Marketers and agencies must learn to demonstrate advertising effectiveness

09 August 2017 Consultancy.uk

Global advertising expenditure is at an all-time high, valued at more than $500 billion. While practically all marketers agree that measuring advertising effectiveness is key to ensuring value for the huge flow of funds into the industry however, actually doing so remains a daunting task. With increasing competition entering the industry developing new metrics for this measurement has become essential.

In a fast-paced world of constant innovation and market disruption, strong marketing has become more important than ever before, with companies needing to make increasing efforts to distinguish themselves from the growing number of competitors in their segment. As a result, investment in advertising presently sits at an all-time high. With global expenditure on advertising exceeding $500 billion in 2015, having since grown by an estimated 5.2% in 2016, it has become increasingly important to craft sound marketing strategies, including a solid plan for executing them further down the line.

Marketers therefore find their hands full with executing marketing strategies, aimed at awareness, branding, sales, or a combination of the three. At the same time, with growing stakes, it has become increasingly important for marketing experts to validate that record spending by demonstrating a concrete return on investment (ROI). The marketing industry as a whole is picking up on this – according to new research drawn from a survey of over 2,700 marketers in nine countries*. The study, conducted by Research Now together with Econsultancy, shows that almost all brand and agency marketers now understand the importance of analytics and campaign-level measurement to prove the effectiveness of their advertising services. A quarter of all brands meanwhile rate this factor as ‘extremely important’ to their business.

“With only 3% of brands and 4% of agencies not measuring the success of their advertising campaigns, the need for measurement is evidently acknowledged by marketers,” said Monica Savut, Head of Commercial Research Services at Econsultancy, following the release of the 'What Advertising Effectiveness Means to Modern Marketers in a Digital World’ report.

Thinking about your typical advertising campaign

Marketers are aware of the importance of validating their advertising, both at a campaign level and in the context of their broader marketing objectives. Three in five brands consider measuring effectiveness to be ‘very’ or ‘extremely’ important, while 64% see advertising effectiveness as ‘very’ or ‘extremely’ important to broader marketing objectives. More than 60% of client-side marketers meanwhile used ‘surveys to test advertising effectiveness provide a strong indication of the success of an advertising campaign,’ with 54% agreeing that such surveys are essential to validation of their work. An even higher proportion of 72% saw market research as playing an important part in measuring the effectiveness of advertising.

While social media engagement and increased brand awareness were backed by 45% each of internal marketers, external agency marketers were more inclined to back social media engagement over brand awareness at 46% and 41% respectively. With social media analytics giving a more rapid view to engagement with a brand, agency respondents favoured the more fluid data this allowed for – as working on a case-by-case basis rather than a long-term strategy, this gives a rapid impression of the effectiveness of their work. However, it also offers less of an insight into the long-term permeation of a brand into the awareness of consumers, something that company marketers retain a higher concern in, in order to build for a marketing strategy that drives sustainable growth rather than sporadic spikes in market interest.

How do you currently measure the success of your advertising campaigns

Importantly, success of a campaign was shown to correlate with spending to an extent. While the majority of firms placed themselves modestly in the middle ground of measuring marketing effectiveness, regardless of spending, when spend on advertising was cross-tabulated against digital advertising effectiveness, the findings revealed that those spending more than £100 million on advertising were more likely to rate themselves as ‘extremely effective’ at digital advertising (13%) than those spending less than £500k (2%). There was also a slight trend across all ratings of effectiveness towards a lower spend correlating with a higher likelihood of ineffective measurement.

According to Tom Swenson, Vice President of Product Management for Advertising Solutions at Research Now, the analysis confirms marketers across the industry now recognise the need for accurate measurement of the effectiveness of advertising campaigns and validation of audience reach and targeting. “Access to data and insights and true single-source measurement solutions are critical to making better informed decisions about advertising planning and execution,” Swenson concluded.

Objectives for advertising

The report also shows that the most commonly prioritised objectives for advertising are increased sales, with 63% of those polled placing it as a key criteria, just ahead of new customer acquisition at 61% and brand awareness on 39%.

Thinking about your advertising campaigns

Again there was a small yet notable gap between agencies and in-house marketers when it came to long and short term objectives. Driving traffic to a website and increasing engagement both showed 25% of company respondents rating the factors as a priority, compared to a higher 27% of agency employees. Both again are relatively short term goals for campaigns which can be observed rapidly with spikes in web activity and ‘engagement’, which as previously mentioned can in a large part be determined via social media being joined by supporting a product launch as the third category where more agency respondents than company marketers set the most common goals.

The study further looked into what advertising breakdown looks like. Marketers were asked to split their budget across the headline media channels for a typical campaign. The average company marketer placed a quarter of budget with digital (25%), just over a fifth with print (21%) and 13% with TV. In contrast, agencies said that their typical clients spend 16% of their budgets on TV, and 19% on print, with the largest number of 26% prioritising digital.

