Mark Ritson: 10 lessons all marketers should take from Direct Line’s brand strategy

Last week was a busy one for marketers. In addition to the Festival of Marketing, the IPA was running Effectiveness Week, the pinnacle of which is the Effectiveness Awards.

Congratulations is due to all the winners, especially Audi and BBH for taking home the grand prix, but it was the Direct Line Group (which includes the Churchill, Privilege, Green Flag and Direct Line brands) and its gold for ‘best new learning’ that struck me as the most fascinating win of the night.

Reading its submission to the IPA I kept nodding and then nodding more. I certainly appreciated what Direct Line had achieved with its marketing and the way it measured success, but the lessons I took from the business’s journey are useful for all marketers. So here they are – 10 in total.

1. Price premium is often overlooked when it comes to brand building

Most marketers know that brand building delivers manifest rewards. You get lower acquisition costs, familiarity, more loyalty and so on. But in this commoditised age I think we are forgetting that perhaps the biggest and best advantage of brand equity is still that it lowers price sensitivity.

Provided a good marketer is running the brand and holds the line on price, there are significant profit advantages to be had from investing in brand and then reaping the margin-related outcomes that result.

That conclusion usually suggests strong brands deliver very large price premiums for consumers, cue a series of pictures of Chanel handbags and Rolls Royce grills. But it’s clear from DLG’s analysis that it’s more a case of slightly stronger brands delivering relatively small premiums for lots of consumers.

The “small budge” that Churchill’s brand equity gave many customers looking for auto insurance only delivered a price premium in the £10 to £20 range, but measured across tens of thousands of customers, this marginal superiority delivered spectacular profits.

2. Brand image and differentiation still matter

There is a worrying (and growing) trend to favour distinctiveness over differentiation. Clearly the advances in creating and reinforcing distinctive assets that make a brand “look like itself” have proven important and effective. But there is a current fashion among brand managers and account planners to focus on distinctiveness above all else and conclude that differentiation is an ancient myth.

Well, it is a myth if you use an old-fashioned, undergraduate definition of differentiation consisting three parts unique selling proposition and one part love marks. The more complex and realistic view of brand image and the way it can differentiate a brand versus the competition is that a few non-unique but important associations can be claimed by a brand, combined in a gestalt offer, and used to stand out and pull in customers.

That is clear from the DLG case and the company’s use of factor analysis and econometrics to show very clearly the empirical connection between brand associations like “helpful”, “reassuring”, “leader” and “proactive” and the link with driving consideration and then sales.

Clearly you need distinctiveness. Equally clearly you need differentiation too. And there is no reason one needs to come at the cost of the other.

READ MORE: How brands are creating a culture of marketing effectiveness

3. Digital is overrated

Despite marketers’ ongoing love affair with the new and shiny tools of digital and the ever upward snaking line that represents overall marketing spend on digital display and digital video in this country, it is abundantly clear that much of that spend is mistaken.

That is not to say that all digital is pointless or that it should be excised completely from the mix, just that most marketers have been bamboozled by YouTube and Facebook into spending too much with them.

Creativity still counts, probably more than media in most cases.

Between 2013 and 2017, DLG substantially reduced its investment in digital display and programmatic online video. The company did this not because of some burning hatred for digital but because it has the kind of advanced analytics and independent thinking that is sorely lacking from most marketing teams.

Crucially it also has a longer-term horizon upon which it reviews the value of various media; seen from this perspective digital loses out.

“We call ourselves digital conservatives but we are not anti-digital,” DLG concludes in its submission to the IPA. “We could find compelling evidence for both the long-term and short-term effectiveness of media lines such as TV and radio. By contrast, our research did not support continued investment in a number of programmatic digital media lines even on a short-term basis”.

Ouch.

4. TV is...


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