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Digital Transformation WPP Marketing

Lindsay Pattison: Brands versus demand

By Lindsay Pattison, Worldwide CEO

February 22, 2018 | 5 min read

It has now been over two years since the World Economic Forum declared we are experiencing ‘The Fourth Industrial Revolution’, characterised by technological upheaval and the fusion between the physical, digital and biological.

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Both clients and agencies on behalf of their clients are - rightly - obsessed with the future, what it will look like and how we can future proof to continue driving growth.

Jack Welch told us that businesses plan across three time horizons; some plan for ‘years ahead’, some for each quarter and some for ‘right now’. But the best plan for all three. As we experience the VUCA (volatility, uncertainty, complexity, and ambiguity) world right now, we see many marketers becoming too focused on short term success (see the shift in balance from this excellent Enders/Magnetic report, May 2017)

Short termism has risen for two key reasons: firstly, in a low growth environment, marketers are focused on short term goals to please chief executives, boards and shareholders. Secondly, the digital revolution has allowed media agencies to be super precise on short term performance by measuring clicks, impressions and engagements. This trend shows no sign of stopping - investment in digital continues to accelerate: in 2017 digital’s share of global ad spend was 36% with digital share gains set to continue in 2018, according to latest research by UBS.

Analysis of the IPA Effectiveness Awards found that the optimum campaigns have a 60:40 ratio of long term brand building versus short term sales activation. But increasingly, campaigns have shifted to 50:50 and this focus on quick returns is damaging long term ROI and brand equity and risks stunting longer term growth.

Certainly, category leadership and brand awareness take longer to change than generating quarterly sales or “buzz”. But investment pays back. Analysis by Kantar Millward Brown demonstrates that strong brands generate superior shareholders’ return – in fact, the top 10 global brands outperform S&P 500 by over 50% and MSCI over three times over the last 11 years. Brand building brings resilience in challenging times. When the share price of brands dropped during the economic downturn, it took strong brands just six months to recover versus three years for average brands. Moreover, CMOs agree that brand advertising work (81% of 350 CMOs of the largest advertisers interviewed by UBS) and that brand advertising is particularly important in an increasing eCommerce world.

Investing in brand building guarantees future financial success. So, as clients’ partners for growth, it is the responsibility of us agencies to work with our clients to develop understanding of the importance of longer term brand building.

However, suggesting that we need to shift the brand balance a little upward is not to negate the value of demand, and the efficiency we now get from digitalized and real time media. We absolutely need an engine room to drive efficient and effective comms. We absolutely need to use data to inform a single customer view across a customer journey. We absolutely need to ensure that we reward loyalty. That’s why our media agencies are partnering with our agencies that specialize in CRM to create a truly horizontal consumer identity.

So back to the sensible and of course very successful Jack Welch; this is the winning formula in a low growth environment – brands that are built and managed across for the short, medium and long term will outperform the market.

I’m convinced that we can work with our clients to demonstrate the importance of longer term brand building alongside the need to keep feeding the top of the sales funnel, collecting data and becoming smarter daily, quarterly and in the long term. Balancing long and short goals and budgets means integrating teams of our best people across agencies to encourage even more fluid and seamless ways of working across all marketing disciplines, and across agencies and clients. This is a key focus for me in my roles both at GroupM and WPP; ensuring our agencies work together to ensure that clients’ business goals, long and short term, are all met.

Lindsay Pattison is the chief transformation officer for WPP and a regular contributor to The Drum

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