We need to talk about short-termism
Short-termism in ad campaigns is damaging brands.
At a recent Core Media & AAI event, Marketing Multiplied, guest speaker and ad effectiveness guru, Peter Field, ran a captivated audience through the numbers.
In 2011, creatively awarded campaigns were 12 times more effective than non-awarded campaigns. By 2014, this had fallen to six times. In other words, since 2011, 'creative effectiveness' in advertising has halved.
One reason for this decline is the growth of short-term campaigns (less than six months), encouraged by the instant availability and allure of digital metrics which provide instant feedback on brand engagement and sales uplift. The number of award-winning short-term creative campaigns has quadrupled since 2006, and accelerated since the economic crash.
The second reason is pressure on marketing budgets, caused by the global economic crisis and the proliferation of digital touch-points, which is spreading already diminishing marketing budgets more thinly and diluting the impact of traditional media.
What's the problem?
Short-termism is advertising's weapon of (mass) brand destruction.
It's bad for brand growth. While short-term campaigns can achieve strong awareness and sales impact, their effects are short-lived. Field warns a brand wastes their investment if they expect their creativity work in less than six months.
It's also bad for creativity. The Long and Short of It study into advertising effectiveness found that creativity is a brand's secret sauce: creative campaigns work harder. Through building up emotional associations in people's minds and achieving 'fame', brands live on in consumers' minds long after a short-term campaign has wrapped up.
While short-term campaigns are expensive and decay more quickly, long-term campaigns cost less to 'top up' in year two, three, four ... .
But this takes time.
Paraphrasing that great philosopher Donald Rumsfeld, brands can become trapped in an unknown unknown.
If a brand relies only on short-term campaigns or does not stick to a long-term creative strategy, they will never see the benefits they're missing now and in the future.
Breaking out of Groundhog day
In the 1993 classic Groundhog Day, Bill Murray played an arrogant TV weatherman caught in a time loop. To break the loop, he had to re-evaluate his life.
Likewise, many brands are caught in their own Groundhog Day - they need to re-evaluate how they see the benefits of long-term and short-term campaigns working together.
During a brand's growing pains, it makes sense for brands to pursue short-term campaigns - they build awareness and grow sales quickly, driving revenue and growth.
Eventually, they reach an inflection point where the gains from long-term incremental brand growth outpaces the benefits of short-term campaigns.
Brand is the element that not just grows businesses, but sustains them across short-term campaigns, at lower cost.
What is to be done?
Clearly, having a strong brand is essential for business growth.
One rule of thumb is that businesses need to spend 60% of their marketing budget on brand-building and 40% on activation. While every brand's situation is different, this appears to be the rule, with brands deviating from the 60:40 split to their detriment.
Unfortunately, it appears that, in the 21st century, brands - and particularly young brands - need to play by different rules to 20th century brands. These new rules can make it seem like short-term is the new long-term. But while there may be different rules for 21st century brands, short-termism is still a problem once a brand survives and matures.
The challenge for brands in the 21st century - and particularly new brands - is to balance the need to follow through on a long-term brand strategy while building in adaptability and flexibility as the world around them changes at accelerating pace.
Short-term campaigns clearly have a role, but they need to be folded into a long-term strategic vision, however adaptable, to ensure both short-term and long-term work effectively together.