The State of Marketing Effectiveness in China 2025

The topic of effectiveness is important but seldom urgent, so by the time we're asked the question, it's often late in the game. In this article we explore the growing interest in effectiveness, the challenges in measuring it, and provide some practical tips for improving effectiveness in times of slow growth.

Profitability is under pressure as companies reorientate from high- to moderate- growth. Fixed costs are being scrutinized. More marketing VPs are wrestling with effectiveness questions, as they look to secure investments by demonstrating their contribution to growth.

This article serves as the opening piece of the "Marketing Effectiveness" insights series, aiming to establish a comprehensive framework for understanding marketing effectiveness. Future articles will delve into specific methodologies and practical case studies—stay tuned!

Defining Effectiveness

What do we mean by effectiveness: superficially, did it work? Where the ‘it’ is often and loosely applied to any number of marketing and media questions. The practice of effectiveness tends to be deprioritized when people have KPIs on doing an activity rather than the impact of an activity.

Effectiveness is meaningfully different from efficiency. Where effectiveness concerns the outcome, efficiency concerns the cost of achieving that outcome. Without understanding effectiveness, you can't say how well resources are being used. “Impact”on the other hand combines these ideas and can be thought of as sustainable effectiveness at scale.

Challenges in Measuring Effectiveness

Effectiveness culture tends to be strongest in companies that can iterate at scale, since this is the basis of controlled experiments and meaningful measurement. If you can iterate activation across enough retail outlets, geographies or points in time, you can start to meaningfully A/B test sales uplift. Effectiveness tends to be weaker in B2B2C companies who don't have owned retail channels. While they may be able to iterate across distributors to evaluate the effectiveness of 2B activities, they struggle to iterate across consumers to evaluate 2C activities.

In the absence of robust effectiveness measurement, it's our assumptions, gut-feels and anecdotes that guide decision making. While many of these intuitions may be correct, without objective measurement and evaluation, the narrative about what does and doesn't work, and subsequently resource allocation, is subject to individual influence and company politics. 

Brand building vs. Sales Activation

The effectiveness of brand building has always been harder to prove than the effectiveness of sales activation. This makes sense, they work differently and must be evaluated differently. Together brand and sales activation work to Create, Change, Refresh & Convert memory structures. Where sales activation has the 'easier' task of measuring impact on sales, brand building must measure its impact on memory.

It's easy to see why performance marketing, particularly in China at this moment, has increased at the expense of brand building. It's easier to show an impact on sales than it is to show an impact on memory. It's thanks to effectiveness studies from the IPA, Ehrenberg Bass Institute and many others, that we can categorically say brand building in combination with sales activation drive long term growth. However unfortunately, in times of slow growth, it's easier and seemingly more rational to reach for performance levers

Brand marketeers rely on memory audit (brand health trackers) to check the effectiveness of their brand building. I would argue these are better at measuring effectiveness for smaller brands with less activity, than larger brands with more activity. If you are doing fewer things, it's easier to isolate their effect on awareness.

There is no easy answer to the question of how much brand building do I need and when. Pragmatically it often comes down to how much we can afford. Trying to track memory decay of your activations could be one way forward. If you're investing in a celebrity for brand reach for example, measuring brand awareness amongst fans before and at intervals after the campaign could be informative.

Ways to Demonstrate Effectiveness

We anticipate interest in effectiveness will only increase as growth slows, and the threshold for go/no-go decisions on investments increases. If you're under pressure to demonstrate effectiveness now, what can you do? It takes time to build an effectiveness program, if you don't have one in place, what can you do right now? 

1. Education: Educate or remind your management team that brand investment builds memory structures, and performance investments activate those structures at the right moment for sales. They work together. Put focus on the 'why' of the investment, not the 'what' of the campaign. Be transparent about your measurement gaps and how to fill them.

2. Levers & sensitivities: Conduct a qualitative market mix model (qMMM). A lot of the value in good market mix modelling is in the stakeholder engagement that happens during the process. If you don't have effectiveness data, decisions are still being made using assumptions about what is effective. Run a workshop with budget holders to identify & formalize these assumptions. This will help you map out where you need to build effectiveness muscle.

3. Proactively double down: Simulate a 25%, 50%, 75% budget cut, what activities would you stop? This is an easy and insightful activity which can drive greater effectiveness. If there are clear choices, consider increasing effort on core activities and build momentum behind a more focused set of choices. 

4. Effectiveness now: Push your internal teams and agency partners on effectiveness. If we don't continually challenge ourselves on how to better measure our efforts to Create, Change, Refresh & Convert memory structures, then we'll never make progress. In your next team meeting take 15 minutes and ask, "what is effectiveness" and see where it leads.

About the author

Lawrence Wykes is the Head of Decision Impact at dentsu China, he has nearly two decades of experience delivering strategic marketing initiatives for global brands. With a career spanning insight, foresight, brand strategy and marketing, he has a unique perspective on marketing effectiveness. Before joining Dentsu, he was Marketing Director at Bacardi China, driving the culturalization of renowned brands such as Bacardi, Bombay Sapphire and Dewar's.