Nielsen has come out with an interesting report that sheds some light on balancing brand building and quick sales. It notes that when Covid burst upon the scenes, marketers of all sizes (including Coca-Cola) cut back on brand-building seeking quick sales through conversion marketing.
“Conversion-oriented marketing has been the marketing industry darling for some time. It’s attractive because it drives sales in this quarter, not the next—and immediate gratification carries weight,” the report says. But it goes on to add:
“Conversion-dominated strategies stand in opposition to numerous academic studies that claim upperfunnel marketing is the best path to growth. The Ehrenberg-Bass Institute, for example, has long argued that awareness (or “mental availability”) is the best path to customer acquisition, which is in turn the only true path to growth. Some brands have learned the value of awareness the hard way. A wide range of companies across categories have made public acknowledgments of missteps in forsaking brand building in the name of increasing focus on activation. Gap Inc., Adidas, TripAdvisor and Booking Holdings (formerly Priceline) are just a few of the organizations that came to these realizations, citing the need to do more to create and maintain long-term equity.” Among Ehrenberg-Bass’s sponsors: Diageo.
The Nielsen report notes that marketing accounts for 10%-35% of a brand’s
equity. Equity also comes from visibility, such as seeing a product on the shelf or signage on a storefront, as well as regular product usage, such as the subtle reminder about an auto brand every time you drive your car. Brand owners often take these non-marketing sources of equity for granted, but today, that’s a risky proposition.
One problem is that fewer people are seeing your logos inside stores, because they aren’t driving to stores and shopping inside them as often. Another problem is that the online “shelf” is infinite, which makes it really hard for your product to stand out. Finally, supply chain disruptions are having an impact on brand equity.
In the U.S. consumer packaged goods (CPG) market, consumers say that
4.3% of their brick-and-mortar purchases involve a brand they had not purchased before, according to Nielsen Commspoint. For online purchases, the metric jumps to 12.1%. The increased rate of new brand purchase is entirely at the expense of brands that consumers use regularly, the Nielsen report says.
That presents marketers with a quandry. For example, the report notes that consumers “believe television is among the best channels for becoming aware of a brand. Yes, TV is, on average, one of the most effective channels for driving long-term sales lift, but every campaign is different—and so is the effectiveness of TV across them. We found that in 25% of Nielsen marketing mix studies, TV was in the lowest quintile of all channels in producing long-term effects. In a separate 25%, it was the very best.”
To add to the quandry, Nielsen found that “lower-funnel messaging has a higher short-term impact than upper-funnel messaging, but it doesn’t deliver
much additional value in the long term. Upper-funnel messaging delivers slightly lower short-term results, but it delivers meaningful additional
value in the long term.” In other words, you may be damned if you do, and damned if you don’t.
Some research suggests 60% of your efforts should be devoted to long-term brand building and 40% to short-term efforts. But Nielsen you shouldn’t focus on that, but rather “assess their brand-building efforts and ensure that they insert a balanced share of voice in both upper- and lower-funnel messaging.”
The study is fascinating, and, in our opinion, worth reading and pondering. You can access it here.