Reach-Frequency Paradigm For Brands Challenged. Plus, Agency HoldCo 3Q24 Trends and More Top 100 Marketer Commentary
Madison & Wall: Saturday Summary for Oct. 26, 2024
Each week on the M&W Podcast, Olivia Morley and Brian Wieser discuss Madison & Wall’s latest research and walk listeners through how the advertising business really works. Episode 8 of the Madison & Wall M&W Podcast is now available on Spotify, Apple, or wherever you get your podcasts.
Weekly Work
We reviewed 3Q24 results from Interpublic and WPP, and compiled those results along into our estimate for industry-wide growth at global and regional levels. Growth is, essentially, back to normal
We reviewed marketing-related commentary made during earnings calls from CEOs and CFOs at Beiersdorf, Capital One, Coca-Cola, Colgate, Kering, Keurig Dr. Pepper, Kimberly-Clark and L’Oreal. The general tone continues to have very positive implications for media owners.
After listening to a recent podcast hosted by Australian trade publication Mi3 featuring an interview with Oxford Associate Professor Felipe Thomasz and reviewing his research effectively challenging a premise of Byron Sharp’s “How Brands Grow” (and marketers’ heavy focus on reach metrics to build brands), we explored the new research and its consequences.
Additional Context
We recently listened to a provocative podcast hosted by Australian trade publication, Mi3, featuring an Associate Professor from Oxford University, Felipe Thomasz. The core idea conveyed by Thomasz was that the globally-influential work of Byron Sharp – author of the 2013 book “How Brands Grow” – and the historical output of the Ehrenberg-Bass Institute Sharp oversees is, while “solid,” of “limited use” and “incorrect in its applications.”
More specifically, Thomasz argues that the Sharp’s and Ehrenberg-Bass’ work was only relevant under limited conditions that aren’t particularly relevant to most marketers today. The claim is significant because they have arguably driven the focus that many marketers place on reach and frequency-based metrics. Sharp’s arguments that “growth in market share” comes from “light customers buying…only very occasionally,” that brands “mainly compete as if they are near lookalikes” and that “brand competition and growth is largely about…physical availability and mental availability” are effectively challenged by Thomasz’ research.
To the extent that research challenging the utility of reach for brands becomes challenged, it would contribute to an accelerated shift of spending away from television. It could also lead to a greater focus on performance-based metrics than already exist among larger brand-based advertisers. On the other hand, it’s worth noting that the study’s underlying data only runs up until 2019. Since that time, we have observed that larger marketers have increasingly allocated budgets to media platforms independently of what a media plan says the marketer should allocate.
Additional analysis of the research is contained here.
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