Why discounting is ruining brands, and what to do next

0:09Hello and welcome to The Walk Podcast. My name is David Tiltman and today we are talking about price promotions, why marketers are addicted to them and how to kick the habit. To help us, we are joined by two returning guests to the Walk pod, author, consultant and marketing professor Les Binette and Dom Boyd, who is chief strategy officer for global clients at Cantar. Now, this podcast builds on a presentation Les and Dom gave at the excellent IPA Effectiveness Conference held here in London in October. We've already released a podcast of highlights from that event, but this particular session was so rich, we thought it needed a full pod to deal with it.

0:52So, promotions. Well, they're a popular lever in a marketer's toolkit because they are easy to do and, at least on the surface, appear to be a sales driver. But they can be addictive, as Les and Dom reveal. They come with hidden dangers. We'll be discussing marketers' growing dependency on price promotions, some new research revealed at the conference that shows the scale of the problem, and, if this sounds a bit like you, some steps you can take to change course. But before we get into all of that, here's a word from our sponsors.

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2:01les don welcome to the walk podcast nice to be here great to be here so as i said in the intro this this comes from a uh a presentation the two of you gave at the ipa conference but before we get into the kind of detail and there is a lot of data and detail in that presentation i guess i want to start with the bigger picture and and really why the two of you felt it was the right time to talk about price promotions as a topic. Les, why don't you kick us off? Well, this has been a little bit of an obsession of mine for over 20 years, actually. I think price promotions can be, they can be a useful tool, but as we'll get into it in a bit, they can also be enormously damaging if they're overused.

2:49And I think they've done quite a lot of damage to the advertising industry by stealing budget basically so there were two reasons i kind of wanted to focus on that this year one is in a way this is a bit of a follow-up to our go big or go home thing yeah i was going to ask that because you've been on this mission about going big so so and that's that's been about budget yeah that's been yes exactly so well well scale more generally but budget obviously is crucial to scale so last year talked about the importance of budget and scale and thinking big rather than thinking small and one of the pushbacks I immediately got from that was of course well where's the money going to come from so that that led me to sort of start thinking about well where's the money gone you know advertising used to be much bigger and more profitable and more effective and budgets have been whittled away where did the money go And I think part of the answer, only part of the answer is price promotions.

3:49So that's, if you like, that's where this fits into the story I've been trying to tell. But also it's a particularly crucial time because inflation is now rising again. And when inflation is rising, it's particularly damaging for brands to start discounting because, of course, their costs are rising. So it seems to me that this is precisely the moment when firms will be under pressure to start doing lots of prize promotions when they shouldn't. So that's the other reason for doing it now. Don, where does Kantar come into this picture? Building on Les's points, we can sort of see an inflationary environment, certainly from a food and drink perspective.

4:32Food inflation is expected to go from about 1.5 % to 6.5 % next year, according to the Food and Drink Federation. also a great opportunity to work again with less i can't resist it i mean from a kantar perspective you know first promotions are absolutely an important part of a commercial brand playbook and balancing sales value and brand power with driving sales volume that helps people maximize operational efficiency and shift excess inventory but the challenge is that what we see time and time again there's a use too often there's a bit of a default for creating sales and uh that that But as we'll no doubt come on to talk about, that means that they're ultimately, they've become sort of like a class A drug where it's impossible not to do more and more.

5:11We also start to see they're often not evaluated very well. And we can talk a bit about that. And the challenge is to balance how you do that evaluation by evaluating business impact through econometric modelling, through pricing power, through price inelasticity modelling too. Those are all things we love doing at Kantar. And that just helps brands detox, basically. this sort of drug addiction analogy kind of runs through your presentation i guess we'll sort of come on to some of that why but you do sort of both feel that there's a kind of addiction at play here i mean i think i i use that phrase about you know promotions being like the crack cocaine of marketing i think was the phrase that i used back in 2021 when i i was talking about the state of the economy the thing is when you do a price promotion it gives you an immediate hit of volume So it makes all the sales figures look great briefly, but the high doesn't last.

