A wasted budget: 20 percent of media touchpoints deliver 80 percent of the impact

  • Media
  • November 14, 2016
  • Damien Venuto
A wasted budget: 20 percent of media touchpoints deliver 80 percent of the impact

With Facebook, Instagram, Snapchat, Twitter, YouTube and Pinterest popping up alongside all the traditional media channels, brands are spoiled for choice these days.

The only problem is that a significant amount of budget is being spent on the wrong choices.

Speaking at a recent breakfast event, TNS group client director Emma Eichbaum revealed research showing that only 20 percent of the touchpoints being used by marketers were driving 80 percent of the impact.

What this suggests is that a relatively small number of touchpoints are driving a disproportionate percentage of the overall impact for brands.

While this certainly does lead to wastage, Eichbaum warns marketers against kneejerk reactions.

“This doesn’t mean that if we’re using 25 touchpoints we should only be using five and discarding the other 20, as appealing as that may sound from a budgeting perspective,” she says.

“The complexity of connected consumer experiences means that marketers cannot afford to pre-judge the role of any touchpoint, or dismiss its significance to their objectives out of hand.”

Eichbaum makes the point that different channels might be driving impact at different stages of customer journey, and that marketers need to set clear objectives at each stage to really determine effectiveness.

She says that when clear objectives are laid out along a customer journey, it follows that the effective 20 percent of channels might differ along the way, even when it comes to a single brand.  

“We’re seeing that some touchpoints are really good for building brand equity – the kind of equity that allows brands to sustain their market share into the longer term, because it provides the basis for future sales,” Eichbaum says.

“Other touchpoints are exceptional at driving an immediate short-term sales response – while not helping to build the brand over the long term, some touchpoints are very effective at moving product off shelves at pace, as brands might often require.”

While the phrase 'impact' is certainly open to interpretation, TNS measures it according to the reach of the channel and the quality of the experience.

(Image credit: Kantar TNS)

This entire approach is premised on behavioural economics and aims to give a more accurate reflection of how of consumers behave in the actual marketplace.    

Eichbaum elaborated on four different categories that are taken into consideration when determining the effectiveness of a category:  

  • Anchor heuristic: this reflects that we’re better at relative thinking than absolute thinking, in practice. A good example is negotiating the purchase of a second hand car; the initial price offered will be the anchor and set the standard for the rest of the negotiations
  • Diminishing marginal returns: best explained as an example, this category involves activities such as consuming chocolate or alcohol, or reaching your pizza and pasta limit on a touring holiday of Italy.
  • Loss aversion: we tend to favour avoiding losses over acquiring gains. The best example of this would be the way in which marketers create a sense of scarcity or urgency that means people will feel like they’ve missed out if they don’t take up the offer.
  • Availability heuristic: the thing that most easily comes to mind tends to affect our decision-making most. This explains why top-of-mind awareness is a better predictor of sales.

To elaborate further on this approach, Eichbaum delved into a case study of a European insurance company.

When the impact of all channels used was determined across various touchpoints, 17 percent were found to have no impact whatsoever. And these channels, described as wastage, could have been eliminated entirely without hindering the effectiveness of the brand’s comms strategy.

(Image credit: Kantar TNS)

Case studies such as these will no doubt pique the interest of marketers, who stand to save huge amounts by pulling budget out of unnecessary channels.

But there’s also an important story here for media owners that could potentially be caught on the wrong side of the effectiveness graph.

If a channel no longer drives any effectiveness for a brand, then it stands to be removed from the marketing mix.

In fact, we’ve already seen this over the past for years, with Skinny pulling out of TV, Tourism New Zealand shifting most of its spend to digital and Countdown pulling back on press advertising.

And as researchers become better at measuring channel effectiveness, we will no doubt see a few more channels jettisoned in the coming years.  

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  • Advertising
  • June 17, 2019
  • StopPress Team
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