Home Newswire Getting the long-term vs short-term balance right in Australia

Getting the long-term vs short-term balance right in Australia

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“We know that as a profession we are attracted to the shiny and new, and maybe we over-leaned in that direction.” That admission came from John Broome, Chief Executive Officer at AANA, the Australian Association of National Advertisers, last month in the context of whether the marketing industry in Australia has the right balance between short-term and long-term strategies. “I think we are still over-leaning, but not considerably; it is getting better. We are starting to see a ‘maturing out’, which is led through the lens of effectiveness and ROI.”

Speaking at Future of Brands Sydney, Broome continued: “We are getting better at understanding how we optimise our choices [marketing mix], not just for short-term outcomes but for the long-term sustainability of the business, and balancing those two things is critical.”

He referred to the current troubles at Kraft Heinz, and the fact the company has written down the goodwill value of its trademarks, as a warning about what can go wrong if a focus on efficiency and driving out cost puts you off balance. “That is an extreme case of what happens; it undermined shareholder value.”

Avoiding a blame game and instead addressing structural issues that can lead to short-termism, Broome noted that the wider FMCG sector feared unwanted private equity approaches and focused on immediate value. The danger is that brands are neglected, then cease to be worth what is stated on the balance sheet.

He thinks the dangers to brand value are now understood. “Companies have learnt that after people and plant, brands are the next biggest thing on the balance sheet. There is a balance between delivering results in the short-term and fostering brands as an asset for the future. You have to distinguish between long-term and short-term effectiveness – you must have both.”

Broome does not think brands have to stick to a rigid 60% long-term/brand and 40% short-term/activation investment model, however, referring to the classic ratio championed by Binet & Field via the IPA (and others). He said brands must decide what the right balance is, given their own circumstances.

Speaking at the same conference, Adam Ross, Content Lead, South Pacific for Coca-Cola, made it clear he was a fan of the Binet & Field work, which he said is timeless. Tackling other structural challenges that work against long-term investment, he noted the short tenure of CMOs. “This is a huge issue. Very rarely are CMOs in a job long enough to put in place the things that drive long-term value.

“I also think the plethora of data available to us almost instigates short-term thinking, because you are able to measure so much. Just because you can measure something, it does not mean it is valuable – and it can create knee-jerk reactions.”

Ross also wanted to emphasise the importance of the 40% – the short-term investments in the Binet & Field model. Since being on the client side, his eyes have been opened to the power and importance of retailers and grocers, he revealed. When agency-side, he was annoyed when told that a campaign had to work for Coles and Woolworths, the Australian supermarkets.

He reminded the audience of the need for physical as well as mental availability in marketing science. Working for Coca-Cola had changed his frame of reference. “I now know how important it is to have something short-term that a Coles or a Woolies can buy into, because that is what will give you physical distribution. You can create as much mental availability as you want, but if people can’t find you, it is irrelevant.”

Ross observed of the marketing industry in ANZ region, “We are increasingly attracted to the new and shiny” and he called for informed decisions and not ones based on personal perceptions like ‘I don’t want TV and my kid is on Snapchat.’ He also warned against the parallel danger that media savings and ‘cheap’ are misinterpreted as value.

AANA’s Broome said it is clear that effectiveness is the new test that matters in the boardroom, and the means by which you must now justify actions to a leadership group. This is welcome news for ‘traditional’ (or what some people like to call proven) media, and especially TV, with its strong effectiveness ratings, as famously demonstrated in a study by Ebiquity.

The problem for marketers, which creates frustration, is the competing claims on effectiveness. “Marketers want one version of the truth on effectiveness and we are nowhere near that,” Broome said. “But our ability to get to the truth is improving, thanks to access to the systems and technology needed to measure effectiveness.”

There may not be a single source of truth on effectiveness, but Broome is optimistic that we are going to get a single measure of reach – which he considers the Holy Grail for marketers. He said Facebook and Google are both “leaning-into” the need for a single reach measurement, which he thinks should remove hurdles to traditional media owners collaborating in such an initiative.

Broome thinks a single cross-channel media measurement solution is 1-3 years away, maybe built in an iterative process that involves fusing panels. “We are on the cusp of being able to deliver this.” Having one measurement of reach would be “dramatically enabling to marketers”, he said. “Their planning would be far more effective, and it would connect through to ROI.”

He thinks this is where the industry should be focusing its energies. “My appeal to marketers and media agencies is that you need to agitate for this. Unless you demand it from the demand-side of the ecosystem, there will be no change.”

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