Thread by @shaneoleary1, So this week @adidas' Global Media Director Simon Peel had some really [...]

So this week @adidas' Global Media Director Simon Peel had some really interesting, important stuff to say about marketing effectiveness & media planning in @MarketingWeekEd.

https://www.marketingweek.com/adidas-marketing-effectiveness/

Here's a quick thread pulling apart the most important takeaways:

First some context. Two years ago Adidas' global head of digital ecosystem design David Greenfield compared TV advertising to marketing via the ‘fax machine’: https://www.marketingweek.com/adidas-compares-tv-to-the-fax-machine-claiming-digital-is-its-most-relevant-channel/

Adidas compares TV to the fax machine, claiming digital is its ‘most relevant channel’

Adidas says it is prioritising digital-only marketing campaigns, with the brand confident its new three-pillar strategy can help it win back lost ground in North America.

https://www.marketingweek.com/adidas-compares-tv-to-the-fax-machine-claiming-digital-is-its-most-relevant-channel/

Then the company’s chief executive Kasper Rorsted spoke about how ' digital engagement is key for us; you don't see any TV advertising anymore': https://www.thedrum.com/news/2017/03/17/adidas-chief-casts-doubt-tv-ads-digital-engagement-key-us?utm_content=digital&utm_campaign=social&utm_source=twitter

Adidas chief casts doubt on TV ads: ‘digital engagement is key for us’

TV ads are reportedly behind Adidas, according to the company’s chief executive Kasper Rorsted. Instead it looks to embrace platforms where younger consumers are more likely to be present.

https://www.thedrum.com/news/2017/03/17/adidas-chief-casts-doubt-tv-ads-digital-engagement-key-us?utm_content=digital&utm_campaign=social&utm_source=twitter

At the time, many marketing nerds, including myself, called this ridiculous. I wrote a fairly strong piece at the time calling it a nonsense approach with little to back it up besides bias and hype: https://www.linkedin.com/pulse/fax-machine-marketing-adidas-commit-brand-suicide-ignoring-o-leary/

Fax machine marketing - Is Adidas about to commit brand suicide by ignoring TV?

Irish advertising legend John Fanning has a brilliant piece on the current state of advertising in this month’s Marketing magazine. Fanning spans the breadth of the business, speaking sense and...

https://www.linkedin.com/pulse/fax-machine-marketing-adidas-commit-brand-suicide-ignoring-o-leary/

Two years later, it seems sense has been found. But what's really interesting is to take a look at some of the things Peel said about where they went wrong.

It's a real case study on some of the common problems with modern marketing/media that we can all learn a lot from.

(Also, fair play to Peel for having the balls to basically say Adidas fucked up and to contradict his CEO like that. I think we need more clear headed, smart, sharp people like this in the business.)

Here are five important points to take:

1) Last Click Fallacy

“We had an understanding that it was digital advertising – desktop and mobile – that was driving those sales and as a consequence we were over-investing.”

They got this very, very wrong.

This is the epitome of last click fallacy where sales get attributed only to one/two channels and everything else gets ignored.

The idea that digital sales can't be driven by 'traditional' media is nonsense. That's why online brands are the biggest spenders on TV in the UK.

Later in the piece its noted that the four attribution models Adidas were using focused on short-term, real time measurements that didn't take into account the effect of broad non digital channels like TV, OOH, and cinema.

2) Overfocus on ROI

Adidas 'focused on short-term, real-time measurements that focused on ROI and return on ad spend (ROAS).'

As @lesbinet, @markritson and others have consistently said, ROI is an efficiency not effectiveness metric.

The best way to generate great ROI is to spend very little. It's useful, but only in certain contexts. The things that drive long term business results (emphasis on reach, penetration and broad brand building activity) are all things that don't reflect well in an ROI calculation.

3) Overfocus on sales activation

'Adidas’s advertising split was 23% into brand and 77% into performance.'

Again, we've known for a long time from the work of Binet & Field and others that brands are generally spend too much on lower funnel media and not enough on long term brand building. Adidas split should probably be around 50/50 but was severely unbalanced.

4) Misaligned incentives

'We had a problem that we were focusing on the wrong metrics, the short-term, because we have fiduciary responsibility to shareholders.'

This really gets to the heart of why so much of what we hear from CMOs in big global companies is bullshit.

They're saying stuff that signals certain things to the market and their bosses. They're incentivised to invest in certain ways that drive short term sales and signal 'digital innovation'. Remember that the next time you hear a mental CMO soundbite.

5) Heavy Buyer Fallacy

'We had thought loyal customers were driving sales, and it was therefore investing in CRM, in fact 60% of revenue came from first-time buyers.'

Again, from Byron and HBG we know that focusing on heavy buyers who are likely already loyal is foolish.

Loyalty programmes often scrub away margin and incentivised people who would probably buy anyway. The NBD curve shows that light buyers are incredibly important to activate, particularly in a market as large as Adidas find themselves.

In summary - It's brilliant to see a bit more maturity from Adidas and this has paid off for their bottom line it seems.

Hopefully other brands that have gone down this route will follow suit.

There ends your media nerd lesson for this morning.

FYI the full presentation from Adidas' Simon Peel is here:

This is the type of case study that should be examined in marketing courses instead of the latest Cannes winner.

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