Planning techniques for brands during a disrupted decade
Amidst uncertainty, and under pressure, how can marketers quickly and credibly build new strategies and comms plans? Richard Kirk, CSO at Zenith, offers his advice
Today, marketers are moving from crisis mode to resetting their organisation’s marketing for our strange new world. With a recession looming, marketing teams must step up if they want to push back on boardroom sceptics and avoid the “cost centre” label.
Recently, Faris Yakob and JP Hanson wrote brilliantly about the value of good marketing strategy: Yakob states: “[strategy] turns uncertainty into risk… [and] risk is where competitive performance is created. When companies make investments, it’s because they are willing to take on risk to create profit over time.”
Hanson takes a similar vein: “Strategy has never been about guaranteeing a result but improving the likelihood of one. However… the odds of something coming to fruition must be weighed against the resulting damage if it does not”
These quotes reflect a core belief of sophisticated marketers, and those sceptics in the boardroom; that comms budget must be planned, managed and reported on as an investment. It’s why Zenith’s tagline “The ROI Agency” has endured for 20 years.
But these great pieces both neglect the “how?”. How do you start to rethink marketing? How can any plan be worth a damn, given the uncertainty? How can a plan be made credible to win over a CFO? Marketers require new, pragmatic, data-led ways to plan.
Planning frameworks for the ‘disrupted decade’
Covid-19’s impact has been so great it seems prudent to plan on the assumption we are not going back to 2019 “normalcy”. We can assume any plan will be beholden to the pandemic: non-pharmaceutical interventions (such as social distancing) will come and go as the pandemic evolves, with each change impacting comms plans and customer behaviour. If the pandemic shapes the business reality you plan for, businesses need to understand the future of the pandemic to produce better plans.
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Alongside epidemiologists and governmental advisors, Publicis Health has built a framework for navigating the pandemic (fig 1). Each stage can be considered as a discrete business planning exercise, producing plans that can then be actioned as the pandemic evolves in a given market. Stage one represents what the UK has been through since Feb; stringent governmental NPI and an associated economic dip. Stages two and three will now be the focus. Expect localised lockdowns, cautious consumer behaviour, and exaggerated customer “disloyalty” as lockdown will have reset people’s buying habits (see Zenith’s “life stages” research and this April-20 update).
In media terms, this means highly flexible options will serve businesses well, as investment may need to be switched across regions quickly. It’s likely that strong radio performance will improve as more overland commuting takes place, and OOH will begin to offer reasonable OTS once more.
With an informed framework in place, the “new normal” can be anticipated making planning implications for media and a host of other marketing considerations much clearer.
Building a credible forecast of ROI
“How much to invest?” is a crucial question tied to any plan. Plans only attract investment if they clearly demonstrate how they drive a desired response. To calculate this, brands use response curves, built from prior campaign results, or “norms” compiled from similar sectors.
But, if the founding principle of the plan is “we are not going back to normal” then businesses will need a new way to anticipate customer response in a post-Corona world.
Marketers need a technique which allows them to transpose old data into a new reality. “Morphing” is one answer; it uses actual or proxy data for factors such as media pricing, reach, consumer demand, brand and market size, to re-engineer a response curve for an imagined future.
The outputs of this method, borrowed from medical translational research, will aid budget setting and portfolio management.
Zenith has already used “morphing” to help inform media investment decisions for a business that saw a sharp spike in demand for their products. Morphing the brand’s 2019 response curves showed ROI on incremental media spend jumped from 1.1 to 3.2 in a post Covid-19 scenario (fig 2).
Smart re-purposing of existing data can help marketers credibly ascertain a reasonable budget level for their future activity.
Mitigating uncertainty within a forecast
Another crucial factor is risk. As Hanson and Yakob both point out, any forecast differs from reality. This point is often neglected by marketers. In seeking the point of optimal investment, too much emphasis goes on maximising return, versus mitigating risk.
If forecasts of return are based on models containing sizable assumptions, potentially magnified by morphing, then allowing for that weakness is essential to retain the board’s confidence.
When media is seen as an investment, it makes sense to lean on the world of finance. Modern Portfolio Theory emerged in the ‘50s to help investors optimise expected return based on the level of risk – given risk is inherent to higher rewards.
Risk is quantified via the confidence intervals in our model of response. These intervals are narrow when dealing with an imagined situation similar to previous ones (e.g. investing the same budget in similar channels), but greater when the scenario is more novel (e.g. once a response curve has been morphed using actual or proxy data).
In one example (fig 3) we can see that for the same investment, Brand B’s ROI is higher than Brand A (3.8 vs 1.5). However, when accounting for risk (by looking at confidence bounds of the response curve), the ROI for Brand A is better (0.6 vs 0.5).
Through a combination of response and risk forecasting, a plan for growth can be presented to the board, along with the levers to examine alternative scenarios with more or less caution built-in. This is the case for advertising we aspire to arm our clients with.
Agile techniques for uncertain times
To help marketers rapidly formulate a data-led plan, Zenith has developed Torchlight. This tool allows marketers to translate their pre-Covid response data into a variety of new scenarios through morphing, and then also quantifies the risk associated with this new forecast. This can be done at a portfolio level or for individual brands.
To win in business, you can be the smartest (hard to guarantee), a cheat (rarely advisable) or you can be first – which necessitates speed. A common complaint we hear is that marketers are frustrated at the pace of decision making in their organisations, especially since lockdown. That’s why these techniques are simple to deploy and can help progress a planning discussion in just a few days. We believe they work across categories and can add value to any marketer.
Figure 1: Planning framework for the coming months and years developed by Publicis Health’s team of epidemiologists and government health advisors. The lines represent new cases identified in the population. More detail available on request.
Figure 2: Morphing analysis output, showing the expected customer response to media investment for a brand, both pre & post Covid. The post-Covid scenario was built based on observed changes in market size, media pricing, and customer confidence.
Figure 3: A worked example showing how ROI changes for two brands, before and after factoring in the risk associated with the response forecast