Why do you continue to go to marketing conferences? Are they worth the cost, the travel hassles, and the time away from the office? For people interested in marketing effectiveness, the answer last week was yes. Marketing Week, Campaign, and Footwear News are all carrying the story of how Adidas overinvested in digital marketing and underinvested in brand marketing, as told by Simon Peel, the athletic brand’s global media director at EffWorks in London.
Peel said that four years ago the company didn’t have any econometrics, its attribution modeling was based on last-click and it didn’t do any brand tracking. It also focused on efficiency over effectiveness, leading it to look at specific KPIs and how to reduce their cost rather than what was in the best interests of its brands.
Econometrics? Excuse me?
According to Wikipedia, econometrics is the application of statistical methods to economic data to give empirical content to economic relationships. An introductory economics textbook describes econometrics as allowing economists “to sift through mountains of data to extract simple relationships”
Performance-Based Marketing Didn’t Perform
“One of the other things we saw from the econometric modeling was that our individual business units were not driving their own business unit sales,” Peel told the audience. “So although we believed that football advertising was going to drive football sales, actually it wasn’t; football was driving running sales, running was driving Originals, Originals was driving training.”
Adidas, he said, had been spending only 23% of its marketing budgets on brand and emotionally led advertising, compared with 77% on performance advertising – even though brand advertising drives the majority of Adidas sales across wholesale, retail and ecommerce.
“The reason for that is short-termism because we are trying to grow sales very quickly,” said Peel. He added: “We had a problem that we were focusing on the wrong metrics, the short-term because we have a fiduciary responsibility to shareholders.”
Feel the Boost (of Marketing Communications Alignment)
“Digital” and “Direct” Are Not Synonyms
Global digital ad spending is expected to reach $333.25 billion in 2019, and this year marks the first time that digital will account for about half of the total market. Sadly, much of this money is wasted.
John Wanamaker, the founder of the department store, famously said, “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.” Not much has changed in the 100+ years since Wanamaker pondered his return on investment.
My friend Bob Hoffman, the Ad Contrarian, wrote last week that “the past decade has been the most disappointing and disheartening period that I’ve experienced in my long advertising career.” He says tens of billions of dollars are being stolen annually from our clients by online ad fraud. “And by steadfastly defending the abusive and creepy surveillance practices of our adtech ecosystem, the ‘leaders’ of our industry are clearly on the wrong side of history.”
In summary, to be an effective marketer today, a digital audit is required. Clients and their agency partners must be vigilant in the fight against digital fraud, avoid violations of customer privacy, and apply advanced economic modeling based on actual customer behaviors. And that’s the easy part. The hard part is telling one compelling brand story that is big enough for the general market and flexible enough to be modified for multiple niche audiences.
Adidas hired a person—Peel—with the knowledge to help guide them. Who is your Peel? Every brand with millions of media dollars to spend needs one.
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