Think long-term during the COVID-19 crisis, because short- termism will hurt your brand
B2B CMOs are relying on short-term tactics to demonstrate impact, but Metia’s Pete Morgan thinks under-investment in long-term strategy is hurting the bottom line for many businesses – and could deepen the impact of current global uncertainty.
The English Premier League is the world’s leading soccer league in terms of revenue and viewership, and those who follow it will be familiar with the ever-increasing pressure on club managers.
The median tenure for a Premier League manager stands at 16 months – just long enough for a new arrival to update his LinkedIn profile, fall out with the club’s star player and be fired. Fans bemoan the culture this creates, with clubs seen to over-invest in short-term fixes to the detriment of long-term prospects.
It’s a familiar story in business
While recent research of Fortune 500 companies logged the median tenure of a CEO at five years, a study by executive search firm Spencer Stuart found the comparative figure for CMOs is just 28 months.
That short tenure is even more pronounced when you consider factors such as where the business is in the annual planning cycle and seasonality in purchasing. Or what strategies are inflight and committed on arrival, the time taken to get in-market with new campaigns, and to measure and assess any material impact. And that sets aside transforming in-house skills, supplier base or technology capability. I’d suggest the average CMO has less than 12 months to imprint their signature on marketing and be judged against it.
With reduced tenure, it’s hardly surprising that CMOs often fall into the same trap as Premier League managers: over-investing in low-hanging fruit and ignoring longer-term plays that will help the business, but maybe not during their time in office. A recent Marketing Week study evidenced this trend, finding that only 24 percent of B2B marketers run campaigns that last for more than six months.
Global uncertainty caused by the COVID-19 pandemic risks exacerbating this trend. With a global recession on the horizon, marketing budgets will be under pressure – and the temptation for many marketers will be to focus on short term tactics that deliver immediate impact. History, however, shows that is not a winning approach.
Successful marketing requires both short- and long-term thinking
When considering how marketing investments should be prioritised, the work of Les Binet and Peter Field is a good starting point. In their book “The Long and the Short of It,” Binet and Field position short-term tactics such as sales activation as vital for efficiency, with long-term tactics such as brand building required to drive growth and profit.
Short-term tactics such as lead generation tend to generate a direct behavioral response from immediate prospects and existing customers. These activities aim to drive short-term sales uplifts, helping marketers make an impact more quickly compared to brand building – but with narrower and smaller paybacks that decay quickly once the activity itself has finished. Binet and Field have demonstrated that these tactics have little impact on price elasticity – the relationship between the price of a product and demand in the market. However much short-term activity you run, demand will likely fall if you raise the price of your product.
Longer-term tactics attack the problem from a different angle, aiming to generate brand preference from a wider pool of prospects – often by building an emotional connection to the brand. These attempts at emotional priming aim to make a brand famous, generating broader but slower effects, and with bigger paybacks. Binet and Field have demonstrated how these tactics have a measurable impact on price elasticity, reducing customer sensitivity to price. Famous brands can charge more for the same product than less famous brands – and this effect tends to decay slowly.
A balanced strategy provides a win-win for CMOs
Binet and Field’s research also shows that running short- and long-term tactics together has a positive effect, the sum being greater than the parts. Successful brand building focused on building an emotional connection increases the effectiveness of short-term tactics using rational messaging.
CMOs that run both simultaneously see a rachet-like improvement on effectiveness. It is far better to balance your budget than to double-down on one approach. This is supported by a recent Marketing Week study, in which B2B brands identified as outperforming their competitors were twice as likely to allocate 60 percent or more of their budget to achieving long-term marketing goals.
Binet and Field have long suggested B2C marketers split their budget 60/40 in favor of long-term activities. More recently, they’ve advised B2B marketers to slightly favor short-term investments, suggesting a 55/45 split toward sales activation over brand building.
Either way, Binet and Field’s research suggests a win-win is possible for CMOs new in role – allowing them to demonstrate quick impact while also building a legacy that will outlast their time in office. In the words of IPA Director General Paul Bainsfair, “companies that hold their nerve consistently, and that invest in [both] longer-term brand building [and] shorter-term sales activation, outperform the market.”
This will hold true however long the current uncertainty lasts.
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