6:06And then sales slump when you cut the promotion. So you end up actually with lower sales than you started with, at least in the immediate post-promotional period. And then that means you kind of, okay, we need another fix to, you know, get sales back up again. And then you gradually, you become addicted to it. You can't maintain your sales and your market share without being on promotion. And so things gradually slide. We'll get onto the reasons for that in a moment. But just coming back to the kind of scale point and, Les, your sort of question about where's the budget been going? Because there's a stat you used right at the beginning of your presentation where paid media advertising is roughly 17 % of overall marketing budget.

6:51but promotions as in presumably price promotions is 36 that's more than double what we're spending on advertising we're effectively spending on promotions and discounting so this is this is kind of like the dark matter of yes of marketing yeah you're right that's a very good analogy i'm going to steal that one so the reason it's dark matter is first of all when you're trying to account for the cost of a price promotion literally when you're doing your accounts it's always quite clear how you should represent it you know because the 20 % off is not exactly a a line item that you put into the marketing communications budget or anything so imagine you know you've got a 100 million pound brand just you know making this up you know revenue of 100 million and you you discount it by 20 then one way of thinking about that is that's like a 20 million pound expenditure but it's not usually represented like that in the marketing budget and and even if it is sort of put under you know what they call pfme spends in some companies it's put in the trade budget so people who work in advertising agencies and people on the marketing side of it don't always see this money don't always see this expenditure but it can be huge I learned this years ago working with some FMCG brands where they actually showed me this date.

8:20And I was going, you know, for some of these brands, the spend on price promotions was like 10 times what they were spending on communications. But it's all offered another part of the budget. Like you say, dark matter. You don't normally see these figures. And what I've seen over my 40 years in the business is spend on price promotions get bigger and bigger and bigger. And I think it, you know, there's obvious things that have stolen budget, like, you know, going into paid search and all this Martech stuff and performance marketing and so on. But I think actually the single biggest thing that's been sapping budget out of our industry is this shift towards discounting.

9:03interesting dom do you agree with that presumably yeah very much so and um i love you know i love the analogy of dark matter and the challenge is it's uh it is too often invisible because sometimes it's in other bits of the budget um in other bits of the business and as we'll come on to talk about it it's also invisible because the way it's evaluated is often fairly loose shall we say or poor or done not at all sometimes so and done badly when it is so that's another reason in that what people can see in terms of the effectiveness that it is having is often not the true impact that it's having and that's a separate issue and if i can sort of come back to that dark matter thing it also affects how you think about some performance marketing again you know i had a very vivid experience of this with an FMCG brand where they were doing mobile messaging, you know, sending less text to people with discounts, with a voucher code.

10:02And when we looked at it sort of, you know, in terms of the cost to reach a person with one of these things and, you know, how much they got back in terms of sales, it looked not very good, you know, because it's a costly way of reaching people but if you included the fact that they were giving them a voucher code which was a discount worth you know like a pound off you know the coughs went from 25p to reaching someone to one pound 25 so in other words it sort of increased five x and that was the dark matter as you say it wasn't being included in the cost of this thing and once you looked at it that way you went bloody hell you know this is the most loss-making thing i've ever seen stop doing it you know i know there's some new research you've you've done i want to tee that up in a moment but i think it's worth just running through the kind of eight reasons promotions are a really bad idea because i think i think uh yeah we've sort of touched on some of them recently and there's a particular slide i'm going to go through them and that maybe we do them quick fire it's like the countdown yeah you go through them yes so okay so i'll go one by one and fire them at you so dom i'll start with you number one is acquisition most deal buyers are not new customers that's important yes yeah look this is a the number one reason isn't it you want promotions to bring in new customers what we find is that absolutely that's not the case penetration is so important to drive and grow for brands but uh too many promotions don't drive enough of that number two loyalty deal buyers tend to be less loyal les explain this one yeah well um when you do recruit people on deal the sort of people they are you know these deal hunters they're extremely price sensitive and they're looking out for the next deals they're not going to stay with you they'll bugger off to your rival brand when they promote so actually you're recruiting the worst kind of customer number three sales volume long-term gains are rare and small dom this one's yours look you want any new business to to be a sustainable business and what we see is a lot of things that promotions do tend to basically be time shifted so they just bring forward purchases that would have happened anyway, but at a discounted price.

