What’s going on?
The key here is to understand that there are two main factors at play in marketing.
The first, sales activation, provokes an immediate response. It’s great for short-term selling, and ROIs can be high. But they don’t last long, and do little for your brand in the long term.
Brand activity, on the other hand, creates an emotional response and creates the memories and associations that influence consumers for years to come. This is a harder job, requiring repeated exposure, but the effects last longer and accumulate over time to drive growth and long-term profit.
Simply put, playing the long game is worth it.
Effectiveness v Efficiency
Chasing short-term ROI is efficient.
It takes our limited time and resources, and immediately juices them for everything we can get. But the results are necessarily constrained by what we have to hand right now, and in a world of limited budgets, that may not be a whole lot.
Investing in long-term brand health to achieve our business goals is effective. It focuses on what we want and how we might achieve it. If our goal is to jump over our closest competitor in the next three years, a flash sale isn’t going to get us there.
But investing in how people perceive our brand vs. our competitor? That’ll work, and its effects are cumulative.
However, because long-term brand health takes…well, longer, it often loses out.
Getting it right
Research from Wavemaker found that in more than 100 business categories, long-term effects always contribute between 50% and 85% of communications impact on market share. And across all those studies, the average ratio of long-term to short-term converges at about 60:40.
That in itself is counter-intuitive to the prevailing flawed perceived wisdom that ROI is ‘everything’: but the 60:40 rule there in black and white.
There are variables for every industry – but brand effects always have the edge. Emotional brand communication always trumps the rational.
Does this mean you should always spend 60% of your budget on ‘brand’? No – your category, your brand’s immediate circumstances, and the day-to-day demands of the market all need to be considered.
But in the long run, successful brands invest in building the sustained emotional equity that drives the engine of consumer and shareholder demand. It is one of marketing’s laws of physics, and no marketer who cares about growth can afford to ignore it.
And in increasingly challenging times like these, it is those brand owners that have the courage to swim against the tide of short termism who will win out big style.
Written by Ben Quigley.