In this fast-paced industry, it’s easy to prioritise short-term results at the expense of long-term impacts which may not become apparent for some time to come. It may look great that your sales are up this month but is this occurring at the expense of the health of your brand?
The Drum spoke to David Buttle, global marketing director, commercial at Financial Times about why marketers are still prioritising short-term tactics over long-term strategy, why it’s such a challenge for marketers, and what an industry-wide response will require.
Studies continue to show that marketers are prioritising short-term tactics over long-term strategy to meet the demands of the marketplace. How do you think this is impacting marketing effectiveness?
There's an abundance of industry evidence and academic studies that show that creating customer-based brand equity in the shape of awareness, affinity associations and perceptions of quality, lead to loyalty. This, in turn, reduces price sensitivity and increases margins. By focusing on just activation, all of those commercial mechanisms are being left untapped by businesses.
‘The long and the short of it’ – a report by Les Binet and Peter Field, on average marketers, should invest 60% of their budgets in long-term brand building and 40% in short-term sales activation. Why do you think many marketers are finding this goal a huge challenge?
Our research suggests that there are a number of reasons for this. First and foremost, is the availability of metrics. Digital technologies have given marketers the capability to measure the commercial impact of direct-response campaigns reliably and in real-time. That just isn't impossible with brand-building. The contrast between the nature of metrics between direct response and brand building is certainly one of the causes driving the shift.
Other forces are shareholder pressure and quarterly reporting cycles. We know that has an impact as well.
There's a skills dimension to it also. Our research seems to indicate that the skill of brand building seems to be lost. That confidence in how to build a brand doesn't exist in the marketing department in the way that perhaps it once did.
To build on those missing skills marketing leadership needs to value them and invest in training, development and recruitment in that area. Ultimately, for this to change the employment markets needs to demand that.
Do you think it is a real struggle for marketers to place a value on creative and planning at a time when a short-term ROI is more highly valued, or with an increasing number of agency negotiations undertaken entirely by procurement?
The requirement here is a bridging of the language between the marketing and finance worlds. The marketing discipline needs to find a credible way, in the eyes of procurement, to discuss the value associated with the creation of brand equity. This will help businesses to attach value to brand-building marketing as part of the procurement process. In turn, this should go some way towards freeing up budgets for investment the brand rather than just performance marketing.
What would you propose to the marketer trying to rectify this apparent imbalance in brand and activation advertising?
One of the strongest recommendations in our report was that discussions around brand health, brand strength and brand equity, need to be had at the most senior levels in organisations. Doing that will create awareness at board level of the importance of brand and the familiarity with some of the measurements that are in place and that can be put in place around the brand. And that would go a long way towards freeing up investments to improve the situation.
An industry-wide response is required to appreciate long-term brand building, while delivering growth short and long term. What would that response look like?
At an industry level, it's about building a robust evidence base around the commercial return that brands deliver. That would be a good first step.
The metrics for brands should be linked more directly to commercial performance. If at an industry level we can understand the impact that brand awareness has on, say, cost per acquisition, average margin or price sensitivity etc, then that's going make it a lot easier for individual marketers to have the discussions within businesses. There is also more work that can be done on brand metrics generally to make them more credible.
The Financial Times are a sponsor of the The Drum Advertising Awards 2019, the deadline for entries is August 28.