Tim Ainsworth: Challenger brands, marketing must try harder

Tim Ainsworth is Executive Director at McCann Experience, McCann Manchester and NDA’s new monthly columnist.

You’re a brand that’s challenging the established leaders and fighting for growth, but as your marketing costs have risen in the last 2 years, your revenue and market share haven’t kept pace. And, nobody can tell you why.

Sound familiar?

Back in January 2023, I attended a Marketing For Small Businesses webinar during which Professor Mark Ritson eruditely claimed that small businesses were – to all extent and purposes – a bit “f**ed”, which is a shame when you consider that 99% of businesses in Europe are SMEs.

Central to his compelling argument was that – based on Paul Dyson’s (now recently updated for 2023) celebrated work on The Drivers of Profitability – just being big gives you a pretty unassailable 20X multiplier lead on profitability.

And so, in short, the argument follows that you have to be pretty incredible at just about everything else to scale at any meaningful rate. And that’s why challenger brands are so important. Almost by definition, they have to break the rules in order to succeed and that means innovation.

But, it’s tough out there and challenger brands are – in my humble opinion – underserved by the marketing services industry at large, which focus on a small number of set pieces born of the leading case studies from big business to set the tone for how planning should work: brand versus performance, the long and the short etc…

They are all hugely valuable methodologies/philosophies and powered by some very scientific endeavour, but I am routinely informed by owner operators and CFOs within SMEs that it just “doesn’t work for me”. Not my words, theirs.

So, what’s going on? Why is it increasingly challenging (and expensive) to grow and create distinctiveness and differentiation through traditional approaches to marketing communications?

1. Cost of Sale (COS) is on the rise. The Cost of Living crisis has hit operating margins hard, but I hear every week about cost of sale across digital platforms accelerating as brands have no alternative but to hand over greater control to the “algorithm”.
2. As martech marketplace dominance among few players has increased, the opportunity to cut through and innovate creatively within individual media channels has become increasingly challenged. Simply producing all the formats you need is challenging enough and Dynamic Creative Optimisation (DCO) only gets you so far.
3. Rules-based media can often produce increasingly marginal gains and encourage homogenous brand behaviour across categories. As digital maturity has evolved, Marketing Mix Modelling (MMM) and attribution models are more routinely deployed by a competitor set, often resulting in everyone playing by the same rules, as the barometers are simply reset to new category norms by their very design.
4. Funnels mask chaotic realities. The purchase funnel often underplays what is really happening at pace across the total brand experience ecosystem. And, in truth, there is no such thing as brand versus performance. Brand preference disruption happens in seconds. According to Google’s Messy Middle, first preference brands can be displaced in a small number of carefully-crafted disruptions by a lesser known or second preference brand.
5. Organisational siloes underserve audiences. In my experience, many client businesses and agencies are still not truly integrated by design.

Creating effective marketing – for challenger brands, at least – falls into two key macro camps:

1. Find alternatives to expensive brand tracking/brand health monitoring; closer paired to performance KPIs and across the total brand experience ecosystem.

Challenge 1: Most brands we work with are tasked with increasing awareness, but 90% of them don’t even measure it: without access to expensive brand tracking or YouGov, for instance. Instead, nest data across the total brand experience ecosystem to look at cause and effect. Look for proxies that can give you a sense of direction, even if it’s just eyeballs or impressions versus awareness. It’s a start.

Challenge 2: There is no distinction in the world of the consumer between brand and performance. We know that marketing runs at different speeds, but compartmentalising activity into brand versus performance can be an oversimplification of the challenge. Iterate, test and learn methodologies over 12-week sprints at low investment levels to identify green shoots; don’t bet the house on black.

2. Talking to the right audiences at the right time. Surely, it should be pretty straightforward in 2024, but it isn’t.

In my career, I’ve worked with all manner of marketing universe and audience attitudinal/behavioural segmentations.

Challenge 1: You can build the most sophisticated models, but bear in mind most media platforms will still use a blunt instrument to target. Imagine spending £1000s on a detailed audience intelligence solution to end up with “housewives with kids”. I’m excited to be working with some very smart data, analytics and media partner specialists on fixing this issue.

Challenge 2: Most segmentations feed from survey-, panel- or some other form of census-related data. It can be very out of date very quickly, particularly on key indicators such as discretionary income. On average – and using publicly available data – we estimate that household discretionary income has dropped from £550 to £180 in the last 12 months. Whilst you might want to keep talking to your core customer base, they may have fallen “dormant” and you may need to look to other customer groups to hit your commercial targets in the here and now. Live targeting based on real-time insights on the cash available for spending by the day is an exciting evolution in planning.

I’ve spent the last 12 months at McCann Experience: a new capability that allows brands to shine brighter and grow faster by optimising their total brand experience (defined as every touchpoint you could have with a brand: paid, owned or earned). It embodies a suite of innovative, consultative and diagnostic tools to unlock marketing effectiveness that might otherwise be unavailable to challenger brands.

From separating the utility from the hyperbole surrounding AI (amongst other gnarly topics) to helping brands to detox from the ever-decreasing circles of effective performance in lower funnel activity, from creating cost-effective testing ecosystems at hyper local levels to fast-tracked planning cycle sprints fuelled by faster integrated analytics and decisioning, I’d like to dedicate this column to originating and surfacing some measures – with my colleagues – that any brand can take to get some meaningful competitive advantage at scale.