Not surprisingly then, as with many other industries, the use of digital on the rise. Over the past couple of years, digital has emerged as an effective channel to reach the increasingly technology-literate consumer, particularly when targeting millennials. The most recent eMarketer predictions of time spent with media show that, adults will spend almost six hours per day using digital media in the US alone, leveraging a host of different technologies including mobiles, desktop/laptops and other connected devices. This new age of multi-screening behaviour provides numerous opportunities for serving ads, and improved tracking of digital ads have combined to focus marketers’ attention on the channel.

Though the potential “viral effect”, where sharing through social media rapidly sees posts amass thousands of engagements, lower cost and measurability of digital have meant it has become an appealing media choice for marketers. However, while this short term benefit can deliver a quick boost to companies’ profiles, measurement studies have shown that campaigns that achieve long-term effects are more focused on the traditional mediums of TV and video.

When asked about amounts budgeted specifically for digital advertising, respondents revealed that social media receives on average 25% of budgets, followed by paid displays like website banners at 19% and sponsored search results at 18%. Over 40% of respondents agreed to some extent that too many digital advertising formats exist, which can lead to apathy among consumers, or worse still for advertisers, drive them to technology like Ad-Blocker to avoid the glut of digital marketing targeted at them whenever they open a computer. However despite this risk, which is far lesser in traditional, non-user controlled media like newspapers and television, a far higher proportion of 83% stated that digital advertising remains an essential part of their wider marketing strategy.

A daunting task?

Despite all the financial muscle behind the plethora of advertising options available, in an era of multichannel campaigns with complex layered strategies, ensuring that campaigns are a success can be challenge, the report also shows that confidence in the effective reach of advertising could be higher. While 59% of company marketers and 49% of agencies asked said they were ‘confident’ of reaching the right audience, only 38% of all respondents were confident that they are using the right mix of channels to do so.

How confident are you that your advertising is reaching the right audience

The most sophisticated method of statistically validating the media mix is through attribution modelling. Tasked with unpicking the effects of different media and attributing the sale or other metric to a specific media or channel, these models have grown considerably in complexity in recent years.

However, this can require large quantities of good quality, clean data to make the models function correctly, and often brands lack the in-house skill so need the external expertise of agencies to make the use of attribution worthwhile. As a result, its use is far from mainstream, which is reflected in the survey results, with only 15% of brands using it to establish effectiveness, and rising to 50% of those who rate themselves as ‘extremely effective’ at measurement

Zooming in on digital, it has become much easier to measure the component metrics that would combine into an attribution model, for example impressions, click-through rates and conversions. Unsurprisingly, these are being measured by a much higher proportion of brands and agencies, partially due to the wealth of data available, which therefore makes the area the most logical place to allocate resources toward, as marketers develop new attribution models in the area. The general lack of resources (budget, time) is however noted as by far the most common barrier to advertising validation across the market in general, according to both company (61%) and agency (51%) respondents. For those who are ineffective at measuring the effectiveness of their advertising, other barriers include lack of insight (31%) and lack of understanding (34%).

The booming revenues of advertising and design firms have recently seen them become seen as highly attractive M&A opportunities, as professional service firms look to expand into new markets, in which their analytical prowess would enable them to consistently provide reports on the effectiveness of their ad-arm’s campaigns. Should marketing design agencies wish to retain independence and remain competitive in a market which is increasingly seeing such an influx of such competitors, developing and implementing quality metrics for future projects is essential then.

Which of the following are the most significant barriers to validating your advertising

The authors from Research Now and Econsultancy end their report with five tips to ramp up advertising effectiveness. One recommendation is that marketers should spread their budgets across different media wherever possible in order to mitigate the risk of having all their eggs in one basket. For this reason multichannel campaigns are usually more effective than those focusing on a single channel, especially in relations to long-term effectiveness metrics. Secondly, the researchers suggest to combat the fear of there being too many digital ad formats, despite it being a vital part of a campaign, companies should take note of the importance of not just assigning the right budget to digital, but also getting the mix of channels right within the digital medium. Again, diversity is the key, with campaigns using two or more digital channels being found to be more effective than those using just one – however it is important not to overstretch the resource as well, as once four media or more are used, the effectiveness begins to decrease.

Marketers are then advised to focus on validating the effectiveness of each channel in relation to campaign objectives and optimising the mix from there. Segregating actions into the relevant role it is playing in the customer journey can make it easier to evaluate the effectiveness of each activity, with clearly defined KPIs based on what it is supposed to achieve. The authors also suggest prioritising the measurement techniques in line with the resources and skills at hand to execute successfully. Resources should be allocated accordingly to where size and quality of data provides the best opportunity for quality data insights. Finally the results from this improved analytical process can be used to validate the long-term use of advertising types, while companies and agencies might also benefit from running surveys – increasingly inexpensive thanks to new digital platforms – to add a qualitative human voice to the vast quantities of automated data generated.

Emphasising the findings of the document, Econsultancy’s Monica Savut said, “This research underscores the importance of validating the effectiveness of each channel and campaign in relation to your objectives and then optimising the media mix accordingly. While there’s a correlation between advertising spend and overall effectiveness, spend is not the only key success factor. Deploying key measurement techniques, prioritising them based on internal resources and skills, and never losing sight of the main marketing objectives is what sets effective advertisers apart from the mainstream.”

