Short-termism and marketing

Have you ever thought about maxing out your credit card on a holiday of a lifetime? Or buying a supercar that you simply cannot afford? The sugar rush of the purchase will at some point wear off and you’ll be left with a debt burden for years to come, acting as a drag on every future purchase you want to make. 

There is a word for this: short-termism. According to Collins dictionary, it is “the tendency to focus attention on short-term gains, often at the expense of long-term success or stability”. 

In a previous blog, we discussed how short-termism also exists in marketing. A cross-media study, by Nielsen, Napa and GfK looked into this, and found some surprising results. On average only 40% of ROI comes from the short-term, with a staggering 60% the result of longer-term brand building. 

Why is there then a thirst for short-term thinking in advertising? Partly, it is a result of how we are measuring its impact. It is easier to measure the daily increase in website traffic or store visits, than it is to look at how each new product launch drives an ever-greater sales volume, or how a brand is becoming more resilient to competitor price promotions. 

Short-termism may appear to lead to short-term growth, but can undermine core brand values in doing so and deny the opportunity for more sustained success 

In the research by Nielsen, Napa and GfK, five independent studies took place across different countries and categories in Europe to calculate the short and long-term ROI of advertising across a range of media channels - it provided some fascinating channel insight. 

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It is perhaps no surprise to see Google Search as a short-term lever, as it is unlikely to reinforce a brand’s core strengths in the same way that a TV campaign might. (The latter has a noticeable impact on longer-term ROI, and justifies its role for many brands at the core of the marketing plan). 

Looking deeper into other Digital channels the research highlights a greater role in driving long-term ROI than we might initially expect. Traditionally, many of these channels are measured using Digital Attribution, which tends to favour the short-term ability of a channel to create a response. Any channel that is creating demand that is fulfilled elsewhere will be under-reported. What this study tells us is that this approach only paints a partial picture. 

As an example, we can see that Online Display drives delivers most of its ROI in the long-term. Yet, how many times do we see it being downweighted because Digital Attribution finds little impact? The answer for many is to use Marketing Mix Modelling, which looks at all the factors influencing customers and lets us calculate a robust ROI that builds in both the short and long-term. 

More broadly however, this research suggests that combining various channels is the most effective strategy for enhancing branding attributes like awareness, association, consideration, and motivation. The research emphasises that individual channels shouldn’t be pigeonholed as suitable only for branding or short-term revenue generation. Instead, the key to achieving the most profitable results lies in cross-channel campaigns. 

However, measuring these campaigns over the long term requires a shift in mindset and an analytical approach. When examining the bigger picture, marketers may discover that by focusing too much on short-term outcomes, they have been neglecting 60% of the potential return on investment from advertising. Therefore, prioritising long-term brand perception and planning campaigns with the most effective cross-channel marketing mix should be the guiding principle for marketers. 

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