An interesting thing happened when Adidas dug deep in their advertising budget and looked at their marketing playbook — they discovered brand building marketing was driving 65% of their sales. Not advertising. Not digital ads. Branding. And they were only investing 23% of their ad spend into building brand awareness. But brand building seems counterintuitive, right? Aren’t we constantly told to “go big” with digital and pay-per-click campaigns to get big results? As it turns out, case studies and research are showing those efforts aren’t driving the majority of sales. It’s good, old-fashioned brand awareness that appears to be bringing in customers.
Of course, there’s always going to be a place for traditional advertising campaigns. They can, and do, help boost brand recognition and your bottom line. But it turns out brand consistency and identity have a much bigger impact than people realize.
Before you say this doesn’t apply to your company or your industry, or you pull up examples of successful PPC campaigns, let’s look at some numbers. In the Adidas case study, the company had a history of not doing any brand tracking. Instead, they did what many companies do — they focused on a last-click attribution model, which tends to over-emphasize the results of PPC and social media ad campaigns and campaigns where direct clicks lead to sales.
This last-click attribution focus led them to invest heavily in digital ads and performance marketing. Interestingly, they simultaneously had an overstock problem. (Hmm, wonder if there’s a connection, right?) They had so much extra stock that their products were often being sold at a discount, and that was creating a pricing problem. Not a good situation.
There were other factors at play, including not having coordinated messaging across divisions and in the world of digital that can lead to competing against yourself. Overall, it was a company-wide marketing situation that needed to be reined in.
After a detailed analysis, the company discovered it wasn’t paid search or social media ads or even Google Last Click that were driving the majority of sales. After a deep dive into their ad spend and return on investment, they found 65% of revenue was driven by basic brand activity.
Read that last sentence again. More than half of their revenue across wholesale, retail and ecommerce was driven by brand activity. The research also showed they would do well to start brand campaigns across video, TV, outdoor and cinema — areas they hadn’t considered previously because they don’t fit into the last-click model.
Every company is different, and obviously results vary for each organization, but this is aligned with something marketing researchers have been saying for years — the ideal ad split is 60:40, where 60% of the budget goes toward brand awareness and 40% goes toward sales activation, or traditional advertising.
Sometimes when I’m talking with clients, or potential clients, I get asked about digital ad campaigns as if that’s the only channel worth considering anymore. They seem surprised when I tell them traditional advertising, even things like billboards, video, mailings and print ads, are not only still relevant but do well in building brand awareness! With mediums like print or direct mail, customers get the full view of your brand, creating an awareness and understanding of what your company represents. Digital limits your word count and your visuals — and are typically driven by promotion or catchy lingo.
Brand awareness drives revenue, no matter what sized business you run, so it shouldn’t be treated as an afterthought in your advertising plan. It’s not just important for driving sales, it also builds customer loyalty and keeps your organization top-of-mind.
Digital is certainly an important part of your advertising mix, but we recommend people don’t think of it as the end-all, be-all for driving sales. Building and maintaining a solid brand voice and identity drives more sales than most people realize, and it’s key to having long-term business success.