“Both short-termism and long-termism are really just ‘wrong termism’ in my view,” said Tom Roach, VP of Brand Strategy at Jellyfish, while speaking at the Future of TV Advertising Global conference in London last month. He continued: “We need to close this value-destroying divide between brand and performance marketing.”
Part of overcoming the divide is acknowledging the tendency to accept false dichotomies in marketing. He elaborated: “Long-term versus short-term is probably the most commonly cited false choice in marketing and that’s saying something because we love false dichotomies in this industry: brand versus performance, emotional versus rational, creativity versus technology…All these things are constantly debated in our world and normally the answer involves some kind of combination of both sides.”
Instead, Roach wants brands to embrace bothism – an idea which acknowledges the interdependence between the two and the part both play for sustainable growth. Drawing the analogy of a brand being a tree, he stressed the importance of watering the roots – i.e. investing in brand-building – for it to grow. Ultimately, picking fruits without watering makes the tree unsustainable in the long-term.
Citing Austrian-American management consultant and educator Peter Drucker, he remarked: “Long term results cannot be achieved by piling short-term results on top of short-term results. It’s more complicated than being additive. It’s a multiplicative compound effect which starts slowly but strengthens over time.”
He continued: “While all long-term growth actually has its roots in the short-term, only some kinds of short-term activity also lead to long-term growth. To put it another way: short-term activity sometimes leads to long-term growth, long-term growth always needs short-term growth.”
Roach called on brands to adopt Linkedin’s ‘95-5’ principle as a heuristic rule of thumb when trying to balance long-term and short-term tactics. The rule stipulates that 5% of buyers are in the market right now, while 95% will be in the market in the future. This means that brands need to find ways to speak to immediate buyers while also never losing sight of the much larger proportion that exist in the future. While the rule was initially formulated with B2B business in mind (which usually have longer buying cycles) Roach believes the principle holds for any brand.
To demonstrate this point, he discussed a case-study from Gousto – an ingredients and recipe delivery service – which had been presented at an IPA conference in the month prior. He said: “Gousto were spending 100% of their ad budgets on performance activity. Essentially, they found if they stopped advertising their customer acquisition stopped.”
Gousto then switched from 100% paid performance ads – which were driving 80% of its customer acquisition – to a ratio of 60% performance ads to 40% branding ads. The shift over time meant that 75% of Gousto’s sales began coming organically. Roach remarked: “They raised their base sales and only 25% were coming from short-term paid advertising. They increased their base, reduced their reliance on paid advertising and created a larger reservoir of consumers who were ready to think of that brand when they fell into the market.”
Roach also argued that brands who invest in brand-building come out of recessions earlier and are more resilient in times of crisis. They also have a larger capacity to adjust their pricing – this ability is especially salient in inflationary periods such as right now. He said: “The inflationary period we’re in is putting more pressure on companies to put up prices. Something that brand communication is especially good at – and performance activity actually isn’t very good at at all – is to support price premiums or even a price increase. That’s something I think that we’ve forgotten about in marketing.”
Roach believes a combination of linear TV and a variety of digital channels can deliver both short-term and long-term growth. He thinks a macro-trend over the last decade is that digital is now beginning to mature, making brand-building more possible in digital. He remarked: “TV is not dead – it’s having babies. We have real momentum behind connected and addressable TV. That’s a really exciting development in the advertising marketplace.”