There are reams of case studies, meta-analysis, books and tedious PowerPoint presentations on best practice in advertising effectiveness. But there’s a yawning gap in practical and academic advice when it comes to effectiveness insights for scale-up companies.
I’ve spent my formative years in mature businesses like Unilever, Birdseye and the AA. And I was lucky enough to learn my effectiveness trade at the knee of the masters: Godfathers Binet and Field and the fearsome intellect of the Ehrenberg-Bass institute, with my hand held on each side by the IPA, WARC, and practically every other industry body keen to furnish me with insight.
But now, as CMO for Eve Sleep, I’m leading the marketing efforts of a young brand where every marketing penny’s impact is immediately felt. And it just doesn’t seem quite so simple anymore.
Eve Sleep is a scale-up, rapidly growing up. Scale-ups are not start-ups, but businesses in their growth phase, seeking to grow rapidly. Typical scale-up companies are growing at 20% over the past three years, according to Endeavour, the New York-based non-profit founded to support entrepreneurs[i]. And, according to ScaleUp Institute UK, the number of UK scale-ups rose 34% in 2019 year on year[ii].
But scale-ups need to grow up. At some point, there is an inflection. A moment when the marketing has to not just drive growth, but profitable growth. Our challenge at Eve Sleep is the same challenge facing any scale-up growing up – navigating the path to sustainable growth. Balancing the top line and the bottom line. If you’re a company looking at growth at all costs, your choices are relatively simple, and you can ‘growth hack’ to chase the dollar. At Eve Sleep we are on a path to profitability in a highly competitive, mature market and sustainable profitability is our absolute focus[iii].
Naively, I assumed that when it comes to advertising effectiveness, there’d be little difference between large established businesses and scale-ups. But a growing scale-up is typically on a one to three-year journey towards profitability and has no nice, forgiving baseline brand equity upon which to rely. At Eve Sleep, a huge amount of sales variance is driven by advertising and marketing. That means if we get it a bit wrong, it goes very wrong, very quickly. But when we get it right, it goes very right. Exciting? Yep. But can I find anywhere any decent research, case studies or analysis of the effectiveness journey I need to follow? Nope.
There are a number of reasons for this, but I joined the UK council of Effie Worldwide to help find a solution and drive the understanding of marketing effectiveness for scale ups and fast-growth brands such as Eve Sleep. Case studies are so hard to come by in this brave new world of fast-growth e-commerce because sustainable profitability hasn’t yet been widely achieved. The effectiveness conversation to date has predominately relied on large scale meta-analysis of IPA banks and long-term data – neither of which is directly relevant for scale ups. Added to which, most scale-ups aren’t working with the sort of agencies that invest in unpicking effectiveness.
However, some agencies are starting to get a handle on scale up communication effectiveness. Jonathon Trimble, founder and CEO of And Rising notes, “We’ve seen real success using a balanced scorecard. Pressure on last click performance based on a single channel view is relaxed in favour of a focus on an overall channel mix, incorporating broadcast channels and ‘brand’ much earlier in the growth cycle.”
Thus, it’s clear that at a scale-up, effectiveness must be achieved over the short term rather than the longer term, and it has to generate a multiplier effect rather than a steady cumulative impact on business performance. That means ‘brand’ investment has to work hard and work hard from day one.
This is never more evident than in the current COVID climate, a climate where monetising short term demand becomes a much more crucial objective, and a climate where it’s hard to forecast H2, let alone long term demand and the impact growing brand equity will have on that. But we mustn’t be suckered into shifting spend too short term without keeping an eye on the equity we’re building, or we’ll fail in our task of building tomorrow’s sustainable brands, in the fight for today’s scraps.
But how to do this? Is the combination of TV and digital – widely acknowledged to be an effective media mix for achieving long-term brand-building, as demonstrated by John Lewis[iv] – as effective over the short term for a scale-up with the need to generate profitable sales more quickly? And what are the insights around what other channels bring to the mix? How important is brand building in nascent categories, and how should we balance the building of brand awareness with response driving metrics when brand awareness is less than 20%?
