It’s the catch-22 of almost every business: your objective is to make your products fly off the proverbial shelves. In cases where traffic is slow to arrive, it could be because you haven’t invested enough in your brand-building initiatives. To tackle this, you slash your pricing -- and the traffic trickles in. However, those that purchase your product may come to value your product differently. “Why pay $100 now if I got this for $50 last time?”Such is the constant conundrum of short-term versus long-term strategies -- and why choosing where to funnel your efforts (and when!) is crucial.
The long and short of it
Before anything else, you need to build a solid foundation -- and really understand your brand, the competitive marketplace, and your consumer. If your brand positioning lacks alignment with your go-to-market strategy, it will be a challenging endeavor to undo the potential damage to your brand equity. Think closely about the lifecycle of your brand: when you’re poised to launch, you need to think about building awareness, but if you have a more mature brand on your hands, you will need to consider how that affects your strategy.
When to choose what? Finding your right answer
While your short and long-term marketing goals are very much determined by your brand’s positioning, competition, lifecycle, distribution, etc., research shows that the rule of thumb is that the companies investing in long-term brand building will recognize the biggest gains in overall share volume and profitability. This may seem counterintuitive in the current Mach speed world we live in, where consumer attention is limited and short-term ROI in terms of sales pleases your stakeholders. The tension between longer term goals (brand equity, purchase intent, share) and short-term objectives (sales activation/volume) has never been more pronounced than in this age of immediate digital data.
The IPA Databank of Effectiveness has conducted over 1,000 case studies spanning 20 years. Les Binet and Peter Fields’ latest research shows that campaigns with short-term activation objectives rose from 47 per cent of cases prior to the global financial crisis to 55 per cent subsequently. Over the four years to 2016, the figure reached 72 per cent. Despite this trend, the report finds that the optimum balance of brand and activation expenditure remains at around 60:40, with evidence that deviation either side of this point results in a marked decline in long-term effectiveness.
You see, profit growth correlates most closely with broad improvements across the range of long-term business metrics, especially sales and market share growth, as well as brand metrics and penetration.
Tracking what matters for your LT strategy
Digital has rewarded us with data and the result is that we may be paying attention to the wrong metrics, causing us to make decisions based on short-term ROI. It’s no secret that marketers love to measure everything, but it often happens that they are not focused on the impact of their campaigns on long-term brand health. A good adage is to ‘measure what you treasure’. That’s what brand stewardship is about -- playing a long game.
While it may be less ‘sexy’ than sales-driven marketing, brand development is crucial. Savvy marketers should be using metrics like share of voice, sentiment in the marketplace, and overall brand health to measure how they are doing on their long-term marketing goals.
Sales volumes can be driven up by brand loyalists
Dollar Shave Club is a cautionary tale about focusing on short-term gain over long-term marketing strategy. Dollar Shave Club grew from nothing to $200 million in annual sales in under 5 years. They were acquired by Unilever in 2016 and immediately felt the pain of trying to navigate the tricky terrain of marketing itself like a start-up despite being owned by a corporation with its own brand vision. The result? Within a month of acquisition, US sales fell completely flat. If retention problems weren’t enough, Dollar Shave Club’s new customer acquisition also took a steep dive.
It’s tempting to boost your bottom line with discounts and promotions, especially if you’re a start-up. But don’t be seduced by short-term profit. There is danger in only thinking of the short-term impact or marketing ROI and expecting it will pay off in long-term gains for your brand. If you are building your marketing campaigns with a short-term view, you may be sacrificing your brands long-term health.
A great example of thriving brands with fully established long-term marketing strategies are luxury brands like Gucci or Prada. Due to their positioning in the market, they are very highly regarded by consumers. It’s rare that you will find a Gucci item with a discount, and that is very intentional on their marketing team’s end. They do not want consumers to question the value of the brand.
The timeline of your marketing strategy should depend on how your brand is positioned, and future aspirations. When executing on campaigns, both short and long-term marketing objectives can co-exist and work in a way that ensures brand loyalty, profitability and equity to enjoy short and long-term vision.