Scientific proof that going dark kills brands: All the stats marketers need to defend their budgets

Extensive research conducted by Byron Sharp and partners at the Ehrenberg Bass Institute finds brands that pull ad spending watch sales dramatically decay. For marketers, it offers all the proof they need to defend ad budgets against cost cutting – in language the CFO will understand.

News 4 years ago Unknown author

“A man who stops advertising to save money is like a man who stops the clock to save time.” That timeless quote is commonly attributed to Henry Ford, sometime early last century. But it encapsulates findings published in June this year in the Journal of Advertising Research on the much debated subject of ‘going dark’.

Going dark – i.e pulling ad spend – raises concerns regarding loss of brand traction and brand equity and the impact to sales that arise. This latest research, both diligent and scientific, provides the following headline figures that marketers can use to defend their budgets:

Going dark (stopping brand advertising) for a year creates a sales decline of 16 per cent
Going dark for two years creates a sales decline of 25 per cent
Going dark for three years creates a sales decline of 36 per cent

There are always caveats - but these headline numbers are worthy benchmarks to establish a broad value of brand activity, providing CMOs with a quantifiable brand investment to sales ratio. Crucially, the numbers are backed by the best academics in the business, the Ehrenberg-Bass Institute with notable support from Adam Gelzinis, a customer insights business partner for Endeavour Group.

So with the credentials outlined, let’s unpick the resarch, fine print and all.

Context and caveats

Firstly the research was conducted against 41 beer and cider brands courtesy of the Ehrenberg-Bass Institute and one of its partner members, the Endeavour Group. The data spans 20 years of sales and marketing and is therefore statistically strong enough to draw empirical conclusions. But note that it applies to fast moving consumer goods where brand advertising and sales correlate tightly and quickly, as opposed to slow moving goods that might show similar trends but over a longer period.

Some 57 cases of ‘no spend’ were identified across the 20 years, and 34 of the cases were ‘no spend’ for more than two years. The decline in sales arising from these cases were used to establish the above benchmarks.

Results: How stopping advertising kills sales

The results are best visualised in the below graph, where the trendline demonstrates the percentage fall in sales after one to 10 years without advertising. The sales index represents the average of all sales across the 41 brands, and the vertical dots represent the number of cases that were below the sales index in each annual period.

Read the full article in Mi3.