Illustration of futuristic figures back to back

The new economy balancing act

If new economy brands are to achieve true scale, why are they reluctant to invest in brand media? Wavemaker explains how they can scale beyond performance through brand media

New economy brands tend to pride themselves on disruption and placing big bets, but they are often shy when it comes to aggressive paid media decisions. Ironically, these are brands that tend to be the most in need of building a brand identity, as they tend to either exist only in digital or app form, thereby constraining user discovery.

By diving deep into consumer needs through a proprietary research study, in addition to direct interviews with our new economy clients, we argue that the most successful brands are the ones that understand how brand-building and performance marketing are closely linked – this is not a binary choice, but a balancing act that shifts with growth.

The methodology

The study depended on three sources of data:

1. Dedicated new economy practice

At Wavemaker, we are proud to have expanded our pool of new economy clients, which has allowed us to codify discussions with marketers for cross-sharing institutional knowledge with seasoned talent in this space.

2. Consumer Pulse quantitative study

We conducted a proprietary research study focused on consumer sentiment and needs from both legacy and new economy brands, leveraging Wavemaker’s Consumer Pulse survey, fielded in March 2022.

3. WPP tools and syndicated research

Additional research and data were collected through Wavemaker and WPP tools such as BAV and Momentum, as well as learning from Gain Theory and GroupM Media Reach Curves. We obtained further validation and supplemental data through industry sources and subscription tools.

What did the study say?

New economy brands are new commerce ventures fuelled by disruptive technologies, products or business models. They could be new marketplaces, streaming platforms, software as a service, or direct to consumer.

These brands share common characteristics that breed a unique ‘start-up’ mindset and culture. They are usually high-velocity brands on which there are high expectations – especially from investors – and they are generally focused on the short term.

These characteristics lead to a common path toward paid media. But the real question is: what will drive growth?

Growth is generated through both increasing demand and capturing it, but new economy brands encounter unique barriers to growth. These are:

  • low category penetration,
  • low brand familiarity,
  • lack of physical presence, and
  • undifferentiated competitors.

These barriers have unique implications for the role of media. But brand media is best positioned to combat these growth barriers due to its reach, scale and positioning in pop culture.

New economy marketers struggle with balancing brand and performance. The flexibility and immediate measurability of biddable channels tends to skew mixes towards performance, with brand being an afterthought. But is this optimal for growth?

The balance of brand and performance must be re-examined for the new economy. While there has been significant research done on this topic suggesting a balanced mix is optimal for growth, this advice is rarely applied in practice.

Complex growth dynamics require a more fluid approach. To build brand equity with customers, we must understand what they want. We have to ask: do customers have unique needs when it comes to new economy versus more established legacy players; and, if so, how does this impact brand messaging?

New economy brands have higher user expectations across every dimension. They must work harder to meet customer expectations across every engagement factor, scoring 13% higher on average.

Why are expectations higher? While legacy brands have years of brand equity to rely on, new economy brands must prove their value much faster. They also must do so as advances in tech make expectations for user experience and personalisation higher and higher.

But three big needs matter the most. While expectations are higher for new economy brands and every touchpoint matters more, there are three big needs new economy fi rms must satisfy:

  1. a sense of trust
  2. an easy customer experience, and
  3. the presence of a brand icon.

Key takeaways from the study

1. The balance between brand and performance must be fluid

  • There is no golden ratio.
  • The balance evolves but will increasingly skew towards brand as the market matures.

2. Brand media drives reach and can boost primary performance channels

  • Performance channels do not scale as well as broadcast.
  • Which become more efficient by achieving reach at scale, creating a halo effect that will help boost total performance.

3. Trust is key to driving connection amid rising expectations

  • Consumers have higher expectations for new economy brands.
  • There are greater hurdles to trust given the rise in expectations.

4. Outperform the competition through customer experience and brand icons

  • The presence of brand icons and superior customer experience contribute to a defensible brand moat to combat competitors.

Read more from Atticus Journal Volume 27

Patrick Link, Brad Backenstose and Dennis Potgraven

Wavemaker

published on

28 December 2022

Category

Commerce The Atticus Journal

Related Topics

Consumer behaviour Ecommerce

More in Commerce

Pie chart made of colourful building blocks and a small shopping cart on pink background

Creativity + data propel end to end commerce

We now have the data to understand precisely where and how people engage in commerce, says Beth Ann Kaminkow, Global CEO of WPP’s VMLY&R Commerce. But let’s not underestimate the creativity required to design a compelling customer experience (CX) that converts – regardless of channel

Blue background with retail and commerce graphics

Commerce: innovation and inspiration

Commerce has entered a new phase. Brands are harnessing creativity, putting the customer experience front and centre, tackling carbon generation and employing AI technologies.

Illustration of people in a circle with a football, games controller and musical notes

How to S.C.O.R.E

VMLY&R COMMERCE’s Jon Goynshor explains S.C.O.R.E. – a framework for maximising brand collaborations in the new world of entertainment commerce