Afterpay invests in brand marketing to power growth

A brand marketing campaign by Afterpay, which aimed to prove the power of the discipline, has exceeded return-on-investment and customer acquisition targets to drive effectiveness and growth for the business.

Afterpay still image from Afterpay where you wouldn't believe campaign, created by BMF.

Afterpay has bolstered return on investment and new customer acquisition targets through a brand marketing campaign that leveraged data-led insights to drive growth for the business.

The buy-now-pay-later (BNPL) giant exceeded itsROI targets by 18 per cent and outperformed its customer acquisition costs by 4 per cent off the back of its ‘Afterpay where you wouldn’t believe’ brand marketing campaign.

The campaign, which first launched in August last year across TV, social, digital audio and outdoor, aimed to broaden awareness about the range of merchants and categories, where people could use the payment platform, including in-store purchases and businesses such as nail salons and dentists.

Afterpay International vice-president of marketing Joel Moran told The Growth Agenda the campaign objective was to provide an always-on brand presence to promote greater use of the payment platform.

“The main thing we wanted to do was to change the perception that Afterpay was predominantly about fashion and beauty and let people know about the different places where they can use Afterpay. Some of our biggest categories are ticketing, automotive, merchants like Bunnings, and even services like dental.

“It was about driving awareness around these categories, but also about consideration and usage in those categories.”

Mr Moran said in store purchases now form “the lion’s share of GPV, especially in the later quarters of the year” for the Afterpay platform, which now boasts 3.5 million customers with one in every three Australians aged between 18 and 59 years using Afterpay at least once in the past 12 months.

The campaign, which was created by creative agency BMF, also aimed to demonstrate the impact of brand marketing on the business, while adhering to the company adage “outsmart not ­outspend”.

“We wanted to prove that brand advertising can have a positive return on investment, and that’s pretty tricky to do, right?” said Mr Moran, who started his marketing career as a performance marketer.

“It’s really hard to prove a return on investment, and, it was tricky to do, but we have a very solid econometric model, our mmm that we had used for quite some time. We did things like geo holdout groups and we did heaps of creative testing, and we optimised the creative and we used data to optimise our results.

Mr Moran said his team created the systems and measures to run the brand marketing activity, which served as an always-on presence in market while the business also activated short-term activity around sales events such as Mother’s Day, Father’s Day and Christmas, in addition to the brands’ own Afterpay Day sales events.

“We needed to get all of our ­measures in place to make sure that we could actually do that with our brand marketing budget.

“We wanted to prove out [Les Binet & Peter Field’s brand building strategies from] The Long and the Short of it and use all our data to have all of these trade moments, this co-marketing activity that drives outcomes for our merchants and us, and then we will have this brand layer, which helps change perceptions of Afterpay and increases the run rate and has a return on investment, all at the same time.”

Mr Moran said it was important for the digitally-led business to create a strong business case for the role of brand marketing, which would also flow on to help its co-marketing initiatives with merchant partners.

“It’s hard for marketers because we need to be business people and we need to talk the language of business all the time. However, the business case that we were able to prove out has helped us be more involved with relation to how we go out to market by using brand marketing – and that also serves our merchants well at the end of the day.”

It comes at a significant time for the brand, as the cost-of-living pressures combined with the maturing Gen Z market create a generation of consumers with different attitudes to credit than the previous generations.

“We can see that young people are moving away from traditional forms of credit, such as credit cards. This is reflected in the way that banks are changing the structure of credit cards, because they’re seeing such a reduction in applications for credit cards,” said Mr Moran.

“One of the key bits of evidence that we saw from our economic impact report by Mandala, was that consumers view buy now pay later as a safer way to access a bit of credit and not get into strife. This was evident in the way Afterpay is helping the economy. It’s providing, you know, value to merchants, and it’s actually providing positive economic benefit as well for everybody, in terms of increasing gross domestic product and creating jobs.”

According to the report, Gen Z and Millennials have a strong preference for BNPL and are much less likely to own a credit card if they have used BNPL in the past 12 months. The report revealed 61 per cent of Afterpay customers preferred BNPL to credit cards, while 54 per cent report that BNPL reduces the stress of large expenses..

Mr Moran said trust remains a central pillar for the business, both in terms of consumer trust in the finance product but also the trust halo it lends to merchant partners. Consumer feedback had revealed that customers felt more trust for businesses that were affiliated with Afterpay.

Afterpay provides co-marketing opportunities to merchants and retail partners through the Afterpay app, in addition to services such as Afterpay Ads, which enables brands to promote sales and promotional offers directly to Afterpay customers through the app, are beneficial to both all parties, including consumers, said Mr Moran.

“We have these considerable co-marketing programs that we work on with our merchants. These can be brands investing money for a specific sale, or for Afterpay Day sale campaigns, or sometimes they invest their own brand or media dollars directly with us, because they’re like, ‘you’re a marketing machine that knows what they’re doing, and we trust you’”.

The campaign has been shortlisted for the prestigious Effies awards, which recognised effectiveness in marketing and advertising.