For marketers, the business dynamics of instant wins are very attractive.
This partly explains the last decade's rise towards performance-based marketing, with the promise of clicks, leads and actual sales as a clear way to demonstrate impact and return on investment.
But with expectations of a slowing recession across Europe and dwindling consumer confidence, it's a "one-trick" approach that brands should be wary of.
In fact, a recent study by Nielsen shows that despite financial challenges, companies can only achieve sustainable success by combining these low-level activities with long-term brand building (high-level activities).
Without a comprehensive strategy, these same companies risk losing revenue, brand equity and competitive advantage just when they can't afford it.
That's why.
As marketers struggle with lower disposable income and smaller budgets, it's easy to see why they turn to activities that produce faster results, like marketing. B. Funded advertising campaigns on social channels. A similar paradigm shift occurred during the 2008 economic crisis, when a new ad technology platform introduced front and back metrics for struggling marketers, allowing them to scale to smaller budgets to more accurately target key demographics. This has changed the marketing landscape, with car offerings growing from $10 billion to $27 billion between 2014 and 2017, for example.
Building and maintaining a brand takes more than just maintaining sales.
However, more than a decade later, we know that companies that get seduced by these short-term results will suffer in the long-term. This is because our research shows a focus on lower-level marketing activities at the expense of broader brand building, which erodes brand awareness and consideration over time.
The Brand Echo 2021 report found that just a 1 percentage point increase in awareness and consideration in top funnel marketing resulted in a 1% increase in future sales. In addition, through increased awareness and individual point consideration, the acquisition costs can be reduced by the same amount in the short term. Another 2021 Nielsen study commissioned by Google showed that brands that added promotional marketing to their existing medium-converting campaigns increased their ROI by 70%. And those who added the top funnel tactic to a campaign that included both the middle and bottom funnels saw their ROI increase by 13%.
emotional connection
It's easy to see why when you think about it. A brand that invests solely in driving traffic to its website through social media advertising or sponsored SEO loses out to a brand that combines the same techniques with top channel marketing, such as B. creative television or out-of-home campaigns. . To build an emotional connection. As it becomes difficult to define consumer loyalty only when faced with financial insecurity, this emotional connection or brand ownership also becomes increasingly important. For this reason, too, brands must consider the short-term increase in sales and this qualitative effect when measuring the ROI of any marketing measure.
Without them, conversion rates at the bottom of the conversion funnel become increasingly difficult to achieve, while reduced awareness limits future sales opportunities.
Building and maintaining a brand takes more than just maintaining sales. This is because a brand's existing customer base will not generate enough additional revenue to meet most of its long-term growth goals.
The impact has only been greater amid an economic downturn, as marketers once again struggle with shrinking budgets, or at least heightened demands from CEOs to justify every pound spent. ROI is only sustainable when marketers create a full funnel strategy that balances the benefits of upper and lower funnel activity.
There's another reason to spread spending evenly across the funnel, especially when liquidity is tight. Not only are we seeing continued inflation in digital media costs reducing returns on marketing investments, but advertising saturation in some target markets further undermining their effectiveness as consumers tire of advertising and brands struggle to gain a competitive advantage. All of this has resulted in marketing performance returning to a plateau or even declining in some cases. This does not mean that this type of activity should be eliminated entirely. ROI should be driven by complementary top-of-funnel activities that help brands differentiate when consumers browse websites, social platforms, or search engine feeds.
channel strategy
So what should marketers consider when developing a complete funnel (and factors)?
Despite the obvious benefits, this isn't always an easy exercise. This is mainly because each channel tends to "specialize" in one of these two goals. Are they effective in driving short-term sales or ensuring long-term brand impact? Those who do both are rare. According to our research, only 36% of channels on both sides of the conversion path outperform.
To do this, brands need to develop the right tools to analyze and understand exactly what goals (if any) the channel is achieving and how they fit into an overall strategy that balances short-term sales with long-term brand building. The precise tools used to assess these effects may, of course, vary from case to case, with higher frequency scales being used to assess short-term tactics and more time being used to assess long-term approaches. However, start with the most relevant goal and determine the output of a given channel compared to that goal. If you underperform, first consider whether a different implementation might match your strategy. If not, place it on a second target to see if it doesn't detonate properly.
Please note that these goals will also change and evolve over time. With a looming recession impacting consumer confidence, for example, many brands may focus on selling their existing products to loyal customers rather than entering new categories with NPD, which requires a fresh start with a new demographic.
But whatever the ultimate goal, the most important thing is to keep the funnel full. Despite short-term gains, whether it's clicks to a website or sales through seasonal promotions, they can feel like the answer at a time of economic uncertainty when rushed at the expense of brand activity across the board. they can do many things. more harm than good.
Emma Delserys is Vice President of European Customer Success for Nielsen's Marketing Effectiveness business.
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