The world of marketing used to consist of established brands and everyone else. The established brands spent heavily in traditional media to maintain and grow their markets, which were served by brick and mortar retailers. Everyone else chipped around the edges using direct mail, newspaper inserts and cheap late-night TV spots for direct response and relied more on warehouses than retail storefronts.
Then the internet happened, and with it, new ways to find and sell to consumers. The world shifted to mobile apps, and a whole new way to establish relationships with buyers emerged. Finally, streaming became an alternative to linear TV as a way to use the tradition of sight, sound and emotion to deliver a brand message.
The marketing world is no longer established brands and everyone else. We now have three broad classifications—disruptor, challenger and leaders—to describe the retail landscape.
Disruptor brands enter the market with the least amount of overhead and benefit from quick response mediums like search and other cost per acquisition channels. However, their acquisition growth strategies eventually hit a ceiling and are hard to scale, especially in offline channels. They also constantly need to prove their marketing works before increasing spend to drive awareness.
Challenger brands, having exited the disruptor stage, get signals from both acquisition and awareness tactics and understand who their core customer is. They are ready to take on leader brands but have quickly realized that they are being outspent by the leaders. They will need to scale their share of voice to be considered as part of their competitive set. They need to maximize physical distribution of their products to justify going big on national platforms like TV. And they have now also realized that the CPA model does not scale and that building awareness, as crude as the measurement models are, is an investment they must make.
Leaders have the marketing muscle, product availability and more loyal customer bases but will still need to overcome their own challenges. They need to spend smarter in a fragmented media world, and where budgets are flat to declining, embrace change while keeping the status quo going and continually getting better visibility into what works and why.
So, what is the one marketing challenge that leader, challenger and disruptor all share regardless of their growth strategies? Simply put, they will need to move more toward performance in their media. Here is why.
Media is becoming more strategic than ever. Procurement, which in our tumultuous times also takes the form of private equity and venture capital companies, expects a better return on their biggest line item.
Endless headlines about digital fraud and consolidation of buying only the FANG properties (80 percent of the digital spend) are making brands question the value of their historical pricing metrics, especially cost per thousand impressions. But when a performance lens is placed over that historical pricing, marketers will get the chance to evaluate the value of their advertising instead of just the cost of their advertising.
We need to continue to move toward measurement and media sales and buying based on performance metrics. Only then can answer this simple question: Is advertising addressing my business problems?