Think Full Funnel: Is short-term gain causing long-term pain?

I know what you’re going to say…‘If I had a pound for every time an agency told me to invest in brand building.’ There’s a reason you hear it so often. Not to mention decades of robust research. Sure, a short term we-need-sales-now mindset does deliver, in the short term. But at what cost?

Short-term pipeline vs sustainable pipeline

The cost of buying leads adds up… And whilst effective as a lower funnel conversion tactic, being overly-reliant on performance marketing may see you chasing results at the cost of longer term brand robustness. So let’s take a look at the facts…

Adidas and ebay, are just two notable brands who recently admitted that they’ve become overly-reliant on performance marketing and they’re not alone, as Les Binet explains in a recent WARC report:

“The addiction to the short-term is not a new phenomenon, but it has got a lot worse. One of the problems is that (for) short-term activities, you get immediate feedback: responses, clicks, or short-term sales. If you are a marketer who’s spending money and nervous about what you’re getting for your money, you can immediately see that this stuff pays back. It’s become easier and easier to see these short-term effects, because we have more granular short-term data that comes through faster and faster.”

The simple truth, is that longer-term investment in brand building, delivers longer-term sustainable sales, leading to cost efficiencies over time. Which is why investing in your brand pays off. This is reinforced by new research that shows brands who invest consistently in upper funnel activity (awareness/reach initiatives) for at least ten months experience greater efficiencies versus those who cease the activity after just three months.

Finding the optimal balance

Companies that allocate 60% of their marketing budget to long-term branding and 40% to short-term activation tend to outperform their competitors. This balanced approach allows brands to cultivate long-term customer relationships while reaping the benefits of short-term revenue spikes. (LinkedIn).

“It’s interesting to note that the tech firms seem to be some of the ones now leading the charge towards brand-building. Companies like Google and Amazon have spent 20 years building up long runs of performance data, and they’re the ones who are now piling back into traditional ad media like TV and outdoor. The rest of the marketing community should take note.”

When investing in upper funnel activity, the challenge for many marketers is that it can initially impinge key metrics and even lead to an increase in acquisition costs. An uncomfortable situation to be in, especially when you have figures to report on (often on a monthly or quarterly basis) and so scrutiny and caution sets in. Whilst easier said than done, advising your CFO to adopt a longer-term mindset is key. How you frame the conversation is pivotal – making sure you talk the language of finance (sales and revenue), not marketing (likes and open rates).

Finding what works for your business

Pitting brand building and performance marketing against each other in a competition for budget unnecessarily damages the effectiveness of both. So a good way to start is to allocate a small amount of spend for upper funnel awareness activity and trial some test and learn activity.

You may want to consider a colonisation strategy – running a multi-channel campaign in a single locality to measure the uplift in metrics.
Utilise a mix of OOH awareness formats, including radio and VOD, alongside your go-to lower funnel activity.
Be patient with your results though, depending on the nature of your product and buying cycle, you’ll need to give the test ‘time to work’.
The true value might not be visible right away, but if you can manage stakeholder expectations, the results will speak for themselves and instil confidence in the board for further investment.

Proving the ROI of upper funnel activity

In an interview for WARC, Les Binet says:

“Really smart marketers build the brand long-term and activate it efficiently. Building the brand long-term builds up preference for the brand, and then activation converts that preference efficiently into cash. You need to do both jobs because each enhances the other, and you need to do them in balance.”

Perhaps the main challenge for marketers is proving the ROI of upper funnel activity. When it can’t be directly attributed to sales (like performance tactics), how can you be sure it’s working? Whilst the impact on sales figures may take a few months to pull through, organic search traffic and in-bound enquiries, as opposed to paid search or click-throughs from digital ads, are a great indication of general brand awareness. Additionally, look at the proportion of direct website traffic versus paid activation, partnerships or price comparison sites.

Looking to go further?

If you’d like to talk more about how to optimise performance, balance your budget and deliver on the metrics that matter, we’d love to help. Get in touch with our Client Services Director, Francois d’Espagnac.