Hit rates Investing in brands - hit rates Brands, Media and Money Branding is sometimes presented as a risk free investment. Research I collated for my 1998 IPA media planning paper showed it wasn’t*. Most new brand launches fail, about 50% of investment ”upweights” fail. I suggested then that ignoring risk led to inferior investment decisions. At the time I proposed “real options” as a superior approach to making risky marketing investment decisions – but in practice there was never enough good data to make this work. It did provide one great counter-intuitive insight though. It is common practise to attempt to minimise the production cost percentage of an ad budget in order to maximise the media budget which actually impacts on consumers. This rests on the assumption you have an effective proposition and execution. The evidence is you cannot be sure (even after lots of expensive market research!). The optimal strategy from a financial viewpoint is to switch nearly half the available budget into creating a range of communication executions and running them as “in market tests”. This will make you more money - over a period of time - than betting on one single execution or campaign every year. Brand risk is a subject I am returning to in conjunction with Imperial Business School using data kindly provided by Thinkbox. Analysing expected brand longevity is important for accurate forecasting and therefore accurate brand valuation. The graph shows the first results from 13 years of UK cereal market data. We remember the winners – but forget the hundreds of brands that come and go quite rapidly.  *Colin McDonald - How Advertising Works NTC 1992 ,“What do we know of Advertising’’s short-term effects?” Andrew Roberts - Technical Director AGB 1996,“What can one TV Exposure do?” L.D.Gibson. Journal of Advertising Research March 1996.  : Brand survival rates <<<< Back to menu