12:32They're a fantastic way of losing money. For revenue, long-term effects can be negative. Les? Well, as Dom said, if you're selling the same stuff, but at a lower price, then it reduces your revenue. So the effects on revenue tend to be either small or negative. Yeah, I think we've all seen that point where we go to the supermarket, see something we normally buy discounted and then buy three of them to stock up. Yeah, exactly. Okay, so numbers five and six I'm going to deal with together. So five is profit. Around two-thirds of price promos are unprofitable. I think that's a Nielsen stat. And pricing power, number six, which is frequent predictable discounts shift sales forward, reduce margins, and increase price sensitivity.

13:17Dom, talk about these two together. That's a big sentence. So look, clearly you don't want two-thirds of promotions to be unprofitable. And as McKinsey points out, a 1 % increase in sales value drives an 8 % increase in operating profit. That's three times more than the equivalent of sales volume, right? And Warren Buffett talks about pricing power being the single most important decision in evaluating business. And there's a really good reason for that. Your pricing power is your ability to sustain your pricing or to increase your pricing. So it flows straight through to the bottom line in that margin, in that income margin.

13:54And this is why promotions are so damaging, ultimately, because they erode your ability to command that margin and to sustain it and to build it over time. Seven is commoditization. So easily copied deals can fuel promotional wars, making the whole category more price driven. So this is a kind of knock on effect, I guess, Les. Yeah. So a price promotion is a really undistinctive thing. You know, anyone can do 20 % off. Anyone can do buy one, get one free. So when you start this stuff, it's very tempting for your competitors to just match you. And it becomes a sort of zero-sum game. So you get these sort of promotional wars.

14:35I mean, the ultimate is Black Friday, of course. You know, we see everybody discounting. And I suspect nearly everybody losing as a result. So when that happens, shoppers just kind of go, well, we know there will be deals. You know, with Black Friday, people go, well, you know, delay your purchases to Black Friday. Everything's going to be cheaper then. And so people stop paying attention to brands and what they stand for and start just paying attention to what the price is and the discount. and then the final one number eight margins we've kind of covered this anyway but dom any more to say on on this lower prices mean lower margins we did uh some analysis at kantar where we basically overlaid our brand kantar brand z database with other financials with company financials from the smp and what we what we find is the top 10 of brands have pricing power that's one and a half times higher than the bottom 10 of brands based on brand strength right so absolutely strong brands command stronger price in elasticity.

15:39It means they're less responsive to having to shift their pricing around. That delta increases to 1.78 times, so towards twice as much in inflationary periods, basically, and obviously coming into an inflationary period. So having that pricing power and its impact on net income margin is so important in 2027. Great. So you've teed everything up really nicely. We know this is a big issue. we know that there's a big problem here but what was interesting about this presentation was the new research you brought which was a sort of study of how marketers are using and evaluating price promotion so just talk a little bit about the study you set up and then we'll get into some of the results yeah well um as i say i've been you know obsessed with this problem for for at least 20 years because we've known for maybe 30 years that price promotions can be extraordinarily damaging and yet spending on price promotions keeps going up and up and up so there is this sort of conundrum we have this weight of evidence of why you should not be doing excessive discounting and you have this industry that's charging towards price promotions willy-nilly why why do they keep throwing money down the drain.

17:02So what we did was commissioned a survey of, was it 250? It's 250 marketers, 60 % marketeers, 40 % insight leaders. Yeah. And the idea was to just basically find out what they knew and understood about price promotions, how they evaluated them, why they did them and so forth. And it's focused on consumer goods. Yeah. And we should say that up front. Yeah. Because Is that this is obviously where this is felt most keenly? Yes, that is a very important qualification. So when you look at the sort of research and literature on price promotions, it's richest in consumer goods. It's the sort of easiest to measure.

17:43There's the wealth of data and research there. And probably it's fair to say that that's where it's most damaging, quite simply because of the cost structure of manufactured goods versus services, where with some services, the marginal cost of serving a customer is low or zero. So yeah, I would say that is one caveat about this research is while some of the lessons will carry over into services, it may be slightly different in some service industries. We'll come on to that, I think, at the end, how this applies across categories. But let's get into the actual sort of meat of the research. Dom, why don't you kick us off?

18:19What were the sort of core findings for you here? Look, I think the biggest finding for us is that brands really just have this big promotional blind spot. They're blind to the true effect promotions have on sales. They're blind to the damage promotions are doing to their price elasticity and their brand. And most importantly, they're blind to the impact both of these are having on revenue and profitability. The good news is that marketers do want to do fewer promotions. And an even better news is that there are some really simple, actionable steps as possible to take. to get clean off the dependency cycle and to do fewer promotions and to do better promotions.

18:57You use that phrase promotional blind spot, and that comes through in the presentation. And that for you is what? This sort of inability to see the impact? Is it a measurement thing? Is it a mental model thing? Is it a responsibility thing? What exactly is a blind spot? Let me throw some numbers at you. Come on, it's a walk podcast. Oh, yeah, we love numbers. Love numbers. Right. So 82 % of this particular sample, and it was quite a senior audience sample, three quarters of more C-suite, 82 % judged for their own promotion, the last one they did, as profitable. But when you extend that timeframe over 12 months and you kind of go, OK, what proportion of your promotions over the last 12 months have been profitable?

19:42Three quarters can't actually say. And a lot of that is down to the evaluation time window because people are evaluating promotions on a very short time window of 81 % evaluate them in less than three months. It's also because over 60 % of that evaluation is based on personal judgment or partial analysis rather than formal P &L analysis. So there's every incentive to just keep doing them. And people do. Three quarters do continue to repeat promotions even when the profitability isn't assessed. So it's basically a toxic combination of factors that create sort of an effectiveness and profitability blind spot.

20:21So the measurement window is important here then. We're not sort of looking at these like we would measure in a sophisticated way paid media where you're trying to look at the impact over months, not just days or weeks. It's direct response, isn't it? It's evaluated almost immediately. you know running an ad and then sort of in the same month saying how many what's the sales uplift and they're saying that that's the effectiveness of the advertising it's got all the same limitations as that there was one stat in there that you described it as a high knowledge elite who seemed to have more knowledge just explain what that what that showed i found this quite interesting you could sort of divide the sample into about three quarters who really don't know very much about what's going on they sort of they see immediate sales effects they have a sort of overall impression that it's doing well but it's not rigorously evaluated over a sort of long time frame and those people interestingly tend to be people who have less formal marketing training As we know, many or most marketers actually have no qualification in the subject.

21:32They are unfamiliar with the research literature. They don't do formal evaluation of price promotions. And you ask them, well, how often are price promotions profitable? Or they don't know. How often are your price promotions profitable? Don't know. But then there's this little elite group, about 25%. And these people, you know, they've got proper formal marketing training. they have read some of the literature on the subject they have a rigorous evaluation program in place probably using econometrics those people are a bit more savvy so interesting if you ask them what percentage of price promotions in your industry are profitable they'll say about a third which is exactly what the research literature tells you what percentage of your price promotions are profitable they say about half so they think that they're beating the market

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23:08Did anything in the research surprise you? Is there anything in there which, either positively or negatively? There was one thing straight away, actually because one of the hypotheses that we had was that marketers had no power to cut promotions that that you know it was coming from the cfo it's coming from the sales team it was coming from retailers and that they were kind of being bullied into it but this is not what marketers say they say they're the most influential voice in determining uh the level of price promotion that surprised me i mean it could be that they that they have a an inflated view of their own importance but they do claim to be the most influential group and also they said that if they had the data and the evidence i think it was 91 said it would be easy to shift money from price promotions into advertising which of course you know made me salivate so it's not the problem doesn't seem to be lack of power it's lack of knowledge and information and evidence because 68 % say they want to run fewer promotions.

