Short-term marketing impacts long-term growth
Marketing activities that realise an immediate return tend to win out when it comes to the allocation of budget, but a new study warns that brands should not neglect the need to lock in long-term growth, which very few are able to do.
According to Kantar, the data and insights firm, brands that tailor a growth strategy relevant to their market position significantly outperform those that grow only by penetration.
However, based on Kantar’s analysis of 3,900 brands in the BrandZ database over a three-year period, no more than 6% of these brands grew market share over one year and only 6-in-10 of them sustained that gain over three years.
What’s more, less than 1 in 10 of the 6% of brands growing market share over a year then went on to improve on their initial gain. That equates to just 1% of brands that succeeded in building sales momentum over the long-term.
The Kantar report, entitled Mastering Momentum, described this small proportion of successful brands as the “One Percent Club”, which includes some well-known companies, such as Disney and Adidas, as well a number of smaller firms.
Kantar further revealed that only 52% of advertisers are confident their organisation has the right balance between long-term brand-building and short-term performance marketing.
“It’s hugely important for brands to understand the bigger picture. Our latest global BrandZ report clearly illustrates the financial impact a strong brand can have on delivering superior shareholder returns,” said Claire Spaargaren, global brand guidance director at Kantar’s insights division.
“Identifying reliable short-term indicators of long-term success is the first step marketers need to take to unlock future brand growth,” she added.
The report went on to provide three key recommendations to help marketers create sustained growth for their organisations. “Experience” is about influencing repeat sales by delighting existing customers.
“Exposure” involves reaching out to potential new buyers and establishing “meaningful difference through compelling creative and targeted media investment”.
Finally, “Activation” refers to influencing immediate sales by ensuring the brand and its “meaningful difference” come readily to mind at the point of sale.
“Sustained, long-term growth is hard, but there is a huge opportunity for businesses that are willing to look beyond simply delivering the next quarter’s numbers,” said Nigel Hollis, chief global analyst at Kantar’s insights division.
“The brands that concentrate marketing investment into the moments that matter will be the ones that thrive and grow regardless of fluctuations in the global economy.”