In any recession, making any new or existing marketing investment as efficient as possible becomes a priority for both CMOs and CFOs.
CFOs tasked with steering their organizations through the storm often cut marketing budgets as it is a non-fixed cost. This typically increases short term profitability as the business benefits from marketing investments from previous years. While this helps alleviate the pressures of thinner margins and higher market volatility, it means CMOs are forced to do more with less. Their budgets are slashed and they must prove marketing value in financial terms the CFO can use quickly in order to avoid even more significant cuts.
According to the latest International Business Barometer report from Sapio Research, 95% of global businesses fear a coming recession. Up to half of the surveyed businesses anticipate cutting discretionary marketing spend over the next 12 months.
As CEO confidence in business and the economy falls to new lows (not seen since the start of the COVID) and pressures mount, it’s in the best interest of both CMOs and CFOs to identify the most efficient marketing investments possible to make the most of a tighter and inflation-impacted (less efficient) budget.
The problem is, in the pursuit of finding efficient marketing, CMOs and CFOs alike turn to short-term, demand-based marketing to drive immediate, measurable lifts in sales and revenue. It’s an understandable conclusion: not only does this form of marketing achieve results faster, but it’s also more easily measured and less expensive, so its value is more clearly and quickly proven.
Unfortunately, however, overinvesting in short-term demand marketing actually damages longer-term business results as it blunts long-term brand development and lowers Share of Voice—it’s also simply not as efficient a marketing investment as CMOs and CFOs could be making to recession-proof their organizations.
It’s a case of measurement bias: 20 years of technological innovation has resulted in brands over-investing in, and then measuring, marketing impact in terms of ROI. To do that, they tend to focus on marketing initiatives that will raise ROI, such as reducing ad spend, or pulling spend from long-term brand building to focus on performance, or targeting existing customers rather than attempting to convert new ones.
Unfortunately, as Kantar and Paul Dyson recently showed in their report “The advertising multipliers that matter are not what marketers think,” the two drivers of profitability focusing on ROI effects—namely brand vs. performance and target audience—multiply profit ROI by only 1.40 and 1.10, respectively. Meanwhile marketers tend to think they’re the second- and third-most impactful profitability factors.
Compare these factors with the three largest campaign multipliers:
A clear pattern emerges: brands focus on ROI because optimizing media and target audiences are easier to optimize than brand size, creative quality, or budget-setting across geographies. But in the process, they are failing to focus on the factors that most efficiently multiply profitability.
The reason why brand size, creative quality, and budget-setting across geographies tend to be so hard to demonstrably measure and optimize is because raising them requires two things: improving creative quality and maximizing Extra Share of Voice (ESoV). Therefore, the most efficient way to make marketing more impactful is to improve the quality of the brand’s creative itself.
When examining the impact of improving creative quality, it becomes clear why:
In an analysis of almost 500 CPG campaigns that ran in 2016 and 2017 across all major platforms, Nielsen found that creative quality is the single most influential factor in driving sales lift, accounting for 49% of a brand’s sales lift from advertising.
By comparison, the next highest impacting factor was reach, which accounted for 22% of sales lift. Therefore, the fastest and most efficient way to quickly see the results of improving any aspect of a marketing campaign is to raise that campaign’s creative quality.
Raising creative quality isn’t just an especially impactful way to raise immediate sales lift, either. Campaigns that win awards for creativity drive up to 11 times more market share growth for the same budget compared to less creative ads. This means raising an ad campaign’s creative quality also delivers long-term benefits to the organization.
Similarly, creative quality is also closely associated with brand fame (how well known a brand is in its category and the amount of “mental availability” the brand has at a given consumer’s moment of choice), and memorability.
Fame and mental availability are, in turn, both key factors in improving ESoV and customer retention. Not only are these two of the most efficient ways to protect marketing investment and grow brand profitability, but they also both happen to be particularly important during economic downturns.
Therefore, any marketing team looking to make their initiatives as efficient as possible should focus on improving the quality of their creative first and foremost—it’s the best way to make marketing efficiency happen fast.
Of course, two challenges remain: one, being the basic fact that simply “improving creative quality” is not a particularly specific or helpful goal—at least, without a roadmap for doing it. And two, even if creative quality is improved, how can CFOs and CMOs demonstrate both the improvement itself and its impact in a way that makes sense in financial terms?
Luckily, creative data is the solution to both of these challenges.
Creative data is giving some of the world’s most effective advertisers the ability to quantitatively measure creative quality for the first time.
Here’s how it works: First, marketers use creative data platforms to analyze large samples of their previous creative efforts. Using CreativeX as an example, marketers can automatically identify patterns in the creative of previous top-performing campaigns, such as how quickly branding appears, whether or not people or certain colors are present in videos, the optimal size of images, etc., and codify them as “creative best practices.” The place most advertisers who have successfully scaled creative quality start, is with platform best practices.
Next, marketers use the platform to assign all creative a “Creative Quality Score” based on how many of their previously-defined creative best practices the creative incorporates. From there, improving the Creative Quality Score is a matter of incorporating more of the creative best practices.
Raising the Creative Quality Score has a direct and, crucially, measurable effect on media efficiency and the other metrics associated with creative quality, including:
Fortune 500 companies like Nestlé, Heineken, and Mondelēz have used the Creative Quality Score to dramatically boost the efficiency of their ad campaigns. Nestlé saw a 66% increase in Return on Ad Spend for ads with a Creative Quality Score greater than 66% on Meta platforms. Heineken saw a 50% incremental lift to brand value on Facebook after incorporating creative best practices via CreativeX.
Compare wins like these to the typical Fortune 500 company that doesn’t measure Creative Quality Score. The average CQS for Fortune 500 companies is 28%, which means nearly three-quarters of all of their creative campaigns are inefficient.
The Creative Quality Score represents a huge opportunity for both CMOs and CFOs. CMOs can use it to quickly make their marketing campaigns considerably more impactful and therefore efficient, even while working within their recession budgets. CFOs can use the Creative Quality Score to prove the impact of marketing initiatives in clear financial terms by charting the rising CQS with improved results.
In this recession, the most efficient marketing investment an organization can make is to improve its creative quality. The most efficient way to do that is to invest in creative data, identify Creative Best Practices, derive a Creative Quality Score, and then focus on raising that Creative Quality Score across all campaigns.
If you want to start finding your Creative Best Practices and assigning Creative Quality Scores today, CreativeX can help.