Brand building takes time – two to five years – and might initially be less profitable than an activation-only strategy, so it is crucial to be able to forecast over at least a five-year period to reassure the marketing team the strategy is correct; Paul Dyson explains how.
In a two-part series for WARC, Dyson, industry veteran and co-founder of accelero, a new measurement and optimisation company, looks at the reasons behind the recent trend to brand advertising and assesses the rules on how best to balance long-term brand building vs short-term activation.
Measurement is at the heart of much of this – and the fact that digital advertising is usually measured wrongly.
“More specifically, advertisers don’t take account of the fact that most of the people they track online who see the advertising and then buy the product would have bought the product anyway, yet the sale is still attributed to the digital advertising,” notes Dyson.
This is not to say digital advertising does not work, he adds: the argument is rather that a long-term, activation-only strategy is not good for the brand.
That case has been advanced for some time by the likes of Les Binet and Peter Field, who have come up with a 60:40 rule of thumb for spending on brand-building vs activation.
It’s a good starting point, Dyson acknowledges, but he also observes that the final split “varies considerably, depending on a number of factors around current brand strength, historical spends, creative quality, category norms and competitive pressure”.
And while Binet and Field’s work, based on their sources, puts long-term brand building at anything more than six months, Dyson is looking forther out. He has developed a model that considers the impact of short-term advertising effects (extending up to three months after a campaign has ended), long-term advertising effects (sustained over a three-year period) and the effect of the non-media base (eg increased distribution or NPD).
“It allows us to identify how much to spend on activation vs brand building media to achieve given targets at given points in the future,” he explains.
“It allows us to adjust for brands at different points in their life stage, with differing historical spend patterns and with different media contributions. It can be extended to any long-term horizon.”
His simulations suggest that the optimum spread across five years would mean “front-weighting brand spend with on average 51% of brand building budget across years one and two, and the remainder spread over the following three years”.
Something for marketers to think about as they consider how best to navigate the coming recession.
Are you currently rebudgeting for recession and recovery? If you need tailored advice on budget planning, Paul Dyson has teamed up with WARC Advisory to help marketers with their investment planning during COVID-19 and its aftermath. Paul will use evidence from previous recessions to explore the impact of shifting budgets and media allocation to plot out specific scenarios for your brand. If you’d like to know more, please get in touch at email@example.com.
Read Paul Dyson’s two-part series in full:
Why the trend to brand advertising means we need to think more about the long term – Part 1
Why the trend to brand advertising means we need to think more about the long term – Part 2: General rules on how to balance long term brand building vs short term activation
Sourced from WARC