24:15So we've got this sort of, on the surface, quite strange scenario where the majority, like more than two thirds, say they want to change. Most of them say they've got the power to change, but something's holding them back. Yeah, and I think that something is overwhelmingly, most of them say they have no idea how profitable or unprofitable these promotions are. So I think that's potentially the unlock if there could be better evaluation of price promotions then they could trim out the wasteful ones and reallocate that budget and this seems to me possibly what the elite group are doing if if it's true that they are getting a better profit rate from their promotions i suspect what they're doing is they're using their knowledge and their evaluation to plan promotions better yeah i mean the other thing that surprised me david like is you know clearly uh one of the big challenges in running a business is making sure you're keeping the lights on right so if you've got a factory you need to make sure that it's uh being used and that your production line and your workers are being used you know there's operational efficiency there so there's every reason to think that promotions are being used to drive sales and sales volume and that is absolutely a reason that comes through in the research that people do use it.

25:36But I was personally surprised, happily surprised that profit and revenue actually came out as the number one reason that people do promotions, which is twice as strong as factors like sales volume and clearing stock and retailer relationships. And I was also really struck by just how poor businesses are helping themselves understand what does actually drive that profit and revenue as well. So that for me was a sort of a fundamental thing in that if people have said profit and revenue isn't important, actually, it's all about sales voting or it's all about reseller relationships, then that takes the outcome into a slightly different place.

26:09But if actually profitability and revenue is actually a fundamental lever of what was important as part of the promotional equation, then it's really important to make sure you're evaluating that in the right way. There was one number in there that sort of stood out to me when you asked about reasons for repeating promotions, even when they're negative or unassessed. And the top response in this by a reasonable margin was consumer expectations. So there's a sort of thing here where maybe marketers are getting themselves in a position where the consumers come to expect that this thing will be on offer, which is a particular danger of this kind of activity.

26:53Super dangerous. The research highlights push factors and pull factors. So the push factors are businesses chasing that short-term hit of sales targets. Companies have always wanted to drive sales, and they've always had short-term sales targets, and we see that as the second highest ranking factor. So that's not going to change. If anything, it's becoming stronger, though. And then there are sort of pull factors. So things like defending market share, competitive promotions, and the number one reason, consumer pricing expectations. And those are, I would argue, all defensive factors. I think the challenge here is that by continually doing promotions, brands are lowering the price drawbridge, which is inviting increased competition based on price instead of building a wider defensible moat based more on value.

27:37And the issue is that, you know, our Kantar data shows that brands that discount more heavily are 1.2 times more price elastic than brands that don't. So in effect, you've trained consumers to expect lower prices. So guess what? They stop buying you when you're not at that price point. And you've commoditized your brand, essentially, and made it more like a product. And that surely is no smart way to win. If your normal price is, you know, four pounds, but you regularly sell the thing for a pound, you just teach people the real price is a pound. Yeah. Cialdini, in his book Influence, has a little story about Procter & Gamble, I think it was, going through a phase where they tried to cut out doing price promotions and in particular sort of discount vouchers and there was a huge consumer backlash people had come to expect these offers and when they stopped appearing they got very angry about it and i think he made the point that more people got angry than actually redeemed the vouchers so that that kind of people people wanted the offers to be there even if they weren't weren't taking advantage of matter of principle you know we want our and monday madness deals or whatever they are so i do wonder if there might be something else there that you know this thing about consumer expectations that if you suddenly pull all that stuff away particularly if it's sort of part of your brand somehow because because we talk a lot about the importance of pricing power and for maintaining premium pricing but there are brands but the other end of the market whose sort of brand shtick is you know being competitive on price you know people like Ryanair or Aldi and so I think we we should probably proceed with caution there you know particularly if you're a brand that is a kind of budget brand You might want to proceed with caution, as I say.

29:36Just removing all discounting, all price promotions might cause problems. You get into this, but where is it? Is it better to discount or have everyday low prices? Well, I think that Procter & Gamble story, as Cialdini tells it, was a shift from price promotions to everyday low prices. Supposedly, consumers didn't like it. It's a bit of a nanny. I guess that brings us on to the final section, which is we've talked about uh being an addiction so let's talk about how you detox how you how you wean yourself off the habit because you know we have set up that this is in general it's part of the mix but maybe we're leaning far too hard into it we're talking about the issues of measurement we're talking uh about this desire to change but there being a gap between as so often is in marketing a gap between what marketers think they should be doing and what they're actually doing so the two of you sort of presented a few ways to get over this to start to be able to take action so let's go through uh some of those um don why don't you kick us off with a few of the recommendations you made in the in the presentation yeah look i think in simple terms you know the challenge we're outlining is that too often the sort of a dependency on promotion leaves brands trapped in a bit of a vicious cycle of over-investing in promotions, under-investing in brands.

