominate. The important point is to keep up-to-date measurements of your own ad performance so you can judge the best time to make a switch.
What happens if you flip your ad?
Sometimes, not very much. Sometimes the new ad actually performs worse than old one. We’ve seen that more than once on our modelling travels.
Here, in a happier vein, is the opposite, where the brand team wrestled with their ad over successive years. As a result, the ROI improved by a whopping 63% – worth having in anyone’s book.
Interestingly, look at 2019. The ROI fell back by -3%. Was that wear-out? Well, no. In this case, the team made some changes to the flighting of the same advert, resulting in a worse performance.
That serves as a handy illustration of the point we made above – it’s not all about creative. Managing your media deployment and costs are every bit as important to achieving and sustaining the best possible performance for your creative endeavours.
And, naturally, it’s all made possible with econometric modelling.
We’d love to hear your thoughts on this topic. How do you decide when your creative has had enough? If you go on gut feel, then, if we could be so bold, as to suggest getting in touch to discuss how econometric modelling could put some facts around your feeling.