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Cutting a long-term effectiveness story short

Opinion, 31 May 2017
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Faris Yakob addresses the tensions between short-term sales effects and longer-term brand building - and concludes that measurement holds the key to untangling this paradoxical relationship.

Reader Andrew Willshire writes:

Your Ogilvy piece (Ogilvy on Efficacy, March 2017) has the following line: "The most robust data we have suggests focusing on short-term response is harmful over the long term." I have an outline hypothesis: no advertising has a long-term effect without also producing a measurable short-term effect. The corollary of which is that if there’s no short-term effect, there’s no long-term effect.

The long-term brand effect is more a product of the customer experience than the advertising. The most effective role for advertising is getting people to that trial from which a brand experience results.

I read your piece and it got me thinking. What sort of advertising/message focuses on short-term response while damaging the brand in the long term?

I can see how price promotions produce a short-term response at the expense of brand health. I can see that advertising something and being unable to back it up is detrimental, i.e. selling a false promise. But I can’t see how advertising that achieves a short-term sales response for a product that delivers a great experience can possibly be detrimental to the brand in the longer term. I wondered what you thought about that.

My response:

I was delighted to receive a reader’s email and especially so when it had something thoughtful and considered to ponder.

Andrew outlines a challenge to the notion that short-termism is detrimental to long-term brand health. He states that there can be no long-term effect without a measurable short-term effect. That the biggest impact on brand is customer experience, not advertising. That advertising that drives short-term sales response increases trial, which should contribute positively to brand if the product delivers.

So he asks – how, then, can advertising focused on short-term response be harmful? Outside of price promotions.

The ‘robust data’ to which I was referring in my March column is the meta-analysis from the IPA Databank called The Long and the Short of It. The paper, by Les Binet and Peter Field, analyses one thousand cases across thirty years of IPA Effectiveness Awards and the core of its argument is as follows.

First, advertising has two different kinds of effects – short- and long-term. Second, campaigns that perform well when judged by longer-term metrics, such as profit and share growth, do not necessarily perform well at generating short-term direct responses. Third, the converse is also true: campaigns that drive short-term direct response most strongly tend to underperform on longer-term metrics. Fourth, although there are no long-term business effects without short-term effects, the reverse is not true: long-term effects are not just the accumulation of short-term effects. And fifth, beyond price promotion, activation metrics respond better to rational messaging.

How are we to resolve this apparent paradox? How can long-term effects be diminished by increased short-term effects?

The key is in what we measure. The long-term impact of advertising depends on carryover effects beyond short-term sales volume: price elasticity, long-term volume and loyalty. Loyalty was the red herring. The idea was that a customer acquired once by advertising would keep buying but that would also appear initially as short-term sales response. Later analyses by Binet and Sharp have shown loyalty is an inconsequential driver to growth. It’s the rational messaging that drives the paradox.

Other short-term metrics like pre-testing, and activation metrics like click-throughs, all respond too well to rational advertising because it appeals to how we think we think but doesn’t reflect the subconscious impact, which is what builds price elasticity and profit. Without it, increases in volume tend to return to a baseline, and therefore overly focusing on short-term metrics can be detrimental.

It is not just the experience of a product that creates brand equity but that experience in association with symbolic values created by imagery over time. As Binet points out, “the most effective advertisements are those with little or no rational content”. In fact, according to Millward Brown, only “5% of total brand volume results from short-term ad effects” and the IPA meta-analysis consistently shows that a 60:40 split in favour of image advertising maximises long-term volume growth. Put simply, it’s not either – it’s both.

About the author

Faris Yakob is co-founder of strategy and innovation consultancy Genius Steals, built on the belief that ideas are new combinations. He is co-author of Digital State and What is a Brand?, and the author of an upcoming book on the present future of advertising.

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