The full report from Reasearch Now and Econsultancy can be downloaded from this page

* The respondent base consisted of in-house marketers or brand advertisers (49%), marketers at agencies (26%), independent marketing consultants (16%) and technology vendors (9%).

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Project management industry adds £156 billion of value to UK economy

15 April 2019 Consultancy.uk

Project management has grown into one of UK’s largest areas of business over the past decade, amid the increasing ‘projectification’ of work. With the gross value added to the UK economy by project management estimated to be £156 billion, this trend is likely to continue in the coming era.

Despite the huge success of project management in recent years, until now there has been relatively little data available on the size of project activity. As a result, there has been a great deal of debate on things like the number of people involved in the sector, the number of projects, and how it contributes to economic output. Due to this need for clarity, APM, the UK’s professional body for project management (the largest organisation of its kind in Europe, with 28,000 individual members) commissioned economists from PwC to shed light on the industry's economic impact.

The research concluded that the profession makes a more significant contribution to the UK economy than the financial services sector. 2.13 million full-time equivalent workers (FTEs) were employed in the UK project management sector, generating £156.5 billion of annual gross value added (GVA). In comparison, the financial services sector contributes £115 billion, and the construction industry adds £113 billion.

Gross value added to UK economy

Commenting on the discovery, Debbie Dore, Chief Executive of APM said, “Project management runs as a ‘golden thread’ through businesses, helping to develop new services, driving strategic change and sector-wide reform.”

Who is a ‘project manager’?

To reach these estimates, PwC’s researchers used detailed models to map out the value of project management activity. They ultimately defined relevant ‘projects’ as “temporary, non-routine endeavours or rolling programmes of change designed to produce a distinct product, service or end result… [with] a defined beginning and end, a specific scope, a ring-fenced budget, [and] an identified and potentially dedicated team with a project manager in charge.”

Building on this, they then went on to define what the act of project management actually is. The job consists of applying “processes, methods, knowledge, skills and experience” so that clients can meet their objectives and bring about planned outputs or outcomes. The analysts added that this includes “initiating the project, planning, executing, controlling, quality assuring and closing the work of an identified and dedicated team according to a specified budget and timeframe.”

Importantly, it should be noted that the profession is not exclusive to only roles explicitly labelled as ‘project manager’, but to any role where specialist project management skills are used. This means that across sectors these roles can have very different titles, from the self-explanatory contract managers of procurement, or the campaign managers of advertising, to the likes of festival co-ordinators in the events sector, and many more. The roles in question also span all strategic levels of the profession, from strategic to tactical and operational positions.

Gross value added of project management profession

From a sector perspective, the financial and professional services, construction and healthcare industries make up almost two-thirds of the total project management GVA. At the same time, understandably, the UK Government has a huge project portfolio, which further drives the size of the GVA the sector contributes, thanks to megaprojects like HS2 and Crossrail.

Commenting on this to the report’s authors, Oliver Dowden, Minister for Implementation remarked, “Project delivery is at the heart of all Government activity, whether it’s building roads and rail, strengthening our armed forces, modernising IT or transforming the way government provides public services to citizens. Getting these projects right is essential if we are to ensure that we build a country that works for everyone.”

Throughout 2019, 26 major government projects were delivered, representing a fifth of the overall Government Major Projects Portfolio (GMPP) of 133 projects. According to the IPA annual report 2017-18, these represented a whole life cost of £423 billion. In addition to this were a plethora of smaller scale projects, and those in early development.

Elsewhere, with the increasing digitalisation of the economy impacting entities of all shapes and sizes, IT and digital transformations tended to dominate the projects of the UK scene alongside new product development projects, with a respective 55% and 46% of organisations in the research sample having undertaken these types of project in the past year. At the same time, this varied across sectors, and unsurprisingly, in the construction and local government sectors, fixed capital projects were the main project type undertaken.

Outlook

Looking to the future, 40% of business leaders expect project management will grow in the coming years due to the increased use of projects – or the ‘projectification’ of the UK. In a trend that has been witnessed elsewhere, organisations have to rapidly and continuously change in the digital age of business, driving the need for project management.

Outlook for project management services

An increased focus on value over cost – especially in the construction sector – and a forecast increase in the number of international projects are predicted to be key drivers of growth, according to the expert contributors. However, this will not happen in the absence of challenges; more than half of organisations expressed concern over the perceived impact of political uncertainty in the UK. Skills and capability shortages were also cited as a potential barrier by a third of organisations.

With regard to budgets, meanwhile, a third of those surveyed by PwC said they expect the size of project budgets will increase in the coming three years, while 40% anticipate a growth in project size. As the profession continues to mature, and as the recognition of the importance of good project management grows, it is expected that a greater proportion of project work will gain more distinct attribution to the profession itself, giving more recognition and appreciation to the role of the project manager.

Speaking on the findings of the study, Sandie Grimshaw, a Partner at PwC, concluded, “The project management profession is relatively new compared to some other professions, such as lawyers, teachers and doctors. However, as project management is a core competence vital to organisations in the UK, the profession is critical and will continue to grow in stature.”