30:59So in broad terms, there are some simple principles that can help address that. And then we'll get onto some practical things you can do. So doubling down on brand investment, obviously Kantar Brand Z data shows that strong brands drive far superior shareholder growth and it reduces price sensitivity. So absolutely continue to maintain or ideally increase your overall brand investment is one simple principle. The next one is around just creating a value map to understand your pricing power and whether it's in sync with consumer expectations of your perceived price. So that just basically tells you which brands are worth more in the minds of consumers than they are currently charging and which ones are overpriced and therefore vulnerable to having to discount and prop up sales.

31:40So make sure you know where you sit on that axis. We've got a lovely little grid that we can apply. It helps you understand your position relative to category and to competitors too. Then the next one up is modeling. So this is going beyond what we include in our tracking, which is pricing power. This gets into analytic modeling of the impact of your price elasticity on commercial growth. And that's something that we love doing. And we've got some fantastic case studies of how you can understand the impact of your price elasticity and changes in your pricing power on things like net income margin and net revenue.

32:13And that's obviously very powerful in making commercial cases. And then the final broad principle, actually, we often overlooked is just making sure you're building perceived difference when you are applying your brand and building it. Making sure you're creating that difference, not just salience, because our evidence shows that you can't just build price power using the same levers you use to build penetration. So salience, super critical for driving volume, but six times less important for driving price power, whereas perceived difference more than doubles in being important for driving price power.

32:45So that means you've got to maximize your differentiation levers. You've got to add value for innovation and emotional creativity and certain kinds of media that shape the category and build trust and quality perceptions. and that altogether that kind of helps you create a force field around your brand that reduces your dependency basically and that's a if for want of a better term a four p's thing that's not just an advertising job absolutely it's a four it's a four p thing so yes making sure that you've you know you haven't become so dependent on promotions that you've left yourself no budget for doing things like r &d uh and obviously brand advertising but you know you've got to use all your keys and all your levers for driving your meaningful difference as well as you know maintaining your your salience but don't don't think it's you can do the same thing in the same way to build your price power you can't les when you include in the sort of concluding slides of the presentation some scenarios when it might make sense to keep promotions we've talked about how bad they are i guess or how dangerous they can be when might you keep them probably the best use of price promotions is if they are genuinely recruiting new customers.

34:00Now, as I say, most people who buy on promotions aren't new to the brand. But if you can find a way of targeting your price promotions so that they are targeted at trialists, whatever, then that tends to be more effective. So, for example, we talked earlier about it may be different for services. If you've got like a subscription service, then you may be able to actually identify these people have never been a customer. They're genuinely new to the brand. And then you might give them a deal which would be not available to existing customers. This is the kind of thing that, you know, for example, mobile phone companies do.

34:41You know, it's on special rate for a new customer that's not available to existing customers. It does tend to piss your existing customers off. So you have to be quite kind of segmented pricing. So that's one area where price variations might make a difference, where you give some discount as a sort of joining incentive. Another is when on the cost side of the business, either the cost of servicing an existing customer is very low or it's a sort of perishable thing. One example would be food that is reaching the end of its shelf life. you might discount it just to clear it yeah so you know selling a sandwich for example it's not going to be stockpiled by the customer you're not going to make any money from it if you don't sell it or an airline seat you know the plane is about to leave and it then makes sense for you to discount to fill that seat is there a role for this promotional things with new brands and or new variants things where you you haven't got that sort of already that customer base built in Exactly.

35:48So given what we just said, promotions are most likely to be most damaging for big brands with high penetration and least damaging for new brands with low penetration. Great. I think that's a really important message. You included a Volkswagen example in the presentation. And Les, I think this is something you've worked on in the past. Without going into the depths of the case study, what could marketers take from that? What did it show? Why did you think it was such a good example? Well, it was a bit of a career highlight for me in that what they were doing in the sort of early 90s, they were trying to shore up their position because they were struggling with sort of four-court deals.

