Countering Les Binet & Peter Field's 60/40
yes but no but ... thank you for digital!
According to Mr. Les Binet & Peter Field, after studying dozens of ads, the ideal split between building the brand and activation is a 60/40 split on your budget. Great ads sell now and forever. Building a brand is a reinforcement of associations over a longer period of time.
That being said, let us calculate the real split between branding (getting the word out you and your product exists) vs activation (timely offers and actions) in a real-money world.
Products aren’t often discovered and bought on the same day. Maybe one in a hundred people would buy on the same day if they’re already in the last phase of their buying journey, right? Meaning, assuming 99% of people don’t buy right away, how would the split 60/40 really be?
Let’s start with projecting how much budget you’re willing to spend if the customers don’t buy up to 90 days after the start of the campaign. Pure economics.
Am I willing to pay up to 18000 euros of the maximum cost to acquire that one customer? We often only get the CAC of day zero! The big caveat there ha!
So, let us take the lowest (ideal) CAC into account for the first seven days.
That would mean that 14,29% of my budget would go into activation and 85% into building brand awareness. Makes lots of sense, right?
Let us do the opposite now. Let us assume you are willing to pay max CAC per customer. You really NEED that sale. That would mean that 28,57% of my budget would go into activation and 71.43% into building brand awareness. That’s closer to Binet & Field’s approach, right?
So what are they saying? Always calc on max CAC no matter what? Depending on the days of delay on the purchase, have a higher awareness? Thank got digital advertising is cheap and almost always activation due to creative flexibility (think sales video in branding objective FB campaigns).
Step away from CAC on day zero!
Look at activation in timeframes to allocate the budget and get stronger activations.
Now let us lower the CAC min to 20 and keep the CAC max at 200.
The view on Black Friday is bad looks very different now huh?
It’s a top activation campaign - CAC goes down big time - and it makes total sense to focus on activation and even cut the branding. The only thing you need to be aware of: this means you’re focussing on retention!
Make it a benchmark.
That’s it for this week.
See you next week.
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