Marketers are foregoing long-term effectiveness for short-term results. This was the warning from a study by Magnetic and Enders Analytics, released this month, which found that brands have moved from a traditional ratio of 60% of budgets going towards branding and 40% activation; it’s now closer to a 50:50 split.
Evidence suggests that too much of a short-term focus leaves brands in a perilous position – Enders went as far as to describe a ‘crisis’ – with advertisers required to pay more for their customers than those with a stronger brand, and a long-term focus. It also leaves them unable to challenge more established brand names within their competitive set, and susceptible to new entrants who take on a longer term view in terms of marketing investment.
In well respected IPA publication ‘The Long and the Short of It’, Les Binet and Peter Field analysed 996 campaigns covering 30 years, 700 brands and 83 countries. They found that the biggest return on advertising spend comes from long-term brand building activity. In fact, brand building activity will return more than twice the profit over the long-term when compared to solely focusing on short-term sales activation tactics. According to the study, the ideal balance between long-term and short-term tactics is 60:40; a recommendation the industry now appears to be overlooking.
The increased focus on short-term activity appears to go hand in hand with increased targeting and tracking capabilities within digital channels. UK adspend grew 3.7% in 2016; almost entirely driven by an increase in digital adspend, which itself was up 13.4% year-on-year. Marketers with a shelf life only marginally longer than that of a football manager and boards wanting improved results each quarter have found digital propositions incredibly attractive. The promise of being able to track views, clicks and sales in near real time rightly appeals to those who are forced to focus on the short term.
But while the digital oligarchs, Facebook and Google, are being blamed for drawing marketers towards increased short-termism, the problem is not necessarily the media channels used, but in what we track when using them. Evaluated against a different set of metrics, Facebook and YouTube can help build a brand in the longer term; there are case studies from brands across almost every category which prove this.
It all comes down to how we measure success. Clicks are important over the short term, particularly if they lead to sales. But keeping an eye on metrics which are harder to shift (awareness, positive impression, consideration) will not only prove long-term effectiveness, but will eventually mean it becomes cheaper and easier to deliver against the short-term metrics as well.