GM Thought of The Week: Is short-termism in advertising limiting brands long term growth?

1

GM Thought of The Week: Is short-termism in advertising limiting brands long term growth?

In today’s digital economy the traditional advertising structure of divided disciplines is fading. Branding, which for many years accounted for the lion’s share of marketing budgets, is being challenged across all verticals as marketing KPI’s have shifted focus from reach to ROI.  The immediacy of digital reporting has created an obsession amongst marketeers for immediate results, valuing efficiencies and tight targeting to reduce wastage amongst people not in market to purchase their products right now. This short-termism is creating a new risk to brands, where the focus on short-term KPI’s is resulting in less focus on long-term brand building strategies like brand awareness and penetration.

 

 

The risk of an over reliance on short-term KPI’s isn’t a new one in the ad industry. Binet and Field outlined the benefits of an integrated 60/40 split between long and short-term marketing metrics in their 2016 paper ‘Effectiveness in a digital era’. This split was outlined as the perfect balance between brand building, where too little focus can result in brand weakening and undermine any activation messaging being done, and brand activation where too little focus fails to exploit a brands full sales potential. The goal of a good campaign is to ensure a balance between brand building and brand activation messaging, ensuring the majority of spend is allocated to the area which is hardest to effect and more in need to grow.

 

 

The digital revolution is creating a balance shift between brand building and activation spends. New digital channels have made activation easier than ever before, especially amongst those whose business focuses online. This is creating a shift in industry spends to online channels where often performance metrics are being used as the main KPIs. The IABs latest 2018 Adspend report now puts UK digital Adspend at £13.4 billion after a third year of 15% YoY growth. The IPA effectiveness model tells us that as activation has become simpler for brands spends marketing spends should be moving into brand building activity. Especially when you consider the cost savings you can make in acquisition channels now we have access to so much rich data online. In practice we are seeing the very opposite, brands are moving to online channels at the expense of the traditional mass reach, brand building, channels, moving their focus from brand building measurements like reach to short term metrics like ROI.

 

 

Digital advertising has given us access to huge amounts of rich data but the balance between brand and activation budgets still need to be followed if brands want to remain relevant and build growth over time. Companies like Facebook, Google and Amazon are key examples to this; not only do they all advocate full funnel approaches in the use of their online platforms, using prospecting spends to create awareness for brands and allow the creation of retargeting pools from this activity to re-engage warm audiences later down the line, they are also heavy investors in TV adverting. These online giants understand the power of brand building activity, and the influence TV still holds in driving mass awareness to wider audiences to further grow their brand online.

 

 

The wider industry however is tipping the balance towards short-termism, focusing on immediate sales targets through digital activation channels and KPI’s rather than longer term brand strategies. I’m not suggesting more budgets need to be spent on traditional media channels to drive brand growth, on the contrary the gaming market is seeing huge YoY growth despite 78% of advertising budgets being spent on digital channels in the sector. What I am suggesting is a more conscious understanding is needed of how budgets are being split between long and short-term strategies to ensure continued brand growth over time. If you’re running a digital first campaign, ensure you have enough budget being allocated to brand elements measured by reach and awareness KPI’s to grow brand growth and recall among prospecting audiences later down the line. If your brand is focused at children or 55+ audiences, where time spend watching TV is highest, ensure you have enough budget being allocated to brand activation channels to maximise your brands full sales potential.

There is no hard and fast rule when it comes to the perfect balance between short and long-term campaign spends. The diversity among brands mean any split needs to be considered on a case by case basis, but if we continue down this road of short-termism in advertising, we run the risk of brands failing to prepare for the future and over relying on immediate sales as their brand penetration and recall continues to decline amid potential new customers.

-

6367

Blog post by:

Share: