Paul McIntyre:
Welcome to Mi3’s marketing series, Future Fourcast. I’m Paul McIntyre, executive editor of Mi3, and this is the fourth and final episode in our series, which dives into some of the key themes marketers and the broader industry will need to keep a watch on for 2021. Thanks to Nine for partnering on the series. Today we’re talking about what everyone’s been talking about for the last 18 months: long-term brand building versus customer acquisition and short-term sales driving strategies. This conversation will give us a sense of what brands are  planning to do for 2021. So with us today is the global CMO of Australian furniture and lifestyle upstart, Peter Sloterdyk. Peter has the massive task of building the Koala brand in Australia and taking it global at the same time. We also have Leif Stromnes, managing director of strategy and innovation at DDB, who’s like a first cousin to Les Binet at Adam and Eve at DDB London.

Les of course, along with Peter Field, are the duo who reignited this whole brand and performance debate globally. Also with us is Liana Dubois, director of Powered at Nine, who has some really interesting results from effectiveness studies and a possible shift in brand behavior heading into 2021. We’ll try and get a sense of all that. So welcome to you all. To Peter first. Business has been booming for Koala in the past six months as part of a broader E-commerce surge. We’ve seen it right across a whole bunch of different categories. But you have some new challenges, right? There’s a bunch of shoppers who are not digital natives buying online for the first time. What has that meant for your brand strategy in finding a new type of customer? Have you had to end up completely panning your earlier strategies?

Peter Sloterdyk:
Thank you for having me. You know, it’s not that we’ve had to pan our previous strategies, but instead that we are adding to the pot. There’s a whole new group of consumers that weren’t comfortable with E-commerce previous prior to COVID and are now open and willing to try something like an E-commerce purchase for furniture, for clothing, for a lot of other things that they wouldn’t have in the past. So for us, it’s really influenced a lot of our channel strategies, a number of our messaging strategies in terms of how we reach them with what messages and when and where. But it certainly has been about building on top of our existing strategy as opposed to getting rid of what we’ve been doing thus far.

Paul McIntyre:
What has changed in your channel mix, Peter? Because before you joined Koala, I think pretty much it was 100 per cent digital. You’ve broadened that a bit. And you’ve really taken on this whole brand task of building Koala and raising awareness for these new customers trying to find something online, which may not have been there before.

Peter Sloterdyk:

Absolutely. So from a channel perspective, we’re just reaching more widely.  One of my intentions from the beginning of joining Koala had been to broaden our channel strategy. You’re right that we had been almost 100 per cent digital, kind of opportunistic when it came to TV and out of home. But instead of being opportunistic, now we’re being a bit more planned about our channel mix and making sure that we’re reaching customers wherever they are, not just on digital but throughout the entire spectrum, whether that’s out of home, television, radio, and even more on top of that, like experiential.

Paul McIntyre:
So you have had a big task ahead of you to build brand and awareness. How’s it tracking?

Peter Sloterdyk:
It has been a hectic six months. It’s given us a chance to really focus on the things that matter from a brand perspective, double down on our values, what we believe in, really uplifting our message, which is around supporting local, supporting our communities, making sure that we’re doing what’s right by our Australian roots. And so from that perspective, from a brand awareness point of view, we’ve had a chance to lean into those messages, which has helped from an awareness point of view. What’s upcoming in the next couple of months is a lot of brand work in addition to our tactical marketing to make sure that we’re driving the awareness message. But it isn’t just Koala the brand, it’s what we believe in, who we are, what we stand for, and how we intend to connect with the community on the long term as opposed to a short-term experience.

Paul McIntyre:
Well, I want to get back to that tactical stuff and how you’re balancing that. But Leif, we’ll get to a new brand campaign that DDB has just launched for Coles.

Leif Stromnes:
It sounds like Peter is advertising Coles there, which I’m pleased about.

Paul McIntyre:
Yes. Well, you’ve launched it. Speaking of Coles, you’ve launched a new campaign. Interestingly, it’s around value the Australian way. But I think you think there’s been an overcorrection this year to value and even brands racing to empathy. What do you mean by that, Leif?

Leif Stromnes:
We did some research during COVID on what was resonating. And brands wanted to do the right thing by participating with consumers around this COVID messaging. But just offering empathy was not enough. The brands that did something helpful like Coles community hour and then advertised that were the ones that were really rewarded.

So our clients were really smart. McDonald’s offered free McCafé for frontline workers and advertised that as an idea. Coles had the community hour for the vulnerable and the elderly, advertised that. And those brands have been really rewarded during COVID. So I think there was an over-correction to “we’re with you” type messages. Those were blunt and not well received. I think, ironically, that brands that kept their same, normal advertising beat , if it was tone-appropriate, did fine. And brands that did something genuinely helpful and spoke about that were rewarded.