If you took the John Lewis total investment (including production) from day one to today, at what point did it become profit ROI positive? I suspect the timescale is too long for your average scale up to genuinely take lessons from this case. Where are the scale-up to grown-up profitability hero cases? What is our John Lewis? Little if any work has yet been done to unpack this and, if it has been, I’d like to know.
Even in terms of media mix investment, knowledge is scant for scale-ups moving to profitability. As Simon Wilden, partner and Head of Effectiveness at media agency Goodstuff describes, “The biggest challenge in effectiveness for younger businesses lies with the balance between short term results and longer-term benefits. These are businesses born and bred on performance marketing, and seeing value in investments that will pay off over time can be difficult – particularly when they haven’t seen the dynamic between brand and performance play out previously.”
“Measuring the value of non-linear activity is inherently complex because those events and actions don’t deliver their pay-off in real or even near time. And often those valuable actions are hard or impossible to capture anyway,” he adds. “The value of a heartfelt personal recommendation, elicited by a quirky, insightful moment of brand experience is very difficult to measure.”
Increasingly, however, scale ups are attracting more seasoned marketing talent to guide them through this difficult stage of their growth with all the benefit of their experience, and a well-trained gut instinct to draw on.
As Andrew Gibson, Chief Strategy Officer at creative agency Creature London notes, ‘the client mix is changing in the scale-up sector and the biggest shift is towards a brand focus rather than a response focus. Established marketers tend to be introducing longer-term, softer metrics as a compliment to the hard, response metrics which have got the scale up to where it is. So, the kind of things we’re being asked to test are less about a new channel or message and more about a new approach.’
As we face the multiple recessionary and lockdown scenarios we can all talk ourselves into and out of over the next two years, this confidence in the role that softer metrics eventually have in the long-term health of a brand and business is key.
However, this old dog has learned a few lessons over the past year or so which should stand us in good stead regardless of how the landscape plays out:
Reach-based investment is vital for short and long-term growth once the need to reach profitability in the medium term becomes a burning platform. That can feel counter intuitive, but there becomes a point where you’ve plucked all the low hanging fruit, and you need to reach beyond in order to grow your business. We shifted from a strategy of performance TV with some Channel 4 to a more reach-based plan, and this move has paid off in terms of econometric ROIs, brand metrics AND profitability.
Bloody good basics. Show me a business that doesn’t have ‘fix the basics’ or ‘brilliant basics’ somewhere in its strategy and I’ll show you a business that needs to wake up and smell the roses, but in a scale up it REALLY MATTERS. When your business is small, every interaction is a proportionally much bigger part of your brand experience and can have a much greater positive or negative effect on brand consideration and even awareness. And getting it right is much harder – as a smaller business you are much less able to cope with the inevitable volatility of growth, particularly in rapidly evolving markets, which is exacerbated in times of unpredictability in the supply and demand mix – for example, during a global pandemic…. So getting your experience, availability, SEO and searchability, web conversions and customer journey right is the beating heart of the business.
It is essential to really understand the metrics. While some are brilliant indicators of long-term performance, you need a different lens for short-term. But long-term metrics don’t have to take long to get – there are immediate indicators of long-term effectiveness in small businesses, and this is where search insight comes into its own.
To some, advertising effectiveness for scale-ups may seem a niche concern. But as more senior marketers move from big corporates to high growth smaller businesses, and as scale up budgets represent an ever-growing part of the media and advertising spend in this country, best practice insight is critical.
Cheryl Calverley, CMO of Eve Sleep, is UK Council Member of Effie Worldwide – a non-profit organization championing marketing effectiveness through awards and educational programs.
[i] http://www.ecosysteminsights.org/scaleup-companies-create-most-of-southeast-asias-new-jobs/
[ii] https://www.scaleupinstitute.org.uk/scaleup-review/#
[iii] https://www.warc.com/newsandopinion/opinion/scaling-up-a-direct-to-consumer-brand-in-2020-eve-sleeps-cmo-cheryl-calverley/3309
[iv] https://ipa.co.uk/knowledge/ipa-blog/how-channel-mix-impacts-marketing-effectiveness
Effie Anawaza is new series of thinkpieces written by inspirational business leaders and innovators who are part of our network of Board members and judges. Featuring expertise from right across the industry, the opinions are diverse, but every piece contains insights relevant to all marketers driving growth for their brands in today’s challenging climate.