How to make an impact with zero waste marketing

While budgets continue to recover from the effects of the pandemic, eMarketer predicts a 5.9% growth in ad spend in 2021, with search spend projected to exceed pre-pandemic expectations for 2022-2024, as retail sales shift to online channels.

However, according to Rakuten Marketing, marketers are wasting at least 26% of their budget on ineffective strategies. The 2020 ISBA/PwC report serves as a timely reminder that, while digital marketing offers many opportunities to boost brand performance, marketers can only ensure their spend works as hard as possible by addressing the issue of digital waste.

Overall, with reduced marketing budgets stretched further than ever before, it’s imperative that every penny achieves an impact on brand goals with zero wastage. We look at why zero waste strategies are no longer just an environmental outlook for brands.

What is wasted spend?

Wasted spend simply means there’s not a high enough return from marketing investment, or activity is not meeting its desired outcomes, short or long-term. There are some key reasons why this might happen:

1. There’s an incorrect distribution of investment across the most effective mix of channels for the brand or target customers.

With so many communication channels, it can be difficult to know where to start distributing investment. By identifying and establishing the impact each channel has on marketing goals, a holistic view of where investment should be directed can be gained.

For a retail client, 75% of affiliate providers proved to be margin-diluting and were removed from their portfolio without impacting revenue, ensuring spend wasn’t wasted on those with no probability to convert.

2. Too many or too few ads are being served to prospects without a proper understanding of their optimal value and frequency.

By understanding the value of ad activity, brands have the potential to not only save costs but also maximise potential within other channels.

By identifying the optimal impression frequency for an automotive client, 13% of display activity could be removed without impacting returns, representing a saving of £200k in their media spend.

3. Ads are being served at the wrong time and place in the journey where significant optimisations could be made just by reducing the amount of post-purchase targeting.

Google’s viewability report unveiled that 56% of online display ads are not seen by consumers, making it vital for brands to invest in marketing spend optimisation efforts.

In 2020, we showed an automotive client that they were spending several thousands of pounds annually on advertising events that occurred post-purchase.

4. Media targeting is too broad and isn’t reaching the most relevant audiences with the most relevant content.

Casting too wide a net can result in wasted spend and an over-saturation of messaging, while reaching an unintended and indifferent audience.

A financial services client was investing in radio ads in a particular region, yielding poor returns. Different messaging drove a 25% uplift in audience conversion.

5. Businesses are not using an accurate attribution solution to measure the true value of their marketing activity in driving their desired outcome and identifying efficiencies, therefore making decisions based on inadequate data. Forbes reports that marketers that spend 10% of their marketing budget on measurement are 3 times more likely to hit or beat their sales targets.

The growth of media channels, and sheer fragmentation of today’s consumer journey on and offline, demands that a robust, granular and strategic measurement science is applied to evaluate all nudges and touchpoints along the journey, to truly understand their influence on conversion decisions. For example, our recent work with ASDA has show where more than £3M of marketing investment can be saved without impacting revenue or reinvested in more profitable campaigns.

It is time for new thinking?

Gone are the days where simplistic single-touch models, which significantly over or under value channel returns, can truly support decision-making. Yet so many brands still rely on these inaccurate approaches, despite the fact they don’t reveal the holistic value of their total investments.

Brands are certainly starting to rethink their approach. Airbnb has recently announced that it will be making permanent cuts in the amount it invests in marketing after slashing its outlay by more than half during the Covid-19 downturn and still generating 95% of the same online traffic as a year earlier. Google reflects the shift in investment to brand building advertising as brands recover from the early effects of the pandemic on its platforms.

Many brands have sacrificed brand spend in wake of the pandemic, cutting budget and focusing on short-term tactical activity. It’s vital that marketers take stock to truly evaluate and understand the right balance of both short- and longer-term strategies to ensure a captive audience today is not an indifferent one tomorrow.

Four ways to employ a zero-waste mentality

1. Embed customer insight in your advertising decision-making

Employing granular insight about customers’ behaviours and interactions, beyond just the latest event, is essential to catching them at the right time and right place for your content to work the hardest. Focus on the relationship with different customer segments and tailor the message at a segment and channel level to create even more relevancy and likelihood of response.

2. Bring about a test and learn cultural shift

By continuously questioning expectations of marketing activity and using the learnings from these tests to drive greater returns, a wider understanding of effectiveness is achieved. See an ongoing cycle of test and learn as an investment, rather than a cost - even low performing test outcomes prevent you from making future, detrimental, margin-diluting decisions. Organisations which prioritise testing are twice as likely to outperform their peers.

3. Adopt a rigorous measurement mindset and toolkit

One of the biggest causes of wasted ad spend is lack of measurement; everything else will stem from this. Alongside testing, choosing a sophisticated attribution solution will give provide the real value of your mix to help distribute spend for increased ROI – helping measure what matters, not just what is easy. The wrong approach means you may miss out on vital information that helps improve your customer journey and overall effectiveness. A data-driven model should be seen as a decision-making framework for all your activity to support the move towards measuring true profitable growth.

4. Switch the focus to longer-term growth, not just short-term revenue

Having a future-focussed mindset and appreciation of the true customer lifetime value is what differentiates average brands from those leading the way. Understanding when to invest and when to reduce spend goes beyond driving sales now. It’s about knowing when you’re willing to increase your spend thresholds to acquire those more loyal customers who bring repeat value to the business, even if the immediate returns look low.

Accurate use of data and a more scientific approach to measurement and targeting, alongside an overall shift in organisational mindset, now needs to be central to marketers’ zero-waste strategies. It’s critically important that the right measurement approach is chosen to support this so that the impact of these strategies shows demonstrable business growth. Implementing measures to optimise activity, eliminate unprofitable investment and understanding customers is no longer a choice but an unavoidable obligation for the future of business success for 2021 and beyond.