Not seeing the forest though the trees: Is the industry getting its tools and theory mixed up?

Wavemaker group business director Jamie Connolly
By Wavemaker group business director Jamie Connolly | 11 October 2019

The short term versus long term debate is nothing new. Every marketer and communications professional you speak to says they’re focused on building brands over the long term, yet so few seem to be able to find the right balance between long-term goals and short-term objectives.

A recent Kantar study revealed some interesting insights on marketers’ ability to get this balance right. The study stated: “Some 52% of global advertisers are confident their organisation has the right balance between short-term performance marketing and long-term brand building” – but “just 6% grew market share during one year, and only six in 10 managed to sustain that gain during a three-year period. And of those 6% of brands, only one in 10 brands grew market share over a year then went on to improve on their initial gain.”

In short, while just over half of these global advertisers were confident they had the balance right, they’re failing to build sales momentum in the long term. Most are getting it wrong! Why?

Assuming our global advertisers have read The Long and the Short of It, I’d suggest the issue is in the misuse of Les Binet and Peter Field’s suggested rule of a 60/40 split between long-term brand building and short-term activation.

Let’s backtrack a little

Binet and Field showed that the 60/40 rule differs according to category; in Financial Services, it can be 80/20 in favour of brand building, whereas in telco, it’s a 58/42 split. Nevertheless, a generic 60/ 40 rule will do for the purpose of most discussions.

The aim of directing 60% of a business’s focus, energy and resource into longer-term brand building is to build conscious or unconscious bias in consumers’ minds towards your brand – to be capitalised on in the future.

The other 40% on the now – converting sales today, delivering ROI – is about driving the short-term success of the business, hitting monthly and quarterly sales targets (happy CFO, happy corporate life).

It all sounds straight-forward enough, so why are the global marketers surveyed by Kantar getting themselves into such a pickle?

The key here is the interdependent relationship between the 60% priming and the 40% activating balanced with the need to plan, strategise and develop different tactics for each.

This is potentially where our global marketers made their mistake. Being informed global marketers, one can assume they have all the toys, including access to econometrics and ROI modelling.

While ROI models are fantastic at showing you how to make your 40% work incredibly hard, they’re not that helpful when it comes to your 60%. Unfortunately, that means most ROI models get misused, even abused, as marketers over-enthusiastically apply modelling finding to both the 40% and the 60% – completely missing the point that Binet and Field are trying to land. A classic case of running headlong into tactics before understating or developing a strategy.

So the problem for the globaladvertisers surveyed by Kantar is that they’re buying into Binet and Fields’ theory, but when it comes to operationalising it, they fall into the trap of favouring short-term tactics over proper long-term planning and strategy.

How can we stop this from happening?

The first place to start would be discipline. Marketers need to have the discipline to do the upfront work – know your segments, know the distinct position you want to occupy within the consumer’s mind, set clear objectives (both short-term and long-term) and understand how they ladder together. Then be very clear on how you will approach the 60% and the 40% in their own specific and distinctive ways.

Next, you’ll need to understand how they are interlinked, and assign objectives and KPIs by role.

At Wavemaker, our global analysis of more then 550,000 customer journeys across 86 categories in 36 countries has quantified the impact effective brand building can deliver, and how to influence this stage of the consumer journey. We’ve learned that each category is distinctive and performs differently, and breaking it down further – each brand within each category performs differently as well.

The study shows that people are in the active (40%), ready-to-buy stage for less than 7% of the purchase journey. This is a very short window to convince them to choose you over all the other brands available, so we need to be laser targeted in our approach. Two simple steps we can look to execute are:

1)  Implement the ROI studies as efficiently as possible

2)  Understand your brand’s and category’s specific communications requirements – how to use the recommended ROI channels, what to say within them, matching specific channel to specific roles, objectives and outcomes. Again, specific to your brand, within your category.

To deliver your short-term business goals, sales, monthly and quarterly targets, we need to make sure that the 40% stage delivers your objectives. Only when we are able to get the CFO off your back can we start to focus on the 60% of future priming stage. Nobody is interested in how we’ll be able to sell products more easily in the future, if we’re not selling products today!

Now we can switch our focus to the 60% brand building. This stage is what Daniel Kahnemann calls System 1 in Thinking Fast and Slow.

In this stage, your consumer isn’t actively thinking about or considering your brand. They’re operating mainly on auto pilot. This is where we need to build bias towards your brand, versus the competition.

This positive bias means that when the consumer becomes active – looking to make a purchase – they arrive at the shelf or website with a bias towards our brand over a competitor’s. (Key when considering how short the active window is – that is, less then 7% of the purchase journey!)

Still not convinced?

Nice theory but my CFO likes seeing the hard numbers, I hear you say.

As part of our global analysis of more than 550,000 customer journeys, we’ve seen that the brands that enter the active stage (40% stage) with no brand bias (that is, no focus on the 60% brand building) have only a 1 in 50 chance of conversion.

By contrast, brands with a strong bias towards them have a 1 in 2 chance of converting. What would you rather have? A 1 in 50 chance, or 1 in 2?

In fact, the study shows that with even a small amount of bias towards your brand, you can move your odds from 1 in 50 to 1 in 10 people converting.

This means the brand building – or bias building – you do today, will increase your conversion rates significantly in the future. Surely that’s enough to convince you, and your CFO?

What’s the catch?

No catch, but there is a caveat: this is an approach that needs to be holistic and ongoing. You need to consider all touchpoints available to you and understand their inter-dependence, and their impact on both long- and short-term deliverables. And you can’t just apply the 60/40 rule to a select couple of key campaigns or briefs; this needs to be a total marketing approach.

Marketers must understand both the theory and the tools they’re using, and ensure it is truly applied to the business challenges they face.

Without applying rigour in the understanding and implementation of both theory and tool, we’ll continuously get lost in objectives, tactics and measurement, and ultimately lose our view of what we are actually trying to achieve.

And the CFO will just default to his comfort zone – this quarter’s targets.

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