What if we’ve been thinking about advertising effectiveness all wrong?

That’s a troubling thought. It’s prompted by another troubling thought – that we rarely measure advertising as being profitable in the short term. We know from large-scale studies that advertising generates more value over the long term than it does during a campaign and we should think about that value when we set marketing budgets, but why does it do that?

We tend to think about advertising and try to measure it as an aggressive action; as way of growing, of acquiring new customers and stealing market share and it does do those things, but once a brand has matured, it rarely does enough of those things to pay for itself.

We think less often about advertising as a defensive action; as a way of protecting what we already have.

Brands are castles.

Indulge me for a moment. Brands are castles.

Medieval castles. The kind with a moat and a king inside and archers on the walls.

Castles can be a little wooden fortification, not much more than a fence made of sharp sticks.

Or they can be huge, grand things. The Camelot of castles. Massive, imposing and impregnable.

The really important thing about castles, the thing that makes them like brands, is that they are defensive.

Spending money maintaining your defences doesn’t win you anything new, it stops your castle from slowly crumbling and falling apart.

The main thing that brands do is to stop other people from stealing the sales that you already have. This is why I’ve written previously about the most important chart in advertising and how it shows that – over a few years – the extra market share you win by advertising is smaller than the market share you defend.

When we advertise, we can see and measure the aggressive part – the part that wins new sales – but we can’t easily see the defensive part that’s protecting what we already have, and that defensive part is very important.

Instead of working in advertising, imagine you’re the steward in charge of running a medieval castle. The king wants to spend money on soldiers to go off and conquer foreign lands because although he knows its really expensive, he can see it gets results.

You’re worried that the castle at home needs maintenance.

Measuring your castle by how many foreign lands it helps you to conquer isn’t going to work because that’s not its job. Its job is to stop foreign lands from conquering you. So how do you persuade the king to spend money shoring up his defences?

Measuring defence is hard

Measuring defence is hard because if you’re doing your job right then you’re trying to measure something that’s not happening. Sales aren’t dropping. Market share isn’t being eroded. Foreign lands aren’t invading. Because we built a castle.

Your econometric models can’t measure things that aren’t happening and they especially can’t measure things that aren’t happening slowly.

When you think of advertising as defensive, more possibilities for understanding return on investment open up.

What would happen if we turned off all of the ads?

And left them turned off. Forever.

Where’s the real floor for sales?

And how fast would we find it if we stopped advertising?

You can get to sensible answers to those questions by using large-scale industry-wide studies and by considering benchmarks such as excess share of voice.

Just like our medieval steward, you’re going to need to justify your budget using ‘what-if?’ questions rather than direct measurement. What if we don’t maintain the defences? What would our situation look like then? How do we know? The steward might call it war-gaming.

In advertising we call it scenario planning.

The Vikings are coming

What if a new enemy appears?

The kings of England thought their castles were enough until the Vikings turned up.

I’ve worked with a couple of brands in the past 12 months that unexpectedly saw new competitors arrive on the horizon, invading their territory. In one case, it was a smaller competitor brand that suddenly started to advertise heavily and in another, a big, well-known brand from an adjacent market unexpectedly extended its product lines.

Scenario planning shouldn’t just be about your own actions, it should consider your competitors too. While you’re war-gaming what would happen if you turned off all of the ads, have a think about how vulnerable it might leave you to a bold new competitor. What’s the value of those sales? And how likely is a new competitor to appear if your defences look weak? Multiply those two numbers together and you’ve got an important part of the value of brand advertising.

If barriers to entry in your market are really low then you might find the correct answer to “how much should I spend on advertising?” is… “As much as you can afford”. If it’s the only defence you have, it had better be a good one.

That’s how brands like Red Bull come to be spending 25% of revenue – billions per year – on marketing. The energy drink Vikings are everywhere so they maintain an impregnable defence.

You can’t build half a castle

One last stretch of the analogy.

I’ve often encountered companies that have tried dipping their toe into ‘brand building’ and found that nothing happened.

Even though they were quite small companies, they’d briefly tested what felt to them like an expensive ‘brand’ campaign, with a more conceptual, less direct response advert and it didn’t work.

When you think of brands as castles, you can see why. You can build a small castle and defend a small territory from small enemies, or you can build a big castle and dominate the land.

What you can’t do is build just a little bit of a big castle, stop there, and expect it to work.

Brands are castles. Please don’t try telling your finance department that they are but it can be a really helpful way to think about what you expect them to do, over how long, and how you might try to measure that.

What does a brand do? A brand defends our territory so that competitors can’t steal it.

Just like a castle.