Don’t sacrifice your brand equity on the altar of sales activation
Long-term brand building is essential for brand growth and equity, but it often falls behind campaigns that promise short-term results. It’s time for a change.
Whether you’re aware of it or not, every marketing activity your brand generates produces a mix of two kinds of marketing effects: sales activation and brand building.
Sales activation (more commonly referred to as “conversion”) is geared at generating sales. It’s a short term marketing tactic that exploits brand equity through persuasive messaging targeted at highly homogeneous customer segments.
Brand building is geared at influencing future sales. It’s a long term marketing strategy that creates brand equity by emotionally priming targeted audiences with a broad reach.
Most marketers are naturally inclined towards sales activation. Its quick turn-around and ease of measurement create an immediate sense of progress. It offers quick wins, as opposed to brand building, a more vague undertaking with less immediate and tangible results.
If your brand marketing shares this tendency, you’re in good company. But be aware that while you’re reaching at the low hanging fruit, you’re putting your brand’s future equity at risk.
The 60/40 rule
The most effective balance between brand building and sales activation has been widely researched by marketing gurus Les Binet and Peter Field. Their influential book on balancing short and long-term marketing strategies, “The Long and the Short of It” (you can read the PDF here), set the mark at 60/40, meaning that contrary to common practices, 60% of a brand’s marketing resources should be dedicated to brand building, and only 40% to sales activation.
Lately, Binet and Field’s message has resonated with leading brands, which have been sweating on the sales activation treadmill for ages without seeing a correlated increase in their brand’s equity. One of those is Adidas. The brand’s global media director, Simon Peel, has become an avid advocate of the 60/40 rule, which is currently being implemented by the sports giant’s global marketing operation.
In an interview with Marketing Week, Peel elaborated: “Short-termism is always going to exist. But what we’re trying to do is to make sure that while we’re doing that, we also look after the long-term health of the brand and know that behind those short-term deliveries, the brand is the one that ultimately delivers against them.”
In another vertical altogether, MoneySuperMarket is doing the same. The price comparison site has previously “invested heavily in the latter stages of the path to purchase,” according to marketing director Lloyd Page. But it is now actively testing the impact of re-balancing that spend more towards the brand.
More and more brands are realizing that the rush to show immediate return on investment encourages tactics that ultimately reduce a brand’s ability to grow profitable sales in the long-term.
But what does that even mean?
Emotions are key
Sales activation and brand building work in different time horizons. Sales activation campaigns are dominated by a short-term effect, creating an uplift in sales that stabilizes after the six-month mark. Brand building, on the other hand, is a long play, creating long-term sales growth that increases with time indefinitely.
As opposed to impulse buys, which can happen on the fly, brand-customer relationships—and even more so, customer loyalty—take time to develop. A loooong time. How long? According to a recent Deloitte research, among people who consider themselves brand-loyal, 76% say they’ve used the brand for more than four years.
And what creates that kind of loyalty are emotional factors.
When consumers first engage with brands, it is rational considerations—price, promotions, accessibility, or loyalty programs—that dominate. But as the duration of a consumer’s relationship and exposure to a brand increases, emotional attachment takes over and rational needs become less pertinent. According to Deloitte, “brand-loyal consumers use the same type of emotional language they’d use for family, friends, and pets when speaking of their favorite brands—words like love, happy, and adore.”
So people love or adore a brand not because of sales or promos, but because of the feelings the brand generates. Trustworthiness (83%), integrity (79%), and honesty (77%) are the emotional factors that consumers feel most align with their favorite brands. This means that brands that manage to constantly build and maintain an authentic image of being trustworthy and honest will be able to measurably build on that image by:
- Creating more loyal customers and advocates
- Selling to these customers with less promos
- Gaining forgiveness when they do make a mistake
In short: create a clientele of high LTV customers, who will go the extra mile—in more ways than one—to engage with your brand.
Bringing home the bacon
Connecting to customers on an emotional level to affect long-term consumer behavior, loyalty, and purchasing decisions is an altogether different task than sales activation. It’s based on long-term business strategy, which often takes the back-burner in a business environment that prioritizes short-term results and prefers real-time dashboards over an accumulative process of character building.
The need to refocus on the long-term marketing strategy has seen many brands taking back some control over their marketing from agencies. While in the past marketing resources were outsourced to agencies mainly on the basis of cost-effectiveness, in light of the new understanding of the value of the 60/40 rule for long-term brand health, that doesn’t seem like such a good deal anymore.
That’s one of the reasons that 66% of brands are looking to reorganize their agency / internal operating model for marketing, while 59% plan to bring more media functions in-house and 61% are reviewing their agency model—according to MediaSense’s Media 2020 and Beyond. Changing the agency/brand relationship to drive long term brand health is becoming a major consideration for leading brands, including the aforementioned Adidas, which is currently trying to delineate the traditional client and agency relationship so it can focus on a “proper” media and marketing strategy, which “has been forgotten.”
In the words of Adidas’s Peel: “If you’re looking at cost-efficiency metrics, there’s a lot of short-termism in that. Superficially, it looks like you’re doing a great job efficiently, but actually when you’re looking at measuring the success of it in terms of the business impact you’re not really doing a very good job at all.”
A version of this article previously appeared on MartechAdvisor.