The best-selling pizza in Italy, by a long way, is a margherita. Yep, that’s right, the undisputed experts in pizza choose, most of the time, a simple option. Just tomato sauce and cheese.
In marketing, commentary on the funnel has often gone the other way, with experts from BCG to Google saying there are many messy but essential components. Even though it’s the last thing busy marketers want to hear, the message is that reaching people with the right message at the right time is a complex business.
It’s good news, then, that there’s a thread through recent writings by undisputed experts on effectiveness that shows there’s an opportunity to simplify. We can boil the funnel down to two simple places where potential customers can be on their purchase journey: either they’re in-market now, or they’re not but will be in future.
Italian pizza chefs take pride in choosing the best examples of the two simple ingredients in a margherita and combining them well. Having the ‘perfect’ version is what sets the best pizzerias apart.
And doing two things well matters to success in marketing too.
Working with this new, simplified funnel ensures you have a good strategy for in-market customers, another one for those who aren’t ready to buy yet, and a brilliant way to combine the two.
‘Ready to buy’ vs ‘not yet’
It used to be that you couldn’t easily tell which potential customers were in market or not, let alone target them with different communications. So, even though this distinction has always mattered, and marketing effectiveness experts like Les Binet and Peter Field have repeatedly said so, it got left out of the standard funnel.
The result is that marketers haven’t always directed details on price, product, and reasons to buy solely to people who are ready to purchase. And we haven’t only sent memorable, emotional, familiarity-driving stories to those who aren’t yet in the zone for the detail. Instead, we’ve noodled around with much weaker, intangible distinctions in potential customers’ state of mind.
If only 10% of people are shopping, spending 70% of your budget on performance is not just unsustainable, it limits your growth.
For example, we’ve supposed there’s a difference between being a brand that people can name without being reminded and a brand that people will consider when ready to buy. Even though these states are practically identical for people who aren’t rationally analysing the category, we’ve sweated over separate strategies for them.
But now, things have changed. People who are in market leave snail trails all over the internet, enabling us to see precisely who is in and out of market at any given point. And the modern media stack allows us to target ads accordingly.
The diagram above is a radically simplified funnel that focuses on in- versus out-of-market, inspired by work from Tom Wallis, chief customer officer at Compare the Market. In it, the big orange circle represents people who are not in market now but will be in future, and the green one is people who are ready to buy.
As a marketer, you want the people in the orange to be aware of you, familiar with you and positively inclined towards you. That way, when their world changes and they suddenly move into the green, you can convert them into a customer with something as basic as a bit of text on a search page or a one-second exposure to an image on a Meta platform.
How the simplification helps
When you quantify the simplified funnel, you find that most people are out of market at any given point in time. In B2B, which typically has long purchase cycles, a full 95% are not in market each quarter, and something similar is true in B2C unless you sell something people buy every day.
This leads to a simple but powerful guide for budget allocation. Performance marketing is brilliant for converting active shoppers into customers. But if only 10% of people are shopping, spending 70% of your budget on performance is not just unsustainable, it limits your growth.
Also important is what’s not in the simplified funnel. By focusing on just two states, it unmuddles the mid-funnel, something that creative strategist Tom Roach has argued is long overdue.
His funnel, pictured above, uses in- versus out-of-market as the main criteria for classifying potential customers. And, like others in the ‘Margherita Funnel’ family, it drops what used to live in the middle of the purchase journey: consideration.
Roach argues that some marketers assume they need to drive consideration when, in fact, they don’t. The mistake comes from believing customers make purchase decisions rationally, when in many cases the drivers are really emotion and mental shortcuts.
There’s a related problem with data on consideration: out-of-market consumers don’t know what they’ll do when they’re in market later on. They can’t predict what they’ll buy, or which product and brand features will count. In surveys, they agree that lots of rational things matter when, in fact, they don’t.
These are the issues that explain Roach’s observation that consideration-focused ads are often compromises – secondary messages that are not important enough for the awareness campaign, or product features that aren’t good enough at selling to get past performance marketers’ test-and-learn.
The worst-case scenario is mid-funnel ads bought because the marketing team isn’t brave enough to target familiarity amongst out-of-market customers, but they know spending every penny on performance doesn’t drive long-term growth.
Mid-funnel success: connecting brand with performance
Perhaps the most developed version of the Margherita Funnel is the figure below, which was developed by Warc, Analytic Partners and co-authors in a recent report called ‘The Multiplier Effect’.
The report is named after the benefit that brand advertising aimed at people who are out of market bestows on performance marketing aimed at the same people when they are ready to buy.
Using MMM findings from a large set of reputable studies by Analytic Partners, the report found that this uplift isn’t just a small addition. It’s a reliable way to get 25% to 100% more revenue from the same spend, with the median ROI increase coming in at a stonking 90%.
Even more important, and perhaps the biggest contribution of the report, is what happens when the brand and performance strategies are integrated – when the creative uses a common idea, the teams sit together and all executions use distinctive brand assets.
In a large sample of businesses, nearly all that outperform their competitors take these steps. A full 90% of those beating the competition describe their brand and performance strategy as ‘integrated’.
Don’t add pineapple
The two-step funnel has already been augmented in several ways. Roach has split the tasks for addressing in-market consumers into nudging and connecting; Wallis at Compare the Market has added a feedback loop from customers’ positive word of mouth, and ‘The Multiplier Effect’ authors have added a communications model.
On balance, these are helpful steps, like adding a nice bit of roast ham to your margherita.
But we must be wary of overloading this simple but effective bit of marketing thinking. The funnel is a ‘forever’ piece of kit because it’s so useful. It becomes less so the more debatable components we add.
In Italy, they know the important thing is getting the best possible cheese, the best possible tomatoes, and the special mix of oil and herbs that ties them together perfectly.
In marketing, no one needs the metaphorical pineapple. If you’re adding something to a simple but perfect plan, and then endlessly debating it, it’s probably just not needed.
Grace Kite is the founder of Magic Numbers, which provides people-friendly analytics and practical training to help marketers drive growth.
