What you need to know:

• Professor Byron Sharp told marketers to concentrate on the basics – building mental and physical availability and advertising consistently throughout the year – to drive growth.
• Addressing the divide between brand and performance camps, or “activation and advertising”, Sharp said brands need both, but that without building memory structures through advertising, no amount of performance advertising would deliver growth.
• Sharp dismissed the 60:40 brand to performance ratios formulated by Les Binet and Peter Field as based on unsound awards data.
• He argued paying more for more than fleeting attention is a waste of money.
• Sharp also suggested that multiple iterations of creative could actually hinder growth and stated the network effects of advertising across channels are “a bit of a myth”.
• Meanwhile, he said brands paying for BVOD ads running back to back within the same show should get them “for free”.

Full mental jacket

Sharp told the Mi3-LinkedIn B2B Next conference to focus squarely on mental and physical availability. Marketers should spend their budgets trying to reach all potential buyers in order to grow their category and therefore their brands – the core tenets of his best known book, How Brands Grow.

Sharp acknowledged that marketing science moves slowly – but that rigour cannot be shortcut.

“We make discoveries and then we spend ten plus years working on those discoveries. What are the implications? How do you say this? How do you communicate this? How do you implement this in an organisation? The ‘D’ in R&D takes a lot longer… and it's sort of embarrassing, but it has taken us about 20 years to boil down a lot of very important media discoveries into, I think, two quite simple rules.”

In short, reach everybody and be always on with advertising in order to grow.

He dismissed “things like attention is the new metric” as “nonsense”, and stated that Binet and Field’s 60:40 brand spend to performance rule is based on flawed data.

“Les Binet is a lovely guy, and I would say a good friend of mine, but [the 60:40 rule] really is terrible, very misleading,” said Sharp.

“60:40 is supposed to be the magic formula for you. Spend 60 per cent of your money on advertising, whatever that is, no one's really clear, and 40 per cent on activations. But people have no idea what activations really are and there's no guidelines. So really, you can spend whatever you like. But it sounds good to have a formula,” said Sharp.

“If you actually read Peter Field and Les Binet’s first report on this, they analysed a very weird data set, which is award submissions. If you wanted to solve this issue, you would never use that data. But why did they use it? Because that's the only data they had ... It's not a scientific law, but I think a law that holds is that where there is demand, there will always be supply," said Sharp. "And there was demand. People wanted a number.”

He argued marketers must be always on with advertising that builds mental availability over years, aligned with physical availability, so that brands can “catch buyers when they fall”, i.e. when they come into market and are ready to buy. In other words, build brands in the long term to be there at the moment of choice – and have the goods ready to go.

“Growth and maintenance largely depends on mental and physical availability,” said Sharp. Physical availability means making your brand “easy to buy … If someone wants to buy from the category you are not too hard to access, your package is not too big for them to get it in the car, you will deliver when they need it – so being able to get it.”

Mental availability is about buyers “being able to notice you or even consider you … see you on the shelf, recall you”, he added.

Brand and performance

Mental and physical availability must overlap to drive growth: “If people are going into the store or onto the screen but they don't see you, then your return on physical availability is miserable. But if people know you but you're too difficult to buy, then your return on your mental availability is terrible.”

Activation – or performance marketing – is a part of physical availability, but if people are not primed to buy and are not in market, “it won’t work” no matter the budget spent, said Sharp.

“Physical ability is about catching people when they fall. So if you're a 10 per cent share brand, of all the people who are buying from category today you'd like to get 10 per cent, or maybe a bit more … that's what growth is,” said Sharp.

“When people buy a car or financial services they typically look at two brands. So the odds are you will get half of them where your brand is in that two  – but most of the time it isn’t. So activation is about getting your 50 per cent share, but it’s the advertising, the other stuff, that determines whether you are in that [consideration set of] two. And that probably happened five, 10, 15 years ago,” he added.

“Paid search, in store display, price promotions, special offers – all of these things are to catch people when they fall. But people who aren’t in market do not see them – and most people are not in market,” said Sharp. He nodded to fellow Ehrenberg-Bass professor John Dawes’ work on the 95:5 rule, which states that only five per cent of B2B buyers are ever in market, so marketers should focus on the 95 per cent that represent future customers, and sales (and therefore performance budgets) focusing on the five per cent of active buyers.

Back to the future

While many marketers are focused on efficiency, attempting to avoid wastage by suppressing ads to people that have just bought a product, or limiting targeting only to those in category, Sharp suggested that philosophy is misplaced.

“It is not [waste] because it helps lay down memory, lay down mental availability … Most of your [current] sales will come from the work that people have done in the past. Your job is to make sure that people in the future [do that too]. You spend money today to lift the value of your brand and company,” said Sharp.

Which is why company valuations tend to focus on future cashflows rather than past earnings.

“The share price and market capitalisation of companies has nothing to do with reported profits, because that is gone. What you are willing to pay for that company [stock] is based on your bet on what they're going to bring into the future,” said Sharp. “Why is Tesla worth gazillions? Because a whole lot of people are betting that it's going to make a lot of money in the future.” Similarly, he said advertising “builds value and makes sales easier in the future”.

Golden rules: reach everyone...and Ritson 

According to Sharp, marketers seeking growth should adhere to two principles: reach everyone and “spread out your exposures”.

“There are two golden rules. First, you have to reach everyone in the category, you can’t just target the susceptible. Most of your sales growth will come from your lightest customers … And if you want to grow the category you have to reach people who aren’t yet in the category. So reach is not optional. You have to find a way to reach everyone, cost effectively.”

Targeting, said Sharp, should be used “sparingly when it helps expand your reach”. He used an example of North American brands creating ads in Spanish to reach the Hispanic population.

“So tailor wisely, not too much because you want scale … Skew for seasonality when you’ve got it, but don’t exclude reach. This is sophisticated mass marketing, which Mark Ritson now embraces,” suggested Sharp. “At first [Ritson] was like, ‘What’s that, mass marketing with a cigarette holder or something?’ But now he does get it and credit to him … that’s a change in view… and it is very admirable.”

... and spread budget evenly

The second golden rule, per Sharp, is about "diminishing returns from ad exposures". While Ehrenberg-Bass has been banging that drum for years, Sharp said it is remarkable how many advertisers have failed to heed the message.

“If you watch TV tonight, I bet you will see the same ad multiple times. But two weeks later you can watch TV and you won’t see that ad at all … They blew their money and then went away. Until that ends, we [the Institute] have not achieved our goal,” said Sharp. “That is the dumbest thing ever.”

He said ad-stacking on BVOD, where ads are repeating often in the same ad break due to a lack of frequency capping, presents a similar issue. “If you watch a movie, you just get the same ad over and over. I hope people are getting that for free because I would not like to be paying for that,” said Sharp.

He advised marketers aiming for reach and frequency balance to divide their annual budget into 50 weekly portions, or “every month [spend] about a twelfth taking account for seasonality”.

Advertisers should “never bunch exposures” and should stop thinking about “bursts” of advertising, “because bursting means going silent at other times”, added Sharp.

“Don’t do this. If your research agency says, ‘You have to spend above a certain number of TARPS or share of voice at a certain time, just sack them and get someone else, because they're idiots."

Instead, Sharp reiterated, “spread your budget across timeslots, across locations – and if your budget is large enough, across media”, though he caveated cross-media synergies as “a bit of a myth”.

“We don't have a lot of evidence that you need another media with [any other in order to gain network effects]. It may [occur] in some cases, but that's … not evidence-based at the moment. You need reach, but if you can do that with just one medium, fine.”

Dynamic creative, attention smashed

Sharp contended that the ad industry’s push to build multiple pieces of campaign creative may be counterproductive to building brand memory structures. Instead “creative that works at scale” is required.

“You don't have to have lots of different creative. Branding is absolutely crucial when you're talking to people that may not be in the market at the moment, that might not buy for ages or have just bought,” said Sharp. Brands are “a very small part of their lives. So you have got to look like you. If you're changing things, they just don't see you and they don't care. They will be loyal if you make it easy for them – and they expect fleeting exposure.”

Fleeting exposure, claimed Sharp, is why paying more for attention – and by implication attention metrics – will fail to move the needle.

“Our job is to get some attention. I don’t want to do advertising and not be seen. But after that, paying for a lot more [attention]? No.” He cited a bus shelter ad, and the two seconds it takes to get the message. “Am I just going to look at the bus shelter ad for 10 seconds? Would I need to? No, so don’t be suckered in. It’s just the old engagement thing: ‘We need to get engagement with our consumers!’ No you don’t. You need to fit into their busy lives, that is all,” said Sharp.

“Most exposures are fleeting …  and that’s okay.”