How to Split Your Marketing Budget Between Brand Building and Sales Activations.

In this article in Marketing Week, Mark Ritson--founder of The Mini MBA in Marketing and a true advertising thought leader and long-time practitioner-- discusses the research findings of System1 showing that ads rated 5 (excellent) on brand-building capacities ALSO produce great short-term results and increase sales.

So brand-building ads boost long AND short-term sales? Who would have thought? 😱

🤯 WOW! I'M SHOCKED!

No, just kidding. I'm not. I've said it time and time again, but now there's data to prove it, and y'all love data. So here it is. Or, better said, here they are, because data is plural, and I'm pedantic like that.

📊 THE DATA

Notice in the chart below that ads that scored 5 in brand building ALSO scored high in immediate sales activations. On the opposite end, very few of the ads purposefully built for sales activation scored 5 (excellent) in brand building.

📊 THE RESULTS

"It's a stunning discovery because it should reverse the perception of long-term brand building, which has too often been seen as a frivolous, underperforming indulgence offering up zero short-term impact and questionable longer-term returns. Nothing – it turns out – could have been further from the truth. Long-term brand building is the ultimate strategic BOGOF, ensuring shorter-term impact as well as longer-term benefits."

♾️ LONG-LASTING + SHORT TERM

I have been a supporter of brand building since forever and have always thought that the 60:40 proportion we operate with today allocates too much to sales activations.

I mean no disrespect to the grand strategic brains Les Binet and Peter Field. Their work is thorough and essential, and I'm just a strong head with strong opinions but no published research of my own in this field.

Yet, I always wondered if their 60:40 ratio was created so as not to alienate CMOS and CFO mesmerized with the apparent overnight quick and easy wins of sales activations campaigns. After all, they still need to work with them.

But I don't. At Feral, I choose to work only with companies and executives that see branding and strategy as their North Star. And I can take a more radical position without looking to appease anyone.

So when I read System1's findings, I was happy to see they confirmed what I already knew in my gut from the long time working as a practitioner.

Looking at the findings from a % perspective, I noticed that of the ads that scored excellent in brand building, some 99% of them also scored high in sales activations.

And of the ads that scored excellent in sales activations, only about 1% also scored well in long-lasting brand building.

⚖️ INTRODUCING THE RADA RATIO

💥 While the data is there, this ratio is not one that Mark Ritson and the team at System1 made.

So I'll take advantage of the opportunity and call 99:1-the Rada Golden Ratio. It matches the recommendations I have always made to my clients regarding how much to spend on branding and how little on short-term sales activation campaigns.

When seeing it, Jon Evans, CMO of System1, podcast host of Uncensored CMO, and creator of Fame, Feeling, and Fluency ad measurement scale, said: "BOOM, the 'Rada Ratio' has been born. We looked at this data set in so many ways and didn't quite land it as clearly as that. By the way, your observation on our data is spot on as I have worked in marketing for a long time. Since joining, I keep having the same experience of 'Damn, so what I have taken as instinct all these years has got some data behind it' In fact, my job is quite simply to get all these 'revelations' out into the public domain. Hence, a massive thank you for doing that and improving on it too."

What got me to see the ratio was that in their 5⭐️ section, only two dots were below the line, as you can see in the chart above. Only two commercials! Looking at it visually, I thought to myself: "that's only about 1%!"

Then, when I looked at the horizontal half across all star-ratings, I saw that of the ads that increased sales, only a tiny portion of them worked on brand building too. Also about 1%, give or take. This got me thinking that no matter how you look at it, the 99:1 ratio makes sense.

The idea of 99% brand and 1% activations also matched my long-time advertising practitioner gut feeling. Why? Because when brands that don't have sales offers happen to do a rare one, everyone goes mad.

But if 40% of what a brand does is sales and activations, we get into the realm when people don't buy the brand at regular prices and always wait for the sales and discounts to happen to buy.

This thinking is what led me to put a name on it. I wondered if it was a dick move to make a claim on Jon Evans' and Orlando Wood's data and research, but in the end, I thought, heck, this claim hasn't been made yet, and someone needs to say it out loud.

So that's it. That's the inception story of the Rada Ratio.