36:34So you'd go to buy a Volkswagen and then they'd give you a generous discount in the showroom. And what we realised was this was mostly giving discounts to people who would have bought Volkswagen anyway. Nobody outside the showroom even knew these discounts were available, so they couldn't be drawing people in. It was classic bottom-of-the-funnel conversion stuff. So they moved the budget that was available as a discretionary thing for dealers to give discounts and put it into advertising, because they had a very low share of voice at that point. so they literally doubled the budget from 16 million to 32 million wow this is in the days when we were on commission and it just everything yeah caught fire you know fast this growth in vw's uk history so it's an example of going back to the point you made right at the start where if you thought about promotional investment and advertising investment as a big pot rather than two siloed things then actually you could do more interesting things with it but to get there you clearly need to be able to measure and uh measure across the yeah and and if you think of the size of that part you know in principle since promotional spending is about twice as big as paid media advertising you know you could you could easily double the size of the advertising industry this uh i just want to sort of finish with a few few final sort of thoughts takeaways don what did you take from this research overall what's what's your sort of message to marketers out there look The first one is that too many brands have a blind spot when it comes to evaluating promotional profitability.

38:10And that does leave you vulnerable. But there are some simple steps you can take to detox. And a really important part of that is just being selective. Using promotion selectively, not reflexively was something that we talked about. So as Les has highlighted, it's about recruiting genuinely new and incremental buyers. also things like expanding consumption and new occasions um supporting npd and unlocking new channel formats and pack formats and or reinforcing your meaningful difference if you're a value proposition in the marketplace a bit like ryanair or aldian oldian little but i'd say the simple thing is you know be aware of your blind spot and take action against it this is just too important not to do and les i'm gonna ask you for sort of sort of final thoughts but uh i guess you know we can't have you on without uh somehow bringing it back to long and short because you know you're obviously famous for this sort of sick well well many things but famous in part for this uh 60 40 you know budget split that's that's that you developed with the opa with with beatafield many years ago we talked about this spend being kind of dark matter how does it come into play when you're thinking about things like shorts and long 60 40 random performance all of this kind of stuff should this be part of the conversation and if so how should we think of it it is a long and short problem it's the same trade-off between short and long uh in another form you know price promotions look great in terms of immediate volume and they look lousy in terms of long-term profit.

39:47So it is another version of the long and short dilemma. Promotions don't belong in that 60-40 split. They weren't accounted for when we did that calculation, but it's a similar problem. I think you nailed it actually just now when you said about thinking about price promotions, all promotions, because we haven't really talked about consumer promotions, but promotions and advertising and media all in the same you know pot and and this is what i think most people don't do i think price versions tends to go off on a somewhat somewhere off in the trade spend off to the side and and it's seen as a different problem i think when people are budgeting and planning they need to be looking at promotions and everyday prices and communications full four p's marketing all together on a right-for-right basis and they need to be evaluating all of these things on a common basis in terms of you know actual profit over the short medium and long term can i just add another thing of course please do this is this is homework for you david okay great i needed something to do so one of the things that we said in the presentation was the importance of training and knowledge for people who are getting it right are the ones who've got proper formal marketing training and have a knowledge of the research literature there is a rich body of research literature nielsen have measured the effects of 300 million uh different price promotions and concluded that two-thirds of the month were unprofitable and most people don't know this stuff so at some point during this research process i went on to walk to see what you have about price promotions because you have those wonderful what we know about you don't have one on price promotions oh no right okay okay there is the challenge so yeah talk about dark matter yes okay well i'm going to get onto the team straight away and uh and we will get one set up but uh that's a fantastic place to finish so les dom thank you so much for your time today it was really really interesting thank you thanks david thank you to les and dom and to the ipa for their support there is despite what les says much much more on promotions and brand building and pricing effects on walk so if you are a subscriber get stuck in and keep an eye out for that what we know about that uh les has challenged us to produce and if you're not a subscriber then well what are you waiting for if you like what you've heard please do follow us on your podcasting platform of choice and if you really liked it please do leave us a review.

42:30Until next time, thanks for listening.