Paul McIntyre:
So empathy was say and do, just don’t say.

Leif Stromnes:
Absolutely. I think genuine helpfulness through actions that hopefully cost you something as a company –  you know Coles community hour cost them money – was the right thing to do. They became an essential service and are still being held to that higher standard by customers in Australia as a result. And that’s a good thing for them.

Paul McIntyre:
We should say that McDonald’s and Coles are part of the DDB Group’s client base. But the broader conversation we alluded to earlier about long term and short term – you still argue, as many do, that investing in brand through downturns and crises like the one we’re still in pays off. It’s pretty short at the moment. But do you have any proof that this is working for brands and COVID if they keep investing in that long-term play? Case studies?

Leif Stromnes:
I do. And I have some very big case studies. I have lots of case studies. I think there’s no doubt we are heading into tough financial times. Value for money is really important. There’s no doubt of that. And we are heading into a depression, not just a recession. Of that we are 100 per cent sure. However, I go back to my point around brands. We tend to work with the number ones in their categories. We work with some of the biggest brands in Australia, the Westpacs of the world, the Coles, the McDonald’s, et cetera. These brands have a responsibility. That is as bluntly as I can put it. And people are holding them to a higher standard. So Coles has a responsibility to help rebuild Australia. If they just pivot to value for money they are not fulfilling their responsibility.

They have got to offer value for money, as has McDonald’s, but they have got to help rebuild this country. And I think what people want to hear, why I’m so pleased by what Mr Koala was saying,  it that it’s about themes that Australians want. You know, positivity, getting back to basics. Our recently launched work for Coles is all about the little things like camping and just getting back to the things you want to do. That is super-important. So I think brands like Coles and McDonald’s have a responsibility beyond value for money, which is absolutely important. But we have a responsibility to help people feel like there is something positive to look forward to. And let me tell you, brands don’t play a big role in people’s lives, but they are a marker for normality. So if brands stop doing the things they are good at, like delivering burgers or  food, and stop talking positively, people feel depressed. Brands have a big role to play there. Value for money is very important, but the brands that I work with have got to play a bigger role. That’s about the values of Australia coming to the fore, and we have to advertise that.

Paul McIntyre:
Well, some great points there, Leif. Liana, you have a premise too that the market generally has convinced itself that tactical-style communication is the only thing that can deliver customer acquisition and immediate sales. But it’s wrong. Please explain.

Liana Dubois:
It’s a great question. We see it on every street corner and I know Peter experiences it day in and day out, and Leif has already talked about a few examples. But every single day we see proof that brand and performance are intertwined. It’s not black and white. There are shades of grey in everything. In fact, brand actually fuels performance and propels performance in lots of ways. I think there’s this really interesting human characteristic. Human beings tend to binarise things. If something is not black, it’s white. If something’s wet, it’s not dry. If something drives brand, it can’t drive performance. And that just fundamentally is not true.

If you look at it from a channel perspective, television, for example, is always held up as the poster child, as it should be, for driving brand and awareness. But we work with advertisers every day, every hour, that use television for direct response and driving performance-based metrics. Or to flip that on its head, think about digital media. Digital media is often held up as the poster child for performance. And yet you can build brand with some digital media depending on the way you use it and the message that you put in it. Like broadcast video on demand, for example. Really effective at building brand.

Paul McIntyre:
Liana, give us some examples of where it’s worked and even where it hasn’t. I’d love you to name names.

Liana Dubois:
I’m happy to share both the good and the not so good. It’s important on the not so good that we do openly talk about it. I think there’s a narrative around the idea of test and learn and yet failure isn’t often publicly spoken about. It’s important that we do, and I will get to that in a minute. But in terms of what works, a well-known case study for Nine for one of our huge partners is Hipages and The Block. Now Hipages, much like Koala, was a business that was built using solely and exclusively search and social, and built to be a very successful business in its own right. But their ambitions were capped. Their chief customer officer, Stu Tucker, formerly of the Commonwealth Bank, is obviously a huge believer in brand and the power of brand, not just in terms of its long-term saliency, but what it can do in the immediate term and in real time.

Stu knew that he needed to do some work on Hipages’ brand to bring it into household name status and make it known to the wider population. He had a hypothesis that if he did that brand work, it would propel his performance metrics even further. Cue The Block. So last year was their first outing on The Block. I think that across the market, and certainly Mi3 listeners, people are very aware of the headline results that partnership delivered. App downloads grew 23 per cent against target, jobs posted were up 30 per cent against target, and the dark horse and surprising thing that nobody saw coming was that tradies applying to be part of the platform grew by 144 per cent. What’s not so well known is the data that sits beneath those and why those results were achieved. That is simply because of all of the different levers that were pulled in their omni-channel amplification of that partnership.

So we ran a research study with Agile. Again, well known in terms of proving in particular television’s impact on real-time results. But in partnership with Hipages and Agile, we set about trying to prove what all of the different assets actually delivered in terms of their impact. So from the television commercial to the brand mentions in show, somebody just saying “Hipages”, to billboards.  “This program is proudly brought to you by.” To things like breaking gauges and the famous Hipages lever. We unpacked the real-time results that were driven by each of those individual assets in isolation. Unsurprisingly, or maybe surprisingly, the television commercial drives the greatest result. It made the most people in real time download the app or post a job. Perhaps surprisingly the Hipages lever, the famous bit that happens in the television show, actually in isolation drove the least results in the immediate term.

But when you put those two things together, and the lever happens, then the ad follows in the break prior, that ad is two point three times more powerful at driving a performance-based metric. So Hipages in some ways is very much the poster child for brand and performance in unison. And look, there are some benefits that a business like Hipages has because they have real-time data at their fingerprints, much like Mr Koala does. But to your earlier comment, there are some examples of it not going according to plan either.

Paul McIntyre:
And I want to get to that.  But Leif, we were talking about this earlier and you were saying you  still see the big narrative that comes out of television commercials and what you’re doing for Coles. You like to hear that stuff.

Leif Stromnes:
I love that, Liana. I’ve got some data from McDonald’s through our analytic partners. We do return-on-marketing investment modelling, a very similar experience. Can you believe it, the sixty-second brand ad that doesn’t talk about value for money or about a singular product, but just talks to the McDonald’s brand, is more effective at driving a short-term sales result than the value for money rational ad that talks to the cheeseburger for $1.99. An incredible result. But I’m not surprised because it’s a memory structure we’ve created over a long period of time. The brand pays back in the short term for McDonald’s and it certainly pays back on the long term as well. We have the data to prove that.

Paul McIntyre:
I’d love to follow that up, Leif. They’re calling you Mr Koala but I’ll call you Peter. Peter, what do you make of what we’ve just heard, particularly around some of the Hipages stuff and what Leif’s talking about, even with McDonald’s, the brand actually driving short term? Does that fit within how you’re approaching things or see things?

Peter Sloterdyk:

I definitely agree with both of them in terms of what you guys have shared and certainly the data behind it. We have similar stories internally at Koala that every time we have a brand moment, whether it’s through multi-channel or a single channel, it drives additional brand awareness. But it also drives additional short-term sales, like Leif’s example around McDonald’s. I think that really is true regardless of industry, regardless of what you're selling or what you’re  going after. The point is that consumers need to find something to connect with. And value for money or a great deal isn’t really tangible in the way that we expect a brand to be in terms of something you can connect with. So I get excited about the impact that brands can have on both short-term and long-term metrics, whether that's awareness or sales, no matter what your objective is. Almost any objective can be achieved through brand work when done well.

Paul McIntyre:
Are we going to see something from you, Mr Koala, on this, similar to what we may have seen from Hipages and some other projects? What have you got cooking?

Peter Sloterdyk:
Yes. You can expect that you will see a fair few brand assets from Koala coming in the next few months. We’ve got some really exciting work cooking inside Koala right now that we’re about two or three weeks away from sharing. Liana has been a great partner in a lot of the things we’ve been working on and I’m  excited to see it come to fruition. It's about reintroducing the Koala brand outside of exactly what we’re known for, which is a lot of fun, interesting kind of quick catchy ideas that have been great in the moment. But now we’re really focused on building that longer-term relationship with the brands, communicating our values, what we believe in. I’m excited to see the brand campaign come to life in the next couple of weeks.

Paul McIntyre:
Well, clearly you’re not going to tell us what it is yet, Peter. So Liana, very quickly, some of the work that hasn’t worked. One or two cases?

Liana Dubois:
I’ve removed the names of brands and platforms if you don’t mind. I’m pleading the fifth on that one. But I will share an FMCG partner of Nine’s, a partnership where the hero asset was one of our large-scale television formats. They amplified their idea across paid, owned and earned assets and across television, digital, in-store, on pack, out of home, all the places you would expect any successful campaign to be amplified. As part of their partnership with this particular television format, they took the intellectual property rights, which meant they could brand-up their FMCG packaging, so that in-store, that connection to the last three feet, you know, and the ownership of that big sponsorship property was alive and well at that moment of truth or that moment of purchase. We ran sort of simultaneously with this partner, as we do with a lot of partners, a brand health study. All of the metrics of a brand health study lifted. The brand awareness grew from 75 to 82 per cent, consideration lifted from 22  to 27 per cent. And that kind of core campaign messaging, the real point that they wanted to land, grew by 17 per cent.

But there was something amiss, so after the end of the sponsorship we did an econometric modelling study in partnership with the client, run by  John Fox, our director of effectiveness who is an econometrician by trade. John worked with our client to unpack sales data and understand what really happened on the ground and in-store. And what we found was that sales grew significantly, but not for the sponsoring client, for their competitor. And the hypothesis that we had given, all of the media metrics delivered, the ad delivered, all the brand health study metrics delivered, everything lifted. Everything should have pointed to an increase in sales for our sponsoring client.

The hypothesis we had was that the pack changes to that particular product, which operates in a very low-interest, almost like robotic-like purchase cycle for a consumer. The pack change was just too great to support consumer behaviour at shelf. And so at the moment of truth, the pack didn’t look like what Sally shopper normally would go for. So she went for the competitor’s instead. That is really unfortunate . . . misattribution is an unfortunate side effect sometimes of these things. I think what’s important to learn from that example is that every little detail counts, every little detail to that last moment of truth. The brand and performance  worked, it got shoppers there, and it just was misattributed right at that last moment.

Paul McIntyre:
Leif, have you had that?

Leif Stromnes:

One of the major problems in marketing is when you change a pack, you lose consumers. My instinct is don’t fiddle with the pack unless you really have to. I always think it should be called brand maintenance, not brand management. Maintain the brand and make it instantly recognisable, because that is a story I hear all the time when people change the packaging too much.

Paul McIntyre:
Now I want to quickly get to you and Peter, and then we’re going to wrap up. So this whole brand performance thing, long term, short term investing in brand, that whole scenario we know about, you’re talking to CEOs and clients about this. And I think you’re starting to get the sense that the CEOs of your client organisations are attempting to pull the levers on short term for the sake of it. Is that what’s going on? And what are you saying to them in response?

Leif Stromnes:
Well, they are and they are right. We have to pull value-for-money levers. As I said, we’re in a depression. We’re going into very straitened financial times. However, I go back with insights around what consumers are looking for. And they want brands that are going to help rebuild this country. Mr Koala is in a sweet spot because they want brands that are increasingly available in the digital channels. So I think Mr Koala has a wonderful business model. But brand values, sustainability and health, these are mega themes that have become macro themes that are not going away. And I’m sceptical. Not everything has changed because of COVID. We will shake hands again. We will kiss each other again, Paul, in time.

Paul McIntyre:
Can't wait.

Liana Dubois:
We can only hope.

Leif Stromnes:

Not everything has changed and the world is not forever changed, but some things have changed. I think the clever CEOs are that understanding rebuilding and values is very important for Australians right now. Brand has never been more important or more valuable for them. And the smart CEOs are going to lean into that, in addition to value for money. It’s not either or. It’s both.

Paul McIntyre:
Peter, to finish with you then. Clearly, you’ve got some clever co-founders who are getting that,  because they’re prepared to back some of the strategy you’re doing. But brand and 2021, the big focus. What’s the surprise or the delight or the big priority for you going into next year?

Peter Sloterdyk:
I think Leif is right in terms of when it comes to brand messaging, it has to be about how we are all investing in Australia. What does that look like? How are we doing it? Being really transparent and open about that. For Koala, we’re on this really fantastic growth trajectory, which we’re so grateful for. And we get to hire 120 new people just in Australia in FY 21. That’s a huge privilege, but it’s also a part of how we are giving back, right? There’s this beautiful cycle of being  uncomfortably benefited from COVID because there’s been an increase in E-commerce behaviour. Well, we’re paying that back by growing our Australian business, figuring out exactly how to lift up the Australian economy however we can.

And I think from that perspective, that’s stuff that has to come through the brand messaging in addition to what I call the transactional marketing. So what Leif is referring to as value for money from our perspective is, “Hey, here’s this product that we think is great for you.” And that transactional messaging is still relevant. It just needs to be complemented by the brand marketing. So as we get into 2021 and see through the rest of this year, I think the opportunity for us is to continue to figure out what that perfect mix is between transactional and brand messaging and ensuring that there’s always a perfect complement as much as we can do so.

Paul McIntyre:
Final question. What is your mix at the moment? I know I keep asking you that and you keep laughing at me, but I’ll ask again. So the performance brand mix for you at present.

Peter Sloterdyk:

The performance brand mix for us is about 50-50 at the moment. As we start to invest in the brand campaign, again, to what we were talking about before, we believe that there is a magical halo effect of brand marketing that is really driven home by performance marketing. So at the moment, because we are investing in the brand, we're seeing about a 50-50 split. The channel mix is a bit different. But between performance and brand, that is where we’re standing.

Paul McIntyre:
Thank you, Peter. That’s it for our final edition in the Fourcast 2021 series. We’ll circle around next year and see how it all pans out. Thank you to Peter, Leif and Liana for joining. And stay safe. Thank you all.