LONDON: The City of  London and the financial markets are facing some of the same pressures from technological innovation as advertising, with both pushed towards prioritising short-term metrics, but the need for long-term brand growth is becoming a boardroom issue.

This is according to Catherine O’Neill, director of Citi Research’s European Media Team, who, speaking at Newsworks Shift yesterday, said that both worlds are feeling the effects of an increased focus on efficiency through automation. (For more, read WARC’s exclusive report: What investors look for in brands).

In addition to technological changes, the macroeconomic context that followed the global economic crisis has left its mark. “Brands do not operate in a static environment,” O’Neill noted, and category disruption by online platforms is compounding the view that efficiency (with a priority toward digital) is the core KPI for advertising performance, leading to a vicious circle.

According to Citi’s research, which places the internet’s entry to the mainstream advertising market around 1998, the shift to online advertising has wiped as much as $100bn off the total global advertising market.

However, digital has often found a disproportionate share of spend, notably in the UK, where “online spend now exceeds share of time spent”, O’Neill said.

Increasingly, the problems of investing too little in brand building is becoming clear. “Under-investment in brands, we think, risks long-term volume declines as new entrants gain a foothold in the markets.”

The question boils down to one of bottom line growth versus organic sales growth – short term results or longer-term potential. While cost reduction has delivered bottom line growth, “investors are only too aware that cutting costs is not a sustainable long-term strategy and at some point, the company has to look to stimulate growth again”, O’Neill said. 

A reassessment of the role of digital forms part of that. “It’s become clear that not all digital is equal,” she observed, adding that questions around brand safety have now “reached the boardroom level”.

